WASHINGTON — The Trump Administration and the media were positively giddy at the news: the U.S. had added 223,000 jobs in May, representing a record 92nd consecutive month of jobs growth, and reducing the unemployment rate to 3.8 percent, its lowest level since the height of the dotcom boom in 2000.
“New Milestones in Jobs Report Signals a Bustling Economy,” read the New York Times headline trumpeting the data. “Looking forward to seeing the employment numbers at 8:30 this morning,” Trump tweeted ahead of the Bureau of Labor Statistics June 1 press release.
Down and out in the real world
One week later, the mood in an Indiana courtroom was decidedly more somber, as a federal bankruptcy judge heard the first cases of what was shaping up to be a busy morning. First up was the young couple with a daughter afflicted with cerebral palsy; the mother had to quit her job to be a full-time caregiver, leaving the family with one insufficient paycheck. They had filed for protection from their creditors under federal bankruptcy laws, but before doing so had purchased a $1,200 ring as a Christmas gift for the wife.
“You can see why it concerns me that you made this purchase right before filing for bankruptcy, can’t you?” the judge asked, glaring at the couple over her glasses. The couple nodded yes, and the husband tried to explain that the gift was intended as a reward for his wife who had borne the burden of caring for their daughter.
With their clients clearly cowed by the judge, their attorney interrupted:
In their defense, your honor, they had not yet contemplated filing for bankruptcy protection at the point the purchase was made.”
Satisfied that the U.S. government was not being swindled by an office manager and a housewife, the judge agreed, and dispatched quickly with the next two cases, both middle-aged African-American women — one a divorcee with a teenage son who was trying to remodel a home valued at $79,000 and the other a civil servant who owed more than $200,000 in student loans.
Beautiful numbers, ugly reality: what accounts for it?
No matter the jubilation articulated by the White House, Wall Street or the Washington press corps, happy days are most definitely not here again. So what accounts for the yawning chasm between a utopian jobless rate and a dystopian reality for a growing number of Americans?
The answer is two-pronged. First, the government cooks its books, and secondly, while the economy may indeed be adding jobs, most of them, to put it bluntly, are crap.
The reason for the latter is quite simple really. Since oilman-turned-maverick-politician Ross Perot warned in 1992 of “the giant sucking sound” that would inevitably be triggered by the North American Free Trade Agreement, the U.S. economy has shipped nearly 29 million of the country’s best-paying jobs abroad, mostly to Mexico. Cutting tariffs on manufactured goods from an average of 35 percent to 3 percent was a no-brainer for Wall Street, and a dead-end for Main Street. Good-paying, unionized jobs in the auto sector especially, poured out of the U.S. searching for the cheapest labor it could find.
Jeff Rubin, a senior fellow at the Center for International Government in Canada, told MintPress:
If you’re an investor, why are you going to build a plant somewhere where you pay workers $32-an-hour when you can pay them $5-an-hour? Over the last 25 years, thanks to investments in new facilities and automation, the Mexican workforce has caught up with workers in the U.S. and Canada, but their wages haven’t, providing spectacular profit margins for corporations.”
The result, according to the Bureau of Labor Statistics, is a domestic economy saddled with more short-order cooks, maids and cashiers than assembly-line workers. Peaking at 52 percent in 1969, the percentage of the U.S. gross domestic product going to wages has dwindled to 43 percent, according to research by the St. Louis branch of the Federal Reserve. And since 2012, the share of national income committed to wages is lower than during any five-year period dating back to 1929, according to a New York Times report.
Said Rubin to MintPress:
Typically when you have low-unemployment you have inflation, as employers compete for the best workers, driving wages up. But we have low unemployment and no wage pressures meaning that NAFTA has robbed workers in the U.S. and Canada of their best jobs and their wages.”
Protesters march on Wall Street in New York to demand the government address labor issues, May 1, 2018. Mark Lennihan | AP
The loss of manufacturing jobs has compounded the situation by weakening the strongest unions. Researchers at Economic Policy Institute noted that the strongest wage growth in 2017 was for those in the top 10 percent of earnings, which skewed the results enough to produce a median wage increase for the year of 0.2 percent, or, less than the increase in inflation. In other words, the typical U.S. worker — all the “good news” notwithstanding — suffered a de facto wage decrease last year.
Rubin told MintPress:
When the boss can simply pack up and move, the workers lose a huge bargaining chip. You no longer have the luxury of negotiating for higher wages. You’re negotiating for the job itself.”
At the beginning of the Obama administration, organized labor’s top legislative priority was the Employee Free Choice Act, or Card Check, which would have avoided contentious elections and made it far easier for workers to organize. Obama endorsed the proposal as a candidate but ignored it once he was in the White House, baffling some labor leaders because it could have broadened the Democratic Party’s base and strengthened their electoral prospects at every level for at least a generation.
The questionable reliability of the unemployment data
Famously, government statisticians don’t count workers so discouraged by the job market that they don’t even look for work. A better measure of employment, many economists say, is the “civilian labor force participation rate.” By this measure, which includes all people age 16 or older who are not in prison or a mental institution, only 62.7 percent of the potential U.S. workforce was actually in the workforce in May, down significantly from its peak of 67.3 percent in May 2000. Labor participation rates were typically much lower in the mid-1970s but only because a single income was sufficient to raise a family in the 1950s and 1960s; women hadn’t yet begun to enter the workforce in droves to offset the declining wages of their husbands.
Workers’ plight in the U.S. mirrors the precariousness of workers worldwide. In contrast, the world’s wage workers total 1.4 billion. In their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China, John Bellamy Foster and Robert McChesney cite International Labour Organization data to calculate the “global reserve army of labor” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) — at 2.4 billion, or 1 billion more than those who have full-time work in the formal sector. They write:
It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well.”
Top Photo | President Donald Trump, right, talks to Scott Sauritch, a maintenance worker at Irvin Works and President of Local 2227, during an event in the Roosevelt Room of the White House in Washington, Thursday, March 8, 2018. Trump signed two proclamations, one on steel imports and the other on aluminum imports. Susan Walsh | AP
Jon Jeter is a published book author and two-time Pulitzer Prize finalist with more than 20 years of journalistic experience. He is a former Washington Post bureau chief and award-winning foreign correspondent on two continents, as well as a former radio and television producer for Chicago Public Media’s “This American Life.”
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