From time-to-time, EPI contributes segments for broadcast on Workers Independent News. In January 2016, EPI Communications Director Liz Rose interviewed senior economist Elise Gould. Listen to audio above. A lightly edited transcript is below.
The state of the economy is sound—or is it?
The unemployment rate has declined from a 10 percent peak in October 2009 down to 5 percent last month. This is the biggest drop in any five-year period since 1989.
But many Americans don’t feel like things are getting better. Wade into the crowd of primary voters of either party or look at poll after poll and hear Americans express unease about the economy.
We’ve asked Elise Gould, an economist with the Economic Policy Institute, to explain why Americans do not feel like the economy is getting better.
Pay for CEOs is high, and so are corporate profits. But most Americans have not seen the kind of pay increases that we would see in a stronger economy.
First, the good news, the unemployment rate has gone from 10 percent to 5 percent and the economy has continuously been adding jobs, including a strong 292,000 more jobs in December.
Now the bad news. It’s clear that we are far from the full employment economy we enjoyed in the late 1990s into 2000. More jobs need to be added to pull in missing workers—those potential workers who would be in the economy if there were more job opportunities. There are close to 3 million of these missing workers. And, workers in their prime aren’t employed at the same rates as they were before the recession began. The share of the workforce age 25 to 54 with a job dropped by 4.7 percent points between December 2007 and the summer of 2010 and has only recovered half the drop.
Workers and employers alike recognize the slack in the labor market. Because employers continue to hold the cards, workers have seen weak wage growth. Absent stronger bargaining power generally, workers need the tightest of labor markets to get strong wage growth.
Still I’m hopeful. As the economy continues to add jobs in 2016 and nothing slows down that progress, I expect we will see that stronger wage growth.
So, good on the jobs, but more to go. Very unfinished business on wages!
Thank you Elise.