Opinion pieces and speeches by EPI staff and associates.
[ THIS PIECE ORIGINALLY APPEARED IN EPI VIEWPOINTS ON JANUARY 21, 2004. ]
The Real State of the Union
Sometimes, what’s not said speaks volumes
President Bush said relatively little about our economy last night, and he failed to address the most important problem facing working families: the lack of job growth. The president ticked off a list of positive economic indicators, including Gross Domestic Product, home construction, home ownership, manufacturing activity (to be distinguished from actual jobs, which have been falling for 41 consecutive months), low inflation, and productivity. But while each of these indicators have been positive of late, none have translated into the job growth needed right now if we hope to provide opportunity to the millions of jobless and underemployed Americans.
Since the president took office in January of 2001, we’ve lost 2.3 million jobs. Just last month, over two years into this very recovery that the president was touting in his speech, payrolls expanded by only 1,000 and the labor force contracted by over 300,000 as many left the job market due to lack of job creation.
The President said that “…jobs are on the rise.” It’s true that job growth turned positive last August, but this was 21 months into the recovery that began in November of 2001 – making this the most jobless recovery on record. In fact, this is the first post-WWII recovery wherein over two years into the recovery, we’ve still failed to make up the jobs lost since the onset of recession.
The problem is that it took far too long for the economy to start generating jobs, and since last August, job growth has proceeded at a decidedly tepid pace. Payrolls have expanded 56,000 per month since then, far below what’s needed to lower the unemployment rate, and well below where we’ve been in past recoveries at this point. At this point in the last recovery, which also started out slowly, we were generating over 200,000 jobs per month. We also have a job quality problem. The jobs we’re creating pay a couple of dollars less per hour than the ones we’re losing.
One of the president’s big applause lines last night was: “For the sake of job growth, the tax cuts you passed should be made permanent.”
In fact, the absence of job growth stands as a stark reminder of the limited impact of these huge, regressive expenditures. According to their own analysis, the administration predicted that since last June, tax cuts along with the expanding economy would have generated 1.8 million jobs. The reality is that we’ve added only 221,000 on net since then. Thus, the gap between the administration’s projected jobs impact of the tax cuts and actual job growth is over 1.6 million. To make the tax cuts permanent would have no positive impact on growth in the current economy, but would ensure the persistence of huge long-term deficits, hobbling the government’s ability to meet social needs.
Finally, while the President correctly noted that economic growth has expanded lately, he neglected to point out that this growth has flowed almost exclusively into profits, while the weak labor market is taking its toll on the living standards of working families.
His speech neither acknowledged this fundamental weakness in the economy, nor offered any useful policies to ameliorate it.
Jared Bernstein is senior economist at the Economic Policy Institute in Washington, D.C.
[ POSTED TO VIEWPOINTS ON JANUARY 21, 2004 ]