No recovery with so many unemployed
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Kai Ryssdal: This may be more macro-economic detail than you want, but the Federal Reserve splits this country into 12 parts or regions. About every eight weeks it publishes something called the "Commentary on Current Economic Conditions." Otherwise known as the beige book. It's a look at the U.S. economy broken down by those 12 districts.
And the report that came out today says things in 11 of the 12 are distinctly positive. Except for the labor market, which is a big exception. Commentator Robert Reich says whatever economic recovery there may eventually be depends on jobs.
ROBERT REICH: According to last Friday's jobs report, almost one out of six Americans who needs a full-time job either can't find one or is working part-time. Meanwhile, wage growth among people who have jobs has just about stopped. And the typical workweek is now so short, at just over 33 hours, that if and when companies need workers they'll just expand the hours of people already on payrolls rather than hire anyone new.
Bottom line: No net new private-sector jobs, probably for years.
Does this mean a jobless recovery? No. It means no recovery, at least none lasting beyond inventory corrections and the government stimulus. You see, with so many people unemployed or underemployed, there won't be enough demand to fuel a real recovery.
But according to a recent report by Bank of America Merrill Lynch, we shouldn't worry: 42 percent of consumer spending before the meltdown came from the top-earning 10 percent of Americans. Not too surprising given that the top 10 percent was raking in half of total earnings.
So as long as the top continues to do relatively well, says Bank of America, their spending will revive the economy. And the top 10 percent isn't being hit nearly as badly by job losses, and their wages are doing relatively well. Plus, their wealth isn't as dependent on home values as is everyone else's. While housing prices continue to decline, the stock market has rallied. The report warns against raising taxes on the top 10 percent, lest their consuming ardor be dampened.
This logic is morally and economically indefensible. If we've learned anything from the Great Meltdown, it's that the skewing of income and wealth to the top has made our economy far less stable. Stagnant median wages, widening inequality, and job insecurity got us into this mess in the first place. And until we deal with them head on, the mess will remain.
RYSSDAL: Robert Reich is a professor of public policy at the University of California, Berkeley.