This week, President Obama will travel to Austin, Texas to call for action on jobs. The proposals the president put forth in his State of the Union address – investing in infrastructure, expanding preschool, bolstering manufacturing assistance centers, raising the minimum wage – have been blocked in the Congress, and disappeared from the public debate.
The president wants to revive his jobs agenda while still touting the economic recovery. In his commencement address at Ohio State University last weekend, he reassured students:
“While things are still hard for a lot of people, you have every reason to believe that your future is bright. You’re graduating into an economy and a job market that is steadily healing.”
The White House points to 38 straight months of private sector jobs growth, but in reality, jobs have been largely left behind in the recovery. The stock market is setting new records, but over 20 million people still are in need of full-time work. The labor force participation rate – the percentage of workers who have a job or are looking for one – is down to levels not seen since 1979. The jobs being created pay less with fewer benefits than the jobs that were lost. As a result, inequality is still growing; the middle class is still sinking. And young people are graduating into one of the worst jobs markets since the Great Depression.
In many ways, the fact that the economy is “steadily healing” back to the old economy is the problem, not the solution. That economy featured growing inequality and a declining middle class. It was built on debt and speculative bubbles. Trade deficits hit new records as multinational companies shipped good jobs abroad.
In his first year in office, President Obama argued that we couldn’t go back to that economy and shouldn’t want to. We had to build a new foundation for growth. But in fact, gridlock in Washington has virtually ensured that we would drift back into the old economy.
Once more the Federal Reserve offers the only ballast for the economy by holding interest rates at record lows. The big banks have emerged from the recession bigger and more concentrated than ever. That virtually ensures a reach for increasing risk as we wait for the next bubble. The trade deficit is back over $1 billion a day, despite the natural gas explosion that reduces U.S. dependence on imported oil. The assault on unions has escalated. Part-time minimum-wage jobs proliferate. The richest 1 percent of the country captured a staggering 112 percent of the income growth in the first two years coming out of the recession. The 99 percent on average lost ground. (more…)