U.S. Hiring Increases, But Slow Job Growth Continues

November 21, 2004
U.S. Hiring Increases, But Slow Job Growth Continues
by Seth Sandronsky, a member of Sacramento Area Peace Action and a co-editor with Because People Matter, Sacramento’s progressive paper. He can be reached at: ssandron [at] hotmail.com

Despite the apparent resolution of the presidential race, the U.S. economy still faces many problems. One is slow job growth. This, and not abortion and gay marriage, is the social issue of the day, determining for the majority in blue and red states who does get by and who falls by the wayside.

In October, the U.S. economy added 337,000 new, nonfarm jobs, the highest total since March. The creation of new jobs, as revised by the Labor Department, was 139,000 in September and 198,000 in August. Policy makers with the Federal Reserve Bank issued cheery comments concerning recent U.S. job growth on November 10.

The Labor Dept. reported that 97,000 new jobs, roughly 29 percent of the overall total last month, were created in professional and business services employment. Half of that total, or 48,000 jobs, was in the temporary-help services sector. The economy has added 397,000 new temporary jobs during the past seven months.

Crucially, temporary workers have little job security. They also earn lower wages than permanent workers generally. Moreover, employers give temporary employees less training, British researchers found (cited by Michael Perelman in Dead End: The Trap of Individualism in a Corporate Society, Pluto Press, forthcoming).

Whites continued to be more likely to have paid work than racial minorities. The October unemployment rate for whites was 4.7 percent versus 10.7 percent for blacks and 6.7 percent for Latinos. Racial inequality in the labor market is not front-page news.

What of private-sector employment? “Private-sector jobs have fared worse than public-sector jobs in this recession and recovery,” the Economic Policy Institute noted. “Jobs in the private sector have dropped by 1,261,000 since March 2001, representing a 1.1% contraction.”

It is also worth noting that 367,000 new people entered the U.S. labor force in October. Again, the growth of new jobs failed to keep up with expansion of the labor force. This is not a minor point of academic debate.

Do you recall the Bush White House’s “Jobs and Growth Plan” of big tax cuts for corporations and the rich, effective July 2003? Beginning that month, his economics staff, the Council of Economic Advisers, forecast that the economy would create 306,000 new jobs per month. The reality is “job creation failed to meet the administration’s projection in 13 of the past 16 months,” the EPI added.

Rhetorically, the president’s huge tax cuts were designed to spur business investment. Presumably, when business pays lower taxes, working people benefit. That line of thought neatly sidesteps one current trend of production, distribution and consumption.

That trend is the imbalance in supply and demand, with the domestic car industry a case in point. Why would an auto corporation invest more capital in production when overcapacity (more supply than demand) exists? The Oct. 30 edition of the Washington Post reported on one company’s response: “Some General Motors dealerships in the Kansas City area were actually offering a free Chevrolet subcompact car with the purchase of a giant Tahoe or Suburban sport utility vehicle.”

Meanwhile, U.S. business is not queasy about squeezing employees to work harder and longer. It costs employers less to do this than to hire new workers. Accordingly, business saves now and later by paying less for wages, health care and retirements.

Another trend hampering U.S. job growth is the outsourcing of work to China and India. The American people learned that job outsourcing to other nations is unstoppable, according to Democrat John Kerry in a presidential debate. There is nothing to indicate that President Bush will turn the tide of U.S. business seeking low-paid workers abroad, further weakening domestic payrolls.

In October, a total of 8.1 million American workers were officially unemployed. However, this figure hides how much surplus labor there actually is in the U.S. economy. Consider these two groups who have little to contribute to donkeys and elephants, and get treated like yesterday’s trash.

First are the 1.6 million people “marginally attached” to the labor force. These persons would like to work, and have pounded the pavement for paid employment during the past year. However, they were not counted as jobless due to their not having actively tried to be hired in the 28 days before the government jobs survey.

Second are the 2.1 million Americans languishing behind bars. If they were not locked up, these people would be part of the labor force searching for employment. Thus this mass of incarcerated workers, like the marginally attached, are not counted in the monthly jobs report.

Here is a thought experiment. Count the marginally attached and incarcerated, a total of 3.9 million Americans, as being unemployed. The number of jobless rises from 8. 1 million to 11.8 million in the U.S. last month.

In closing, consider how the federal government defines employment. “To be counted as employed, a person must have worked at least one hour for pay in the week prior to the survey work,” writes economist Michael D. Yates ( Naming the System: Inequality and Work in the Global Economy, Monthly Review Press, 2003). Try and live on wages earned in 60 minutes!

Currently, the American people’s basic need to have employment that pays a livable wage is hard to see on the nation’s political map. This lack of visibility, though, does not diminish the gravity of this social issue. It will not fade anytime soon.

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