Friday :: Sep 3, 2004

This Is The Bush Prosperity: 313,000 New Jobs - In Three Months


by Steve

Here’s the jobs record that George W. Bush will have to defend as he spins his case for election in the next 60 days. According to the Labor Department this morning, 313,000 jobs were created in the Bush prosperity economy – in the last three months. That isn’t 313,000 jobs last month, or any month recently. That’s 313,000 jobs over the last three months. I think that is a little short of the Administration’s claims, and the estimates of most private economists of what is necessary to maintain solid growth.

Oh, but to Muck and the rest of the GOP sycophants, they’ll point to the unemployment rate dropping to 5.4% as the true good news today, and ignore the actual number of jobs created in the last three months. Of course the rate dropped it turned out because 152,000 job seekers dropped out of the labor force in August, and the average duration of joblessness went up in August instead of going down.

But Bush was ready to spin this with his usual drivel:

The new employment report "shows that our economy is strong and getting stronger," Bush said Friday at a campaign stop in Pennsylvania. "Our growing economy is spreading prosperity and opportunity and nothing will hold us back."

Hold us back from what, Skippy? At the risk of being called an "economic girlie man" for repeating the facts in the face of the Ahnold lock-step optimism, I soldier on.

As the Economic Policy Institute noted this morning, these job numbers are so far off from what Bush promised us in selling his tax cuts that he should be fired for fraud, if nothing else.

August's job growth follows two months of very weak growth of 73,000 in July and 96,000 in June and is substantially slower than the 295,000 jobs created monthly (on average) in March, April, and May. This pace of job creation is far slower than what the Bush Administration said would follow as a result of its 2003 tax cuts.

The Bush Administration called the tax cut package, which took effect in July 2003, its "Jobs and Growth Plan." The president's economics staff, the Council of Economic Advisers, projected that the plan would result in the creation of 5.5 million jobs by the end of 2004 — 306,000 new jobs each month starting in July 2003. The CEA projected that the economy would generate 228,000 jobs a month without a tax cut and 306,000 jobs a month with the tax cut. Thus, it projected that 4,284,000 jobs would be created over the last 14 months. In reality, since the tax cuts took effect, there are 2,668,000 fewer jobs than the administration projected would be created by enactment of its tax cuts. The August job growth of 144,000 fell 162,000 jobs short of the administration's projection.

The Center for Budget and Policy Priorities goes a step farther this morning and reports that wage and salary growth in this Bush prosperity has been far outpaced by the growth in corporate profits, unlike previous recoveries.

Commerce Department data on national income trends released on August 27 point toward troubling developments in the current economic recovery. Of greatest concern, wage and salary growth for workers has been exceptionally poor while corporate profits have enjoyed unusually large gains.

The share of income growth, after adjusting for inflation, that has gone to wages and salaries has been only about one-third as much as has gone to corporate profits. This contrasts sharply with other recoveries since the end of World War II; during the other recoveries, the share of income growth that went to wages and salaries averaged more than twice as much as the share going to corporate profits.

We also examined the magnitude of the economic growth that has occurred during this recovery, as well as the amount of growth that has occurred among certain types of income. After adjusting for inflation, wages and salaries have grown at the meager pace of 0.8 percent per year during the current recovery, which is only about one-sixth their average growth level in other post-World War II recoveries. Corporate profits have risen during the current recovery at a dramatically faster pace than wages and salaries — at an inflation-adjusted rate of 14.2 percent per year. This is faster than has typically occurred in other post-World War II recoveries.

CBPP found that the share of national income that consists of wages and salaries was at its lowest level going back to 1929, while after-tax corporate profits comprise the largest share of national income in 75 years. To be fair to employers, part of the reason why wage and salary national income shares are lower is because employers have higher costs funding pension and health insurance programs. But these problems stem from runaway health insurance costs (which haven’t been addressed by this administration) and fully funding pension shortfalls as a result of the stock market bubble. According to the CBPP, even with these concerns factored in, "the share of national income going to workers has dropped even when total compensation is considered. In the first half of 2004, some 64.1 percent of national income went to labor compensation, significantly below its average level of 65.6 percent from 1970 to 2003."

This therefore is the Bush prosperity: poor and inconsistent job creation, fattened corporate bottom lines, reduced wage and salary growth as compared to previous recoveries, and a recovery that shows signs of settling into a growth rate insufficient to generate enough new and quality jobs to sustain the economy.

As corporate CEO’s use the Bush tax cuts to fatten their bottom lines to please their boards and Wall Street, the question that needs to be asked is "who will buy your products if workers are left out of the 'recovery'"?

Steve :: 9:05 AM :: Comments (16) :: Digg It!