Friday, August 06, 2004

Job Growth Not "Turning The Corner"

President Bush keeps talking about how the economy is "turning the corner," and creating jobs in "high-growth, high-paying industries." But it just isn't true.

The economy created just 32,000 jobs in July, less than one-eighth of the 240,000 jobs forecast by the Bush administration.

It's important to remember that just to keep up with population growth, the economy has to create 150,000-175,000 jobs per month. In what the Bush administration would likely agree is the strongest stretch of economic growth since he became president -- starting with the third quarter of 2003 -- the administration has only surpassed that number three times. The low point came in December, when just 8,000 jobs were created.

Unable to tout the job-creation numbers, the Bush administration took comfort in the unemployment rate, which remarkably fell 1/10th of 1 percent, to 5.5%. That's the lowest level since October, 2001, and as Labor Secretary Elaine Chao said, that's lower than the average unemployment rate for the 1970s, 1980s or 1990s. (I haven't been able to check this, but for now, I'll accept that bit of trivia).

The Bush administration also touted that 1.2 million jobs were created this year. Is that better than losing 1 million or more jobs per year? Sure, but 1.2 million jobs in seven months is just an average of 171,000 jobs/month -- which, given the aforementioned need caused by population growth, isn't all that impressive.

***

The media immediately focused on the low job growth total. It didn't spend much time, however, on the unemployment rate -- other than to suggest that jobs created is a better barometer for economic growth.

But I have to wonder about this statistical anomaly. And I have to go with the conventional wisdom, which suggests that the reason the unemployment rate has trickled downward is as much due to the unemployed stopping their job hunts -- or settling for part-time work -- rather than any positive related to economic growth.

***

The job news came on the heels of other discouraging news for workers. The Department of Labor published regulatory changes, scheduled to take effect August 23, that will strip the right to overtime pay for over 6 million workers. (Go to http://www.epinet.org/content.cfm/briefingpapers_bp152 to read more about the changes planned by the Bush administration, and which types of workers would be affected).

Meanwhile, Bush this week touted proposals regarding "flex time" and "comp time." And while those names sound appealing -- especially for the "working mothers" the president has cited need such policy changes (I'm surprised he didn't call them "soccer moms") -- the rules are designed to allow employees to work more than 40 hours per week, and have their employers skirt the need to pay them overtime.

As discussed by the Center for American Progress, an employer and employee can create a schedule that has the employee working 50 hours one week and 30 hours the next, as long as the employer pays time-and-a-half for the extra hours in the first week.

The new "comp time" rules would allow the employee to choose time off instead of extra pay, but let's consider reality. What's to stop employers from giving overtime work to those willing to take comp time, thus reducing wages for all?

Meanwhile, "flex time" would allow employers to set 80-hour, two-week periods, which would allow employers to schedule overtime without paying for it. Using the aforementioned 50-hour, 30-hour format, an employer choosing "flex time" would never have to pay time-and-a-half for the 10 extra hours in week one. Again, the move would keep wages down.

***

The Bush administration will continue to throw out slogans and applause lines as it campaigns through "swing states" that have seen great job losses, such as Ohio, Michigan, Pennsylvania and West Virginia.

The working class audiences listening to those speeches are in many cases the same people who will be hurt by the planned labor law changes. They're the same people who didn't see diddly from Bush's well-publicized tax cuts. The same people who are hurt most by rising tuition costs, higher property taxes, and inflation tied to everyday items like gasoline, milk and meat.

What happens if these people forget their feelings on, say, gay marriage, and decide to vote for their economic best interests?

You'd have a Kerry landslide.

David










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