Two Years of Job Growth - Share Your Story & The Precarious Jobs Recovery 9MAR12

WHEN there is good news we should share it and celebrate it. This is good news for our nation, for all of us, because it means the economy is improving enough that people who have not been looking for work are back in the job market. Even some of the long term unemployed are experiencing hope again. Now is the time for employers, for wall street and all of corporate America to do their part and share the wealth with current employees and start hiring again. But there is a real possibility the repiglicans and tea-baggers and their corporate wall street masters as well as the financial industry will keep us in recession, withholding employee wage increases and loans to small businesses and entrepreneurs and cutting back on hiring to bring about a slump just in time for the election. If they do that then get ready and BOHICA America!

Two Years of Job Growth - Share Your Story

 

Two Years of Job Growth - Share Your Story The private sector has added jobs for two straight years. This chart demonstrates how our economy is recovering from the worst economic downturn since the Great Depression. Behind each of these numbers is the story of a business adding new members to their team or of an unemployed worker finding a new job to help support their family. But we also know that we need to do more. Help illustrate the progress we’ve made over the last two years and the importance of continuing to strengthen our economy and create jobs in the months and years ahead: Tell us your story at WhiteHouse.gov/JobStories

The Precarious Jobs Recovery

February's 227,000 net new jobs -- the third month in a row of job gains well in excess of 200,000 -- is good news for President Obama and bad news for Mitt Romney.
Jobs are coming back fast enough to blunt Republican attacks against Obama on the economy and to rob Romney of the issue he'd prefer to be talking about in his primary battle against social conservatives in the GOP.
But jobs aren't coming back fast enough to significantly reduce the nation's backlog of 10 million jobs. That backlog consists of 5.3 million lost during the recession and another 4.7 million that needed to have been added just to keep up with the growth of the working-age population since the recession began.
If the American economy continues to produce jobs at the good rate it's maintained over the last three months -- averaging 245,000 per month -- the backlog won't be whittled down for another five years, long after Barack Obama finishes his second term if voters grant him another.
But whether even that good rate continues depends largely on whether consumer demand can be revived. Spending by American consumers is 70 percent of U.S. economic activity. But so far, spending is anemic.
American consumers have replaced worn-out cars and appliances, but little else. They haven't had the dough. Their wages are still falling, adjusted for inflation. The value of their homes - most consumers' single biggest asset -- continues to drop.
Home values are down by an average of a third from their 2006 peak. Consumers understandably feel far poorer as a result. Declining home prices also mean consumers can't use their homes as collateral for new loans, as they did before 2008. And even with low interest rates, refinancing is difficult.
Corporate profits are up but the money isn't flowing to American workers. The ratio of profits to wages is the highest on record -- since the government began keeping track in 1947. Not only has the median wage continued to drop, adjusted for inflation, but a far smaller share of working-age Americans is now employed (58.6 percent) than was employed five years ago (63.3 percent). Today's employment-to-population ratio isn't much higher than it was at its lowest point last summer, when it dropped to 58.2 percent.
The major driver of the U.S. economy over the past several months hasn't been consumer spending. It's been businesses rebuilding depleted inventories. Wholesalers increased their stockpiles again in February, bringing them up almost a quarter from their low in September 2009.
But businesses won't continue to rebuild inventories unless consumers start buying big-time. And consumers won't resume spending as they did before the recession until they're far better off financially. Yet how can they be sufficiently better off when their major asset has shrunk so much and when so few of the economic gains are going to them?
This is the central paradox at the heart of the American economy today. If it's not resolved, the jobs recovery will stall, as it did last spring.
A year ago, remember, we had another three-month run of good job numbers. Last February, March, and April saw net gains of more than 200,000 jobs a month. But that job boomlet abruptly ended.
At the time most observers blamed the stall on external events -- the Japanese earthquake, Europe's gathering debt woes, and higher gas prices. In reality, it stalled because of the shallow pockets of American consumers.
Another stall this time might be blamed on any number of external events -- slower growth in China and India, the unraveling of Europe's debt-crisis deal, and higher gas prices. But if another stall occurs, the real reason will be Americans once again ran out of money.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.