Reports highlight need for more government action on slumping economy, wages


As we leave Labor Day weekend, it is very appropriate to look at how the recession has not only left many people unemployed, but it also flattened wages. The income gap between rich and poor has been widening. Meanwhile, there is growing concern that the nation could be heading for a double-dip recession, which would be most harmful for lower-wage workers who have the least financial cushion. A recent series of reports highlight the need for additional federal and state action to create more and better-paying jobs.

An August 27 commentary from the Center on Budget and Policy Priority says the latest Gross Domestic Product numbers show that “the economy is growing far too slowly to reduce unemployment and it is still too early to declare that the recovery is on solid footing. The recovery could definitely use a boost from further stimulus.”

That same day, the National Employment Law Project (NELP) released a report titled: “Where the Jobs are: A First Look at Private Industry Job Growth and Wages in 2010.” It concludes that post-recession job growth is uneven, and the growth occupations include many front-line, non-college degree jobs that tend to have lower wages. The report found that, although the private sector had added 630,000 jobs in the past seven months:

Net job losses in 2008-09 were widely distributed and included significant losses in higher-wage industries; by contrast, net job growth has been driven disproportionately by industries with median wages below $15 and hour.

On August 31, the Economic Policy Institute (EPI) issued a report called “Recession hits workers’ paychecks,” which not surprisingly found that the recession slowed wage growth. EPI’s unpublished state-level data showed that Minnesota’s median weekly wages remained essentially flat from the second quarter of 2009 to 2010, growing by less than one percent.

“The damaging effects of high unemployment are not just felt by the workers (and the families of workers) who have lost jobs,” EPI’s report said. “Workers who have kept their jobs or found new work during this downturn have also suffered from a broad-based collapse of wage growth over the last two years.”

This recent trend will not help workers overcome the widening income gap in the United States, an issue that predates the recession. The EPI report notes that from 1989-2007, 56 percent of all U.S. income growth went to the top one percent of households. The Center on Budget and Policy Priorities echoes that trend in a recent report which finds that the income gap between the richest one percent and most other Americans has more than tripled over the last three decades.

One key approach to putting the economy on more solid footing is additional support to those most affected by the economic downturn, such as increased unemployment or food stamp benefits. Such policies not only help those most in need, but also result in increased consumer spending which boosts the economy.

Second, as state and national leaders look to create jobs, they need to pay attention to fostering good quality jobs, those that pay decent wages. Any job creation program should be evaluated not just on numbers of jobs, but also on wages those jobs pay.