An Ordinary Citizen Trying to Understand the Economy

That ordinary citizen is me. We keep hearing that the economy is on the upswing. Bush wants this badly because it will get him more votes. So he will make glowing statements from now until the election. It is up to us to sort out the truth from the illusion, or better yet, deception. That is a daunting task for someone like me who has no background in economics. I don't understand all the statistics and the big words that experts use. So how do we ordinary citizens figure it all out? I would like to believe that the economy really is improving. Most people would agree that a strong economy is good. But are we in good shape right now as Bush proclaims? I did a little investigating, and here are a few things I found out.

1. The recent economic recovery that we are hearing about has been a "job-less" one. As the economy has grown, the labor market has been shrinking. This is a first since the Great Depression.

2. This recovery is "upside down." Profits are soaring to record heights while income growth is extremely low.

3. There is a growing gap between supply and demand. For the first time in history, the share of additional income that has gone to profits (that's the rich guy who owns the store) is larger than the share of additional income that goes to employee wages and benefits. In a healthy recovery, the employee share is 3-4 times higher than the share that goes to profits for the company.

4. Although corporations are making money hand over fist, they are not hiring more employees. Compared to a reasonable standard of growth, the economy is millions of jobs short of what would be expected.

5. Since wages are not increasing, families are forced to borrow to make ends meet. You know- credit cards, loans, refinancing the mortgage. But families cannot continue to borrow indefinitely. We all know that is the truth. Most of us have a lot of experience in that area. A debt-driven recovery is unsustainable.

6. The massive tax cuts of the Bush administration have not been sufficient to counter the effects of this job-less recovery. The tax cuts did not stimulate the economy because they were given to the rich. What did you do with your $200?

7. The rise in corporate profits has not resulted in new jobs. The economy actually had 2-5 million fewer jobs in early 2004 than would be expected.

8. Much of the growth we hear about has been the result of a spurt in consumer activity, largely accomplished by growing indebtedness. I think I am correct in saying that bankruptcies are at an all time high. We can understand why since the many families are in dire straits and resorting to use of credit and loans. This cannot be sustained.

9. George Bush would like a few more months of so-called economic growth so he can be elected, but then what? America faces a lot more crucial issues than just who will be president, although I shudder to think what would happen if George gets another 4 years. While we throw a billion dollars a week at Iraq, we are urged to focus away from the economy even though the economy impacts us at the very core. Our domestic issues get lost in the shuffle, and that is just what Karl Rove wants.

10. What can be done? A few suggestions include: extending unemployment benefits, improving existing unemployment benefits, higher federal and state minimum wages, and stronger labor law to raise the chance of unionization.

How did I do? I only wrote about those things I could understand a little from my "boomer" vantage point. Isn't it true that most of us mortals are just trying to pay our bills, have health care, and save for retirement? We don't have expensive tastes for the most part. And I am talking about the middle class. What about those who are less fortunate- the poor, the umemployed, those who can't afford health insurance?

So here's a recap: Corporate America is rolling in dough. They have the highest level of cash since 1966. But they aren't hiring or investing because demand is down. They need more customers. But this will only happen if we consumers have real money to spend. And for that we need jobs. Many of our good-paying jobs are disappearing and leaving our borders for overseas. The jobs Bush talks about are low-paying.

The United States needs faster income growth for working families and more employment- MORE JOBS! So the next time a government official or a congress person tells us how things are getting so much better, let's check them out carefully. Where are the jobs? Without jobs, the economy will not be OK over the long term. And we are in this for the long term. Life will go on after November 2nd.

PS John Kerry addressed the minimum wage issue last week. He will raise the minimum wage to $7 when he becomes our next president.

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