Job concerns this Labor Day
BY TERRY SAVAGE email@example.com Sep 1, 2008
Updated: May 3, 2013 12:14PM
Labor Day is the day we take a break from our labor to honor those who work. The first Labor Day holiday was celebrated Tuesday, Sept. 5, 1882, in New York City, a celebration that was created by the Central Labor Union. Two years later, the date was fixed as the first Monday in September.
As we celebrate Labor Day and the traditional end of summer, this year there's a national concern about jobs -- about the number of jobs, the kinds of jobs, the right policies for creation of jobs.
Not enough people in America can find the kind of rewarding (personally and financially) work they seek. Our unemployment rate stands at 5.7 percent -- far from the breadlines of the Great Depression, or even the double-digit rates of the early 1980s when much of our industrial economy went through an upheaval. (We'll get an update on those unemployment numbers Friday.)
That 5.7 percent unemployment statistic in this huge economy represents 8.8 million people who say they are looking for work but can't find a job. That doesn't include the millions who have given up the job search -- an estimated 1.6 million "discouraged workers."
Nor does it include the "underemployed" -- those working in part-time positions because they cannot find full-time jobs or because their hours were cut back. In July, according to the Bureau of Labor Statistics, the number of people who worked part time for economic reasons rose by 308,000, to 5.7 million.
All of those economic statistics mean little, of course, if it is you or someone in your family who can't find a job, or has taken a lower-pay, fewer-hours position to try to make the mortgage payment or put food on the table and gas in the car.
Initial claims for state unemployment benefits declined to "only" 425,000 last week, down 10,000 from the previous week. Is the glass half full, or half empty? It was the sixth straight week that more than 400,000 people filed claims.
The good news?
But there are some positive signs for the economy. Growth in the second quarter was revised upward last week -- to 3.3 percent, from an anemic 0.9 percent in the first quarter. The gains surprised many economists whose predictions averaged a still-healthy 2.7 percent gain.
Why the boomlet? Credit those "economic stimulus checks," which sent $90 billion into the economy, spurring consumer spending. And the weak dollar spurred exports in the second quarter.
Still, Americans are complaining about the jobs they do have -- charging that the "best" jobs are being sent overseas to those who will demand less pay and benefits. It's true that those who are working "full time" are working slightly fewer hours. In July, the average workweek for production and non-supervisory workers on private non-farm payrolls fell by 0.1 hour to 33.6 hours, seasonally adjusted.
And workers are making slightly more money -- but not enough to keep up with the current rate of inflation. Again, from the BLS: "Over the past 12 months, average hourly earnings increased by 3.4 percent and average weekly earnings rose by 2.8 percent." But the Consumer Price Index was 5.6 percent higher this July than in July 2007.
Good numbers, bad policy
Today, we have economic growth based on government spending and a falling dollar that boosts exports. Those ingredients make for good numbers but bad policy. Spending money we don't have by sending checks to consumers only increases our national debt, triggering fears that we'll "print" more money, which is inflationary and weakens the dollar. That dollar weakness might spur the growth of exports, but it raises the price of everything we import -- including oil.
Research shows small businesses created more new jobs, on net, than larger companies in recent years. But many of those small businesses can't afford the health benefits provided by larger firms. So if you start your own small business and grow wealth -- or hire other people to work for you, or purchase supplies from a small business -- you're boosting the economy.
But job growth in small business also means that a shift in the way we provide both health and retirement benefits is necessary. Individual retirement accounts have taken up some of the burden that was once provided by corporate pensions. But it is undeniable that the employer-linked health care model that worked so well in a different era must now be replaced.
The issue facing Americans -- and the political candidates in this election season -- is how to recognize the changing profile of labor in this country. The challenge is how to provide benefits and incentives that keep the economy and the job market growing, instead of making America noncompetitive in a truly global marketplace.
That's the central economic issue about to be debated on a national stage. This is labor's day. We don't want to compete for a share of the least-productive jobs with the rest of the world. And we can't build a wall to keep the best jobs from moving away.
America always has created the right incentives to keep growing new industries and better jobs and a better standard of living for our citizens. That's our challenge today. And that's the Savage Truth.
Terry Savage is a registered investment adviser. Distributed by Creators Syndicate. Copyright Terry Savage Productions Ltd.