The April jobs report released today was good enough to prompt some in Wall Street and Washington to breathe a sigh of relief, but it is not nearly good enough to meet the standard of sustainable job and wage growth, and shared prosperity.
As has been true for the past few months, you have to get below the sunny top lines to get the real story. Yes, the economy added 223,000 jobs in April, in line with consensus expectations from economists. Yes, the unemployment rate is down to 5.4 percent, a rate that has not been seen since May 2008.
But a larger measure of unemployment that includes people who want to work but weren’t actively looking in the past month and people who are working part-time when they want full-time work is at 10.8 percent. Also telling is that wage growth in April was only at 0.1 percent, growing annually at 2.2 percent. Those are clear signs that considerable labor slack remains in the market.
There are succinct messages to both the Federal Reserve and to Congress.
This jobs report tells the Fed that it dare not raise interest rates right now, or at any time in the near future. The conventional wisdom will say that a 5.4 percent unemployment rate is a flashing yellow light indicating inflation is around the corner. Nonsense. If anything, economic growth remains slow, and even if we’re edging closer to the Fed’s inflation target of 2 percent, there is a strong case to be made that a 2 percent inflation target is actually too low in today’s economic conditions.
To Congress, this report underscores once again the folly of the Republican policies of austerity. Earlier this week the House and Senate passed a budget resolution that would force severe cuts in domestic spending and push toward a balanced budget within 10 years. The truth is, as my colleague Bill Scher explained, that the balanced budget promise is illusory. But it is also policy madness, for it misses the most important imbalance in today’s economy: the fact that the gains of whatever meager recovery we have experienced in the past few years have been concentrated in the hands of a few million- and billionaires.
Nonetheless, over the next few months Republican presidential candidates will tout their commitment to “balancing” the federal budget, with a sprinkling of populist rhetoric to acknowledge the extreme wealth concentration that has become impossible to ignore. They will blame the Obama administration for the weak recovery and say that a succeeding administration pursuing progressive policies will only make things worse. We know the reality is that the weak recovery exists because progressive economic remedies haven’t been given a chance to succeed by the conservative obstructionists in Congress. We have to continue to press the case that it is conservative austerity that is keeping people unemployed and employed people’s wages down.