Today’s Bureau of Labor Statistics job report – 173,000 jobs created in August with headline unemployment edging down to 5.1 percent – is strong enough to stoke the noisy debate over whether the Federal Reserve should begin to raise interest rates despite the turmoil in global markets.
The effects of what the Economist calls “The Great Fall of China,” the stock market and commodity price declines, Canada’s near recession and Europe’s troubles are not yet much in evidence in the August job figures (although the decline in manufacturing jobs should be a red flag for what may be coming).
Far more telling than the monthly jobs report is a study released this week by the National Employment Law Project. It detailed the inflation-adjusted decline in hourly wages across the economy during the so-called “recovery” from the Great Recession. Hourly wages have declined at every income level, with the lowest-wage workers getting hit the worst. Real median hourly wages declined by 4 percent from 2009 to 2014. The caring and cleaning professions fared worst – janitors down 6.6 percent, food preparation workers down 7.7 percent, restaurant workers and cooks down 8.9 percent. As the NELP report notes, these wages are declining from already low levels.
The furor around the Federal Reserve’s September meeting is bizarre given this reality. The argument is whether the least democratic economic institution should raise interest rates, held near zero since the Great Recession, by one quarter of one percent. Will the gesture reassure speculators that the Fed thinks the economy is strong or spark a stock market rout?
All this is testament to how distorted our economic debate is.
Attention should be focused on our elected representatives as Congress reconvenes next week. They should pass a budget for the next fiscal year that begins in October – or at least some authority to keep the government open. Our representatives should be arguing about the size of a major initiative to rebuild the country and put people to work. They should be dealing with the growing burden of student debt, now over $1.3 trillion. They should be creating a jobs guarantee for the young, targeted on our cities, so we don’t simply discard a generation of young African Americans and Latinos. They should be pushing the president to give preference to good jobs employers in federal contracting, putting government on the side of companies that share the rewards of growth with their workers.
Instead, the Congress will focus on how much to squeeze federal spending, and whether to shut down the government in the fight over Planned Parenthood. The Republican presidential debate centers on building walls on our borders and the human rights nightmare of booting out 11 million people from our country. The Democratic presidential candidates are overshadowed, in part because the head of the Democratic National Committee apparently decided that the party’s front-runner shouldn’t be taxed with debating her challengers too often.
Wages are falling. Inequality is getting worse. The hopes of a generation of young people of color are getting smashed. College graduates are buckling under the weight of student debts. Our infrastructure is so decrepit that it poses an increasing threat not simply to economic efficiency but to lives and health. And the economic debate is focused on the September meeting of the Federal Reserve’s Open Market Committee and whether it will hike short-term interest rates by 0.25 percent. No wonder Americans are increasingly disgusted with politics as usual.