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The Unemployment Rate is an Inadequate Reporter of U.S. Economic Health

According to current economic indicators released by the U.S. Department of Labor, the U.S. economy is booming. Unemployment is at a low level of 4.1 percent while the economy added some 313,000 jobs in February. The blazing economy is so hot the Fed is considering measures to slow it down to prevent a spike in inflation.

Using history as our guide, if these metrics hold, U.S. President Donald Trump should cruise to an easy re-election victory over any Democratic opponent. This is because Americans have repeatedly demonstrated that they believe that their personal economic security is properly reflected in the nation’s unemployment rate and a few other numerical standards periodically released by the government. After all, “It’s the economy, stupid,” as the campaign team of former President Bill Clinton successfully reminded themselves and us while on the campaign trail in 1992.

If you are a Trump supporter this is great news. Donald Trump ran for president as a populist, a champion of the forgotten middle class. He said he alone had the business expertise to fix the economy and create millions of good jobs. You chose him as President because he appeared more genuine than the artificial Hillary Clinton and a more believable savior of the working class. A low unemployment rate and a spike in job creation seemingly affirm the wisdom of your selection.

However, if you are like me you understand that despite Trump’s populist rhetoric he has so far governed like a typical supply-side Republican, one who believes the best way to create broad-based economic prosperity is to enrich the wealthy through tax relief and corporate deregulation in the hope that such enrichment will spur enough job creation and resulting economic growth to solve our socioeconomic problems. For us, the issue is not so much the quantity of jobs the wealthy create but the quality of those jobs, whether or not the jobs pay a living wage. We understand that trickle-down economics has never fulfilled this promise. Instead, it has enriched the top of the economic ladder to the detriment of the middle and lower classes and our democracy.

Today, the middle class, once the heart of the American Dream, is consumed with survival. Trickle-down economics is the thief that stole the dream. By its pro-corporate and pro-wealthy tax and regulatory policies, trickle-down has contributed to the wage compression, purchasing power reduction and resulting shrinkage of the once flush and expanding American middle class. Over the past few decades, the middle class has seen its standard living costs rise, its wages stagnate and its jobs disappear due to technological advancement, globalization in the form of lower labor and operating costs abroad and opportunistic pirate capitalism. See “What Went Wrong: How The 1% Hijacked The American Middle Class….And What Other Countries Got Right” by George R. Tyler, (Benbella Books 2013).

Some in the middle class have fallen victim to the greedy financial engineering of corporate executives sitting atop the companies they work for and opportunistic pirate capitalists from outside the company in the financial industry. In one devastating scenario, trickle-down has encouraged the wealthy power elites who control our corporations to place their personal enrichment above company loyalty and the related protection of workers and their wages. This is because our federal finance laws and regulations allow corporate executive pay packages to be set in such a way as to promote the personal enrichment of executives who can demonstrate profits in the short-term over the next few reporting quarters. Unfortunately, this financial maneuvering has often compromised the long-term financial health of companies. What we have often seen in the longer term is a decline in corporate product and service quality, a resulting decline in corporate profits, a decline in worker job security and stagnation in worker wages. See “What Went Wrong: How The 1% Hijacked The American Middle Class….And What Other Countries Got Right” by George R. Tyler, (Benbella Books 2013); see also “Glass House: The 1% Economy And The Shattering Of The All-American Town” by Brian Alexander (St. Martin’s Press 2017).

These challenges have exponentially increased the competition for most jobs typically staffed by the middle class, making life even more difficult for its members. When between jobs, middle class individuals who lose their jobs can expect a lengthy period of unemployment that can range from several months to a few years. In the interim period of time, they often have to take low-paying jobs to make ends meet while waiting for a solid job offer to come through in their respective field of expertise. Aware of these harsh realities and burdened with stagnant wages required to cover the rising expenses of home mortgages, car notes and school tuition, most middle class individuals would be surprised to know that the government considers them prosperous. They are too busy staying afloat to devote much attention to the accuracy of the government’s economic indicators. This makes them vulnerable to exploitation by the wealthy power elites. I will try to lend them a helping hand.

The economic stress placed on the middle class by trickle-down capitalism has created in most Americans an internal survival mechanism that has compromised our values and caused us to accept standards used by the wealthy power elites to maintain and enhance their wealth. Most Americans have accepted trickle-down economic policies that favor the rich despite the fact that there is little evidence that they have created broad-based prosperity for the rest of us. To the contrary, there is overwhelming evidence that these policies have seriously impoverished Americans stuck in the middle and lower classes. In no area is the influence of the power elites more tragically felt than in our acceptance of the economic indicators the federal government uses to periodically report the health of our national economy.

For decades, familiar economic indicators, such as the unemployment rate, the national interest rate and the nation’s total gross domestic product, have been used by the power elites in the government, the media and the business sector to inform us whether or not we as a nation are doing well. These numbers are used by professionals and politicians in our government to direct fiscal policy, presumably to help as many Americans as possible achieve the American Dream. However, history and present experience clearly inform us that the economic indicators reported by the government are unequal to the task of adequately reporting our true state of economic health. This is because numbers alone could never tell of the real economic misery millions of Americans are always facing in this draconian, trickle-down economy.

For example, during the Reagan and Clinton economic expansions, the government reported to the media historically low unemployment rates and millions of new jobs created. However, as African-American human rights leader Rev. Al Sharpton has noted when lamenting the relative impoverishment of the African-American community even during economic boom times, “We were at full employment during slavery.” This is because the numbers which herald economic expansions such as Reagan’s and Clinton’s do not reflect the suffering millions of Americans are experiencing. Sharpton properly noted that the critical factor which determines economic prosperity is whether a job pays a living wage not the mere possession of a job. Americans who failed to partake in the economic miracles of the 80s and 90s were largely considered losers who must have been at fault for missing the golden opportunities these booms provided.

Today, despite the rosy economic indicators, we know that America’s true state of economic health is poor. In fact, America suffers from the worst wealth and income disparity the world has ever known. Wealth and income disparity denotes the way wealth and income are distributed among the nation’s population. As a result of our government’s long practice of trickle-down economics, the wealthy have gotten much wealthier while the middle and lower classes have gotten much poorer. Since the media has done a good job of reporting data to support this economic disparity, I will only  share one figure with you that I find interesting. According to an income inequality video released by the 2016 presidential campaign of Vermont Senator Bernie Sanders, in a two-year period the wealth of the richest 15 Americans increased by 170 billion dollars. This increase in wealth was greater than the wealth owned by the bottom 40% of Americans. See “Bernie Brief: Income Inequality, Episode 1” (YouTube 2016).

Our severe economic disparity problem has contributed to America’s growing number of socioeconomic problems, including poverty, low wage employment, middle class shrinkage, social class conflict, police misconduct and human-caused climate damage, to name just a few. As a result of this laundry list of socioeconomic problems, most Americans are experiencing varying degrees of suffering. I know this because I have eyes and ears that function well enough to observe the lives of real people. However, this harsh reality is buttressed by numbers. All of the polls that I’ve seen over the past few years that ask Americans whether our country is on the right or wrong track have been answered negatively by double digit margins. For example, the latest Economist / YouGov “Direction of Country” poll revealed the following: Right Direction 36, Wrong Direction 54. So, most Americans are aware that America is beset with serious problems. So, why are we so easy to manipulate? There is a simple answer to this question. In my opinion, most Americans are simply too busy with their own economic survival to effectively identify and contribute to the resolution of our misery-inducing national problems.

The main problem we must solve is our government’s continued implementation of trickle-down economic policies which have led to our enormous wealth and income inequality gap and the socioeconomic problems it has caused. This gap has transformed our once great democracy into a plutonomy with largely symbolic democratic features. For example, let’s take our constitutional right to vote. Americans can still vote and I encourage them to do so. However, the impact of our voting has been significantly weakened by the influx of big money into our political system and law-making apparatus. This is because the conservative majority on the U.S. Supreme Court has recently given the wealthy power elites the right to spend unlimited amounts of money to influence elections and the subsequent making of laws to preserve and enhance their wealth and influence. See Citizens United v. Federal Election Commission, 558 U.S. 310 (2010); see also “Captured: The Corporate Infiltration Of American Democracy” by Senator Sheldon Whitehouse of Rhode Island, (The New Press 2017). Sadly, Lady Liberty, the old, green girl, ain’t what she used to be. So, how do we restore America’s economic health and with it our lost democracy?

The only way we are ever going to restore America’s economic health and our democracy is to end our nation’s long fascination with trickle-down economics and create a moral capitalism that produces broad-based economic prosperity. The way we do that is to concede that the economic indicators we rely on to determine our nation’s economic health and direct public and private action to manage it are inadequate. We must then begin to supplement the economic indicators with serious investigative reporting that leads to an accurate reflection of the nation’s economic health. This will allow us to properly treat what ails America, cure her and restore our once great democracy to its rightful place as the envy of the world. This task starts with an undressing of the principal measure used to set the nation’s economic agenda: the unemployment rate.

Let’s start by disabusing the public of the widely held but erroneous notion that the unemployment rate reflects how many Americans are unemployed. No, this is false. Instead, what the unemployment rate reflects is the share of people who are out of work but actively searching for it at least once within the past four weeks. The rate does not include Americans who are unemployed but who have given up searching for work. If that were not bad enough, the rate does not count temporary workers. In other words, temporary workers who seek full-time work but have not found it are considered employed. The unemployment rate intentionally omits retired people, schoolchildren, and stay-at-home spouses. As you can see the unemployment rate misses a large number of unemployed Americans. This is why it is such an unreliable economic indicator. And, of course, no number could ever reveal the quality of the jobs held by those fortunate Americans who are employed. So, the unemployment rate cannot possibly provide us with an accurate reflection of America’s economic health. (See U.S. Department Of Labor Bureau Of Labor Statistics for the definition of the unemployment rate).

The only way to determine the true state of America’s economic health is to look behind the unemployment rate and thoroughly investigate both the quality of the jobs in our economy and the lives of people who hold them and those searching for them. Such in-depth reporting would allow us to get to the bottom of the public’s skepticism about our country’s direction and allow our leaders to accurately respond to our socioeconomic problems. This task will take conscientious business and political reporters who are willing to look behind the numbers and ask the hard questions.To accomplish this objective, they will have to go out into the field and meet with unemployed job seekers, employed workers and employers from the middle management level to the CEO level. They should be going out to meet with workers and managers every month, but especially close to the release of employment-related economic indicators. In an economy this large it is vital that reporters speak to as many people as possible. The larger the survey sample is the closer we come to accuracy.

Below, I have listed just a few questions reporters should be asking if we are serious about obtaining the true state of our economy.

How many unemployed job seekers are there?

What industries do the unemployed come from?

Which companies do they come from?

What types of jobs did the unemployed lose?

How did they become unemployed?

Do the unemployed workers share enough characteristics to reflect a pattern?

If so, what are the characteristics?

How long have they been unemployed?

How are they making ends meet while unemployed?

How are they searching for work?

How many of the available jobs in our economy pay a living wage?

How many of the available jobs do not pay a living wage?

How many of the available jobs are temporary employment jobs?

What types of jobs are being reported?

What industries do the jobs originate from?

What region of the country are the jobs located in?

Who are the Americans that are employed?

What is the racial and gender breakdown of those employed?

Which companies do the jobs originate from?

How are these companies performing?

What are these companies paying their workers?

What benefits are these companies offering their workers?

What is the CEO to worker pay ratio in the companies?

What are the companies paying their managers?

How committed to the fiscal health of the companies are their directors?

How frequently are wages increased in the companies

How are unions distributed throughout the economy?

Which companies have unions?

Which companies have collective bargaining agreements?

What is the long-term outlook for these jobs?

Will they be replaced by technology in the near future?

Making this change in our economic reporting would serve a much needed public service by educating the public about the true state of our economy. This would act as an effective check against the injustices associated with our current trickle-down capitalist system. It would allow us to properly identify the forgotten Americans the unemployment rate cannot tell us about and report their stories to America.This would allow us to honestly address our socioeconomic problems and resolve them. This is the only way we will ever have a fighting chance at making America great again.

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