It seems to me…
“A successful economic development strategy must focus on improving the skills of the area’s workforce, reducing the cost of doing business, and making available the resources business needs to compete and thrive in today’s global economy.” ~ Rod Blagojevich.
Though the U.S. economy has essentially recovered from the lingering effects of the 2009 recession, that appearance is slightly deceiving; 63 percent of the population still does not believe it. And the U.S. economy continues to further improve – the normally conservative Federal Reserve Board forecasts U.S. 2014 economic growth to be 3.0-3.5 percent (second quarter 2013 increase was 1.7 percent). This should lead to low unemployment, higher wages, and increased asset values.
The U.S. Labor Department reported payrolls finally have increased above where they were before the financial collapse nearly six years ago. The official unemployment rate is 6.1 percent, within the 6.0 – 6.5 percent range normally considered potentially inflationary, though that official rate does not include those who have stopped looking for work. While the jobs creation rate in the first half of 2014 was the highest in fifteen years, the workforce participation rate, the percentage of people actually in the labor market, currently is at its lowest percentage rate since 1978[i]. Unfortunately, many of the new jobs being created are low-wage or part-time jobs that pay too little to sustain even a modest living standard.
The current labor market is considered to be “tight”; jobs are available but there are insufficient workers with the right skills for which employers are hiring. 83 percent of employers reported having open positions for which they cannot find candidates, a seven-point increase from the past year[ii]. Normally approximately 15 percent of those unemployed have been seeking employment for six months or longer, the rate currently is about 37 percent. Many of those job seekers might never find employment as employers discriminate against the long-term unemployed and the worker’s job skills atrophy – especially given today’s rapidly evolving technology. Continued growth is necessitated to repair labor markets and improve employee incomes which still lag behind 2007 levels.
Several sectors of the economy are leading this improvement[iii]: Manufacturing advances such as robotics, 3-D printing, and other digital technologies in addition to increases in Asian labor costs has encouraged re-shoring of many industries back to the U.S. Total household net worth, primarily due to stock market prices and home values, is higher than in 2007 and last year total household wealth surpassed pre-recession levels.
Economic progress should continue to improve. Retail sales have increased due to consumer debt reductions and increased consumer confidence. Investment in the residential housing market is anticipated to increase by 15-20 percent by 2017. Banking industry balance sheet improvement has allowed banks to resume investing. Increased R&D (research and development) investment has strengthened U.S. technological dominance.
Additionally, crime rates, teen pregnancies, and carbon emissions have declined. Public education ratings have improved. Healthcare inflation rates are the lowest they have been in a half-century[iv].
In the rapidly expanding energy production field, oil and natural gas production has increased dramatically. The U.S. could become the world’s largest producer as early as next year. It is now estimated that we have sufficient natural gas to last 100 years. This is both good news/bad news as natural gas is expected to replace coal for energy production reducing carbon dioxide emissions but slow non-fossil energy development.
Conservatives tend to blame welfare state disincentives for those seemingly trapped in poverty even during times of economic growth. In actuality, low-income workers are working longer hours than they did a generation ago – but their take-home income has not increased. More needs to be done to make the benefits of a stronger economy show up in the wages of the people on the edge of poverty.
As business automation and robotics increases, the labor market becomes increasingly dependent upon higher educational levels of their employees. As demand increases, there is a widening education-dependent differential in lifetime earnings. Both high school graduation and college completion rates have improved substantially as a result of better teacher training and evaluation, better collection and use of student data, curriculum material improvement, and restructuring or closing of underperforming schools.
The remaining biggest challenge is to extend the recovery to all segments of our population, not only to those already wealthy. Median household income remains 8 percent below pre-recession levels; 40 percent of working-age families earn $40,000 or less a year. Employers report difficulty in hiring job seekers with adequate education and/or training.
35.1 percent of Americans have debts and unpaid bills that have been reported to collection agencies[v] for having fallen behind on credit cards, hospital bills, mortgages, auto loans, or student debt. Even past-due gym membership fees or cellphone contracts can end up with a collection agency, potentially hurting credit scores and job prospects.
Stagnant incomes are key to why some parts of the country are struggling to repay their debt. Wages have barely kept up with inflation during the five-year recovery, according to Labor Department figures. Wells Fargo found that after-tax income fell for the bottom 20 percent of earners during the same period.
While the U.S. economy might appear to have fully recovered from the 2009 recession, that recovery still has yet to reach many Americans – especially those in the lower income brackets. More assistance is necessary for those struggling to make ends meet. A good place to start would be to increase educational and training assistance and infrastructure repair. Now if only Congress would agree.
That’s what I think, what about you?
[i] Foroohar, Rana. Job Growth Good; Labor Market Bad, Time, 26 May 2014, p18.
[ii] McCafferty, Dennis. Why Hiring Is Up, but Finding the Right Fit Can Be Hard, Channelinsider, http://www.channelinsider.com/careers/slideshows/why-hiring-is-up-but-finding-the-right-fit-can-be-hard.html/?kc=EWWHNEMNL07302014STR4&dni=149510665&rni=24685478, 28 July 2014.
[iii] Altman, Roger. Why The Economy Could POP!, Time,12 August 2013, pp22-28.
[iv] Altman, Roger. Surprise: The Economy Isn’t As Bad As You Think, Time, 28 July 2014, pp38-42.
[v] Boak, Josh. Study: 35% of Americans Facing Debt Collectors, Time, http://time.com/3050683/study-35-of-americans-facing-debt-collectors/?xid=newsletter-brief, 29 July 2014.