One Hard Economic Truth We Need to Address
Barack Obama’s presidential legacy is beginning to congeal. The president, who’s been in office for six years now, has led the nation back from the brink of economic disaster, presiding over the country as the unemployment rate fell back to pre-recession levels, the stock market recorded gains, and things more or less returned to a state of stability. Obama has no more campaigns to run — after all, he won them both — yet there’s still one big issue that’s yet to be successfully and decisively dealt with by this administration, and that’s inequality.
The resurgence of American industry and business over the past six years has brought back the employment opportunities that are paramount to economic stability in this country. People have gone back to work, but at the same time wages have stagnated and many Americans have lost economic mobility.
One way that have seen this actually manifest is in the fact that nearly all economic gains since Obama has taken office have gone to the wealthiest Americans. This has resulted in expanding global inequality, and has left many wondering why we’re not seeing a shared recovery. Though the answer is complicated, it can be summed up by a pretty stark statistic from My Budget 360, which reports that a staggering 44% of the jobs added since the recession ended pay $10 or less per hour. The data, which was supplied by the National Employment Law Project, shows that in contrast to that 44% figure, 26% of new jobs have been added at the mid-level salary range, and 30% in higher-wage industries.
While it’s a good sign that there has been employment growth in both the mid and high-level salary ranges, the over-dependence on job growth in low-paying industries is the main issue and a big reason why we haven’t seen any substantial wage growth or shared prosperity.
Again, the Obama administration’s main goal when he entered office was to get people back to work any way that they could. It may have been assumed that once the jobs returned, the middle and lower classes would be able to find their footing on the economic step ladder. Now that they have seemingly attained the goal of getting companies hiring again, the second part has evidently not manifested as a result. That’s not to say that this was Obama’s plan along, however, and it’s likely that things could improve with more time.
But even as legislators, workers, and the business community slug it out over policy measures like minimum wage increases and health care initiatives, inflation is another problem nipping at the heels of low-wage workers. And when you combine many of these factors together, we get to the heart of the matter: Despite all the economic progress made under Obama’s watch, how much better off is the average American?
If we assume that the average American is a member of the middle class, it’s hard to tell. They are the demographic that was hit very hard by the financial crisis and subsequent recession, and they are also the individuals who are having to accept jobs that are returning at lower wage levels, as we’re seeing from the NELP’s data. What we have lived through has been an economic expansion and recovery, that part is true. But it’s been a low-wage recovery, and that is one of the things that could be generating resentment among Americans against the administration.
While the gains in lower-wage industries have given the sparkling impression that the economy is back on its feet, it doesn’t represent an entirely accurate portrait of what’s going on. “During the labor market downturn (measured from January 2008 to February 2010), employment losses occurred throughout the economy, but were concentrated in mid-wage and higher-wage industries,” the NELP said regarding its report issued last year. “By contrast, during the recovery (measured from February 2010 to February 2014), employment gains have been concentrated in lower-wage industries.”
Striking at the heart of the issue, the NELP says that “today, there are nearly two million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries.”
Those numbers, right there, are what we need to be worried about. In order to see a full recovery, the trend the NELP describes needs to be reversed.
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