Job Growth Slow, Minimum Wage Hike Unlikely, But Here’s the Upshot
There is good news and bad news on the economic front in America — like a sore burn and a soothing balm. Let’s break it down into injury and ointment, but be prepared for an overabundance of bad versus the good. The upshot is that confidence in the job market is improving, even with last month’s dip in hiring growth. The bad news is that last month did have decreased growth, and Americans in general are still struggling to make ends meet.
The Bad News: August Labor Market Report
The latest report from the U.S. Department of Labor put job growth at a reduced rate in August, a slow down that has Republicans predicting Obama-led disaster while experts caution against panic. “The White House can continue to hype the recovery all it wants. The fact is that today’s disappointing jobs report represents a step backwards,” said Representative Kevin Brady (R-Tex.) to The Washington Post.
Gus Faucher, senior economist at PNC Financial Services Group, looked on the dip with more leniency, according to the Los Angeles Times. “I don’t want to sugarcoat it. This wasn’t a good report. But I do think the economy is better than this and the labor market is better than this,” said Faucher.
The setback may be temporary and brief; a mere month slump in the generally positive growth this year, but still, only 142,000 jobs were added to the market in August, and change to the unemployment rate was negligible — remaining nearly flat at 6.1 percent. The number of unemployed individuals also remained largely unchanged at 9.6 million.
More Bad News: Americans Are “Falling Behind”
A recent study from Pew Research said that more than half of respondents report they feel their family is “falling behind” the cost of living with their total incomes. This is predictably most true of those in the lowest income brackets. The 56 percent who say they are falling behind constitutes only a very minor improvement from the 57 percent who said the same during the financial crash on Wall Street in 2008. Add to that the 67 percent who say “the economy is recovering, but not so strongly,” and the 24 percent who say the economy isn’t recovering at all, and public perception looks rather grim. Pew Researchreports that an overwhelming majority — 79 percent — say that economic conditions in the United States are fair or poor.
Only 21 percent label economic conditions in the U.S. as either good or excellent, though that’s up slightly from 16 percent earlier in 2014. Future outlook is similarly pessimistic; 54 percent say they do not think economic conditions will change in the next year, while 22 percent think they’ll remain static. When public opinion remains pessimistic, you see a marked affect on spending and investing, meaning the U.S. remains in somewhat of a perception rut — not unfairly, perhaps. The negativity likely also reflects the daily struggles of many facing financial instability and a distinct lack of job security.
Yet Still More Bad News: Minimum Wage Unlikely to Pass in Congress
One solution to the cost of living increase and the difficulty facing lower earners is a minimum wage increase. The possibility of pay raise legislation has gained a great deal of attention — but very little traction — at the congressional level, and it’s an item the Obama Administration is bringing back to the forefront now that Congress has returned from break.
The White House Weekly Address this week was heavily focused on the minimum wage. “Folks, it’s long past due to increase the minimum wage that will lift millions of hardworking families out of poverty and in the process produce a ripple effect that boosts wages for the middle class and spurs economic growth for the United States of America,” said Vice President Joe Biden on Saturday, basically a repeat of previous statements from the president.
Meanwhile, protest over wages in fast-food have brought increased attention to the industry and to the wage debate, but little movement on the business end. Unfortunately, this isn’t new rhetoric, and so far Congress has been sharply divided on the minimum wage. Many argue it would have unintended affects on businesses that can’t afford to up pay in a blanket increase. Some argue that the wage increase would fail to target those who need it the most and that it would hurt the economy, and businesses would suffer. On the other side of the aisle, politicians argue increased spending would help to buoy business as Americans monetary stability improves.
The Good News: Passable EITC and State Action
The legislature isn’t the only one making efforts to give Americans a wage increase. So far, 38 states introduced minimum wage increases in their legislatures and 34 states considered doing so, according to the National Conference of State Legislatures. Of those, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Rhode Island, Vermont, West Virginia, and D.C. all passed pay increases this year. President Barack Obama gave federal employees pay raise, as well as restructuring overtime rules.
What’s more, even if states don’t push for high wages, it’s possible Congress will manage to scrape together enough votes for an Earned Income Tax Credit. The EITC is basically additional money from the IRS that could be more closely tied to minimum wage workers, and those workers under the age of 25 in the low pay range — much of the fast-food employment group in a nutshell. Such a move would potentially have the support of both parties, but with midterms looming, major bills may have to wait.
Finally, Pew Research’s polls weren’t entirely on the negative side. Respondents did show an increase in job availability, with 33 percent saying plenty of job were available compared to 22 percent in 2012 and 10 percent in 2010. The numbers still aren’t good, with 58 percent saying that jobs are difficult to find, but they aren’t as disastrously poor as they have been in the past, and they’ve continued to rise despite job growth stagnation last month. Similarly, though economic ratings were not good, they did show some improvement, increasing five percentage points to 21 percent from 16 percent saying that the economy is good or excellent. Yes, the positive side is only slightly positive, but there are some bright spots, and next month may show greater improvement — especially if Congress manages to make progress on aid for the middle and lower socioeconomic groups struggling at present.
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