Today’s Wall Street Journal has a story “Job Gap Widens in Uneven Recovery”, which shows how unbalanced the economic recovery is. For workers aged 25 and older, unemployment is only 6%, compared to the overall unemployment rate of 7.3%. But for the young, ages 16 – 24, unemployment is 15%. Since the end of the recession in June 2009, wages have risen by 12% for the highest paid 25% of all workers. For the lowest paid 25%, wages have only risen by 6% over this time period.
“Households earning $50,000 or more have become steadily more confident over the past year and a half. Among lower income households, confidence has stagnated. The gap in confidence between the two groups is near its widest ever. That isn’t only bad for those being left behind. It’s also hurting the broader recovery, because it means families are able to spend only on essential items. Consumer spending rose just .1% in September 2013, after adjusting for inflation.”
Unfortunately, this data is entirely consistent with other gloomy economic trends which I have been reporting on recently such as the threat of technology to the middle class, the increased competition from globalization, and the shrinking size of the labor pool because of baby boomer retirements.
The New York Times has a running series of articles on “The Great Divide” and how to address it. Here is a clear cut example of this divide: how older, better trained and more affluent Americans are recovering from the recent recession more quickly than the less well off. This evident unfairness is damaging to the health of our society. The question is how do we address it in an effective manner?
The basic problem is the overall slow growth of the economy, about 2% of GDP per year, since the recession ended in June 2009. There are many things that policy makers can do to speed up this growth if they were only able to set aside ideological differences. The best single action by far is tax reform, for both individuals and corporations, lowering overall rates in exchange for reducing deductions and loopholes which primarily benefit the wealthy.
Here is yet another reason why it is so important to speed up the growth of our economy. How exasperating that our national leaders cannot figure out a way to come to together and get this done!