It’s all going according to plan, at least as mainstream economists and politicians see things. Private enterprises, both large and small, on Main Street and Wall Street, were given every condition to lead the economic recovery from the spectacular crash of 2007-08.*
And, according to today’s job report, it worked: the official unemployment fell in May to 4.7 percent, the lowest it’s been since November 2007. That’s basically the full-employment target they’ve been aiming at since the recovery began.
But from the perspective of people who actually work for a living, the situation doesn’t appear as rosy. They’ve been the victims of the plan. They know the only reason the official unemployment rate has dropped is because many workers have dropped out of the labor force (technically, the civilian labor force participation rate decreased by 0.2 percentage point to 62.6 percent). That still left 7.4 million workers who wanted a job but couldn’t find one. In addition, the number of persons employed part time for economic reasons (often referred to as involuntary part-time workers) increased by 468,000 to 6.4 million, and another 1.7 million people remained marginally attached to the labor force (meaning they were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months).
The result was that workers (production and nonsupervisory employees) have seen their incomes barely budge: their hourly wages only increased by 3 cents (to $21.49), while their weekly earnings only rose by 1 dollar (to $722.06). In comparison to a year ago, both hourly wages and weekly earnings have increased by a meager 2.4 percent.
As I explained a month ago, that’s exactly how the reserve army works: even as the official unemployment rate falls, workers’ wages continue to stagnate and their employers’ profits continue to grow.
Exactly, it would seem, according to plan.
*A recovery from the crash that the same private sector created, lest we forget.