The Daily Beast
By, Zachary Karabell
August 3, 2012
Friday’s jobs report was immediately heralded as a strong rebound from months of weak employment growth. With the jobless rate at 8.3 percent, barely changed from 8.2 percent last month, financial markets, ever fickle and always flighty, staged a relief rally after a week of disappointments that the central banks of the world were not swooping in cavalry-like to the rescue. Yet what is most striking about this report is how truly static the job picture in the United States is overall and how that stasis masks the American economic system’s continued, relentless transformation—which has been going on for years.
One way of looking at these reports is to say that as blah as they’ve been, they show employment growth every month, which is not enough to bring down the unemployment rate but is enough to justify the idea that we are in the midst of what my colleague Dan Gross calls a “conservative recovery.” Another way, and we will surely hear this from Mitt Romney and a host of Republicans in the coming weeks, is that we are in the midst of a “non-recovery” that is in imminent danger of slipping back into recession and may already have.
What you will not hear during the campaign season is that we are in the middle of a generational shift that was dramatically exposed by the financial crisis of 2008-09 but which was not caused by it. As anyone who looks at wage figures knows, the wages of “average” Americans ceased growing sometime in the mid-1980s. Of course, averages always lie, in that you can find many millions who thrived during these decades and many millions whose standards of living decreased appreciably. Wage numbers also say little about the cost of goods and their quality; a car or refrigerator today is loaded with electronics—ice makers, satellite radio—that make them more efficient and elaborate. TVs and many home goods cost much less. Even so, it’s unequivocal that system-wide, the U.S. economy stopped being an engine of wage growth for many in the middle class 30 years ago.
As these jobs reports make clear, however, even there it isn’t so simple—and that very lack of simplicity is why we aren’t taking about it in the election silly season or in most forums that demand sound bites. For the college-educated, wage growth has been decent and unemployment not a major problem. College-educated people have an unemployment rate nationally of 4.1 percent, and between 1989 and 2010, those with a college degree saw wage growth of nearly 20 percent. So, for the past 30 years, those who don’t have a college degree have fallen further and further behind those who do. What happened in 2008-09 is that people could no longer use cheap credit and loads of debt to close the gap between the standard of living they needed and wanted, and the income they were earning. That was compounded by the dual forces of globalization of manufacturing and technology, both of which put downward pressure on wages and on the number of jobs in heavy industry. The final nail was the collapse of construction jobs once the housing bubble imploded.