(EDITOR’S NOTE, 10/5/18, 12:01 PM ET: This editorial, originally written in June of 2018, has been updated with data from the September 2018 jobs report.)
There’s been a lot of celebrating in the news media about the latest jobs report. But the media’s surface coverage of the unemployment rate fails to include the daily struggle of millions of working class Americans.
In a healthy economy in which one job can provide for a family and meet basic living expenses, a 3.7 percent unemployment rate would certainly be fantastic economic news. As ABC News reported, the unemployment rate hasn’t been this low in 49 years. September’s unemployment rate is just two-tenths of a point higher than the 3.5 percent unemployment rate recorded in 1969, when the American auto industry was at its peak.
However, simply taking the Bureau of Labor Statistics’ (BLS) jobs numbers at face value without adding in the proper context of stagnant wages and rising costs of living is ignorant at best, and intentionally deceptive at worst. For example, while the federal minimum wage remains a paltry $7.25/hour, the minimum wage would actually be $16/hour today had it risen at the same rate as the cost of living from 1968 to 2018, according to Andrew Pacitti, an assistant professor of economics at Siena College. And had the minimum wage grown at the same rate as worker productivity, it would be approximately $22/hour.
In late May, the United Way’s ALICE Project (Asset Limited, Income Constrained, Employed) project found that approximately 43 percent of the U.S. population — or 51 million American households — are unable to afford basic necessities like housing, food, healthcare, transportation, communications, and child care with their current monthly income. And last year, 44 percent of Americans say they would be unable to cover an unexpected $400 expense — say, an emergency room visit or a broken alternator — without having to borrow from someone or sell their possessions.
This leads many Americans to work multiple jobs out of necessity. BLS data shows that in September of 2018, more than 7.6 million Americans, or 4.9 percent of the workforce, maintained at least two jobs. Of that 7.6 million, more than four million are having to work a part-time second job in addition to a primary full-time job. Approximately 331,000 Americans worked two full-time jobs last month. Data shows that even though the unemployment rate has hit an 49-year-low, workers’ share of corporate profits is still lower than it was during the Great Recession:
Economists have, in the recent past, cast doubt on glowing jobs numbers given the harsh reality millions of struggling Americans face when attempting to reconcile stangant wages with rising costs of living. In August of 2017, macroeconomic consultant Komal Sri-Kumar penned an op-ed for Business Insider cautioning Americans to withhold their optimism about a July 2017 jobs report that showed the unemployment rate had hit a 16-year low.
Sri-Kumar argued that even though the economy had technically recovered, the “recovery” applied almost exclusively to investors, rather than typical wage earners.
“At the conclusion of the eighth year of economic recovery… wages are still increasing at an anemic 2.5% annual pace, indicating a mere 0.9% rise in inflation-adjusted terms. By comparison, real GDP has been rising at around 2% over the past year, suggesting a distribution of income away from wage earners toward those getting their return from capital,” Sri-Kumar wrote.
“Independently, a measure of income inequality called the Gini coefficient confirms that the US income distribution has become more unequal since 2009, and that the United States is now one of the most inequitable among the developed economies,” he continued. “Simply put, a quintupling of the Federal Reserve’s balance sheet, and the maintenance of near-zero interest rates for years, has favored equity investors over wage earners.”
While it’s normally a good and decent thing for the media to celebrate a low unemployment rate, the media must also be diligent in reminding readers, listeners, and viewers that we live in an economy where a massive portion of the labor force lives just one $400 emergency expense away from having to go into debt or sell off their possessions. When new jobs numbers come out, struggling Americans deserve more from the Fourth Estate than rose-colored glasses.