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Nothing speaks more clearly to the sad state of the U.S. labor market than the unbridled enthusiasm that is displayed for a monthly employment report that is no more than average relative to the historical rate of job growth in the U.S. economy and decidedly below normal when compared to periods of economic recovery. The 262,000 jobs created in February equal slightly less that a 0.2 percent increase in the number of Americans working, almost the exact average for monthly job growth over the past 50 years.

The rate of unemployment also rose slightly to 5.4 percent as more American re-entered the labor market. But the rate still does not account for millions of jobless Americans who have given up their efforts to find work. The percentage of adult Americans who either hold or are seeking jobs has fallen from 67.3 percent at the beginning of this decade to 65.8 percent. Had that percentage remained constant, about 3.2 million more Americans would be seeking work and the unemployment rate in February would have totaled 7.4 percent.

The most discouraging aspect of the February employment report was the continued deterioration in the real or inflation adjusted wages of production and non-supervisory workers. This group represents about 80 percent of the American workforce; their hourly earnings fell by about another 4 cents based on the inflation rate of the past year. The real hourly and weekly earnings of these workers is below the level of one year ago, and that is particularly striking in the face of the recently released productivity figures for 2004 indicating that the output per hour worked grew by 4 percent during the period.

These two sets of numbers (hourly wages and hourly output) indicate that workers have too little leverage with employers to win wage increases large enough to match increases in the cost of living. Employers are not only keeping all of the benefits of increased worker output, they are winning wage concessions as well.

This is creating an imbalance between what the nation is able to produce and what it is able to consume, which will inevitably result in an economic downturn. Current government policies appear on almost every front to be encouraging rather than discouraging the growth of this imbalance.

Scott Lilly is a Senior Fellow at the Center for American Progress.

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