Despite sitting on mountains of cash, U.S. employers are not hiring. In January, employment grew by only 0.1 percent while average hours worked declined by 0.2 percent. Total hours worked by the American labor force declined by 8.3 million. The rate of unemployment declined by two-tenths of one percent as more than 200,000 unemployed workers gave up their job search.
Continuing productivity growth is allowing U.S. businesses to expand production without hiring additional employees. Nearly all of the growth in corporate revenues is being held as profits. In January, average hourly earnings increased at an annual rate of less than 2.3 percent, or below the anticipated annual increase in consumer prices. Weekly earnings fell by $0.57. We are steadily headed toward an economy in which consumers will not have the purchasing power to sustain economic growth.
Corporate financial officers are refusing to invest their profits to further boost capacity, and for good reason. The long-term prospect for corporate sales is not bright, and policymakers in Washington need to look at policies that will provide a needed boost to employment, wages and consumer pocketbooks.
It should also be noted that the January employment level of 132,573,000 was 119,000 (less than one-tenth of one percent) above the level of January 2001 when President Bush first took office. Total employment did not decline during his first four-year term as some observers had predicted, but it was still the worst performance for the job market during a four-year term since Herbert Hoover's term as president from 1929 to 1933. To have avoided the worst record of any of the 18 administrations since Hoover left office, the economy under the Bush administration would have had to produce almost exactly 2 million additional jobs during the last four years. The previous worst job growth during a four-year administration was the second Eisenhower administration, during which employment grew by 1.6 percent between January 1957 and January 1961.
Scott Lilly is a Senior Fellow at the Center for American Progress.