The good news in the August employment report is that the five month slide in the level of job creation has ended. The June and July numbers were revised slightly upward and the rate of job growth creation, for at least the time being, has been stabilized. The bad news is that it stabilized at a very low level. To provide some context, the growth in employment in August (which equaled a 0.1 percent total increase in national employment) is less than two-thirds the average rate of monthly job growth over the 25 years prior to the beginning of this administration, including the recessions that began in 1981 and 1990. It is only about half of the monthly rate of job growth that the U.S. experienced in the eight years prior to the beginning of this administration.
What this means is that too little money is flowing into consumer pocket books to maintain the level of demand for goods and services businesses enjoyed last year as a result of the boom in home mortgage refinancing and spiraling government deficits. This will eventually weigh heavily on car sales, home buying and the market for a wide variety of consumer goods.
It also means that the ability of families to improve their living standards will be extremely limited. The Census Department estimates that the U.S. population is growing this year by a rate of about 220,000 a month, or about 50 percent faster than the number of jobs being created. The combination of slow or negative job growth and stagnant wages has resulted in declining family incomes and living standards. Census data released last week indicate that the average income of middle-income families had fallen by more than 2 percent between 2000 and 2003. More reports like the one released by the Labor Department this morning will likely not reverse that trend.
Scott Lilly is senior fellow at the Center for American Progress.