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On the Economy, Listen To The Voters

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On Sunday, the New York Times suggested that Americans aren't as optimistic about the economy as they should be.

"After enduring three years of a deteriorating job market and one economic false start after another, Americans finally have reason to think that the long slump of the early 21st century has ended. Employers are hiring again. The stock market has risen more than 40 percent since early last year.

"And how have the American people celebrated? By becoming a lot grumpier about the economy."

That was just the latest of a series of mainstream press reports pushing a conservative message that George Bush's economy is doing better than people think.

And in many cases instead of exploring what legitimate reasons voters may have for being dissatisfied, reporters are assuming voters are too focused on Iraq or simply reluctant to believe the good news. Take a look at this unbroken chorus:

For example, on June 5, the San Francisco Chronicle reported:

A string of very strong job growth numbers — totaling nearly 1 million in just the last three months — appears to be sustainable through November, but hasn't broken through the bad news from Iraq to give the expected lift to President Bush's re-election campaign, economists and political analysts said."

The June 10 Washington Post put a sharper point on it:

"The nation's economy is growing smartly, wages have begun to rise, and employers have added more than 1.4 million jobs to their payrolls in the past nine months. Yet voters continue to give President Bush poor ratings on his handling of the economy.

"It may sound baffling but interviews with voters, pollsters and economists suggest Bush's stubborn difficulties on domestic policy boil down to an obvious problem abroad."

The next day, the Associated Press made the same case:

"The U.S. economy has gained about 1.2 million jobs in the last six months, but word hasn't trickled down to most Americans, according to voters in a survey by The Associated Press.

"They're too focused on the war in Iraq and other news – and too busy trying to make ends meet – to notice the upbeat economic development. Few voters seem to be giving President Bush credit for the new jobs or other signs of recovery."

And on June 14, CNN political analyst Bill Schneider chimed in:

"Here's a little secret: the nation's economy is actually doing very well. President Bush has been trying to spread the word…the administration's projection of 2.6 million new jobs this year, a figure that was widely ridiculed a few months ago, now looks too low. Are happy times here again? Not if you ask the people who matter, the voters…There's always a time lag between statistics and perceptions."

These mainstream outlets that point the finger at voters' skepticism are picking up an argument pushed by some conservatives who want people to think the current state of Bush's economy is worth getting excited about.

Yet what is receiving almost no attention from those pontificating on the economy is the nature of the growth they so admire. In fact, it demonstrates a massive growth discrepancy between corporate profits and wages. As the Economic Policy Institute calculated last month, corporate profits have grown by 62 percent since the first quarter of 2001, but "labor compensation" — which includes paychecks and benefits — grew only 2.8 percent, and "private wage and salary income" fell by 0.6 percent.

In turn, the EPI study concludes:

"Most of this growth in total labor compensation has been accounted for by rising non-wage payments, like health care and pension benefits. Rapidly rising health care costs and pension funding requirements imply that these higher benefit payments are not translating into increased living standards for workers, but are rather just covering the higher costs of health care and pension funding."

Other recent confirm the view that living standards are not improving and may even be declining. This week, Bloomberg reported:

"A 2.2 percent rise in wages in the 12 months through May has been more than offset by a 3.1 percent gain in consumer prices. It's unlikely that employees will get raises that outpace inflation over the next five to 10 years, said William A. Niskanen, former acting chairman of the President's Council of Economic Advisors during the Ronald Reagan administration.… Niskanen and other economists cite global competition, which forces companies to keep costs down, shrinking union clout and continuing slack in a labor market…"

Doesn't the recent job growth count for anything? Well, not as much as might appear. Not only does the economy still suffer from a net job loss during Bush's term, but many of the new jobs pay less than the lost jobs. As the AFL-CIO data demonstrates, the top five job-creating industries since August offer average wages ranging from $8.20 to $18.58, while the average for the top five job-losing industries range from $14.69 to $21.29.

Furthermore, as the Los Angeles Times reported, 28.5 percent of the newly created jobs were filled by noncitizens, according to a Pew Hispanic Center report released this month. That doesn't just reduce the electoral benefit for Bush; it also provides additional evidence of how low-paying many of the new jobs are.

Finally, economist J. Bradford DeLong looks to the employment-population ratio as "the best yardstick because of the recent sensitivity of labor force participation to the state of the job market." The new job growth hasn't impacted the ratio much. As you can see from his graph, the ratio increased from about 61 percent to 65 percent during the Clinton years, and has fallen to roughly 62 percent under Bush.

Voters have good reason to dissatisfied with Bush's economy, and many are doing the optimistic thing: demanding better. Instead of trying to tell the public why it's misguided, the media should delve into why the economy isn't working for many Americans, and what the solutions might be.

One hopeful sign comes from this Wednesday's Washington Post, which ran an article titled "Quality of New Jobs Is Focus of Election-Year Debate," including analysis from private sector economists that is in line with the above information from EPI and AFL-CIO.

While it may be heartening that the Post is coming around to describing a more complete economic picture, too bad it’s tucked away in the business section.

Information about the direction of the economy is not something only for the business community, but for all Americans, and token analysis pieces ghettoized in the back pages are not enough for the media to properly do its job. Unless the nation's political correspondents and pundits resist the spinners and the cheerleaders, and make an ongoing practice to fully understand and convey the complex nature of our economy, the public will not be served.

Bill Scher is executive editor of LiberalOasis.com.

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