Bush's Second Aborted Jobs Recovery

by JACK RASMUS (Copyright 2004)

It used to be when a recovery from recession got underway workers laid off were re-hired back to their old job and rate of pay. It used to be during a recovery wages that were flat could now be raised again. It used to be an economic recovery meant improvements in health and pensions could once again be negotiated. It used to be...

But we no longer live in the world that "used to be". We live in the world of George Bush and his corporate friends; in the world of indicted corporate criminals like Ken Lay of Enron, still at large enjoying the beach view from his mansion; the world of energy company business executives who recently got caught laughing on tape about 'ripping off grandmothers' as they stole $9 billion from California taxpayers.

No longer the world that "used to be", we now live in a world where Warren Buffet, the richest man in America, recently bragged to a gathering of his stockholders that "There is a class war underway in America—and my class is winning!" (1)

Since March of this year, Bush and the business press have been trumpeting the great jobs recovery in the U.S. that has finally started, and the 900,000 new jobs that have been created from March through May of this year.

But the jobs recovery of 2004—like the first aborted jobs recovery that occurred in the autumn of 2003—has begun to lose momentum. And it appears we may be on the verge of a second 'aborted jobs recovery' once again. (2)

Equally important, the overwhelming majority of the jobs that have been created so far in 2004 have been low pay, temporary, part-time—i.e. low quality jobs easily shed quickly by corporations at the first initial sign of the economy faltering, a faltering for which more evidence is beginning to appear daily.

Bush's New Jobs: Temporary, Part-Time, & Low Pay

Two-thirds of the jobs created from March through May 2004 were either part-time, temporary, or jobs paying at minimum, or even below, minimum wage. Of the 900,000 new jobs created from March through May 228,000 have been involuntary part-time jobs.(3) That means 228,000 workers who want full time work have had to settle for part time, typically 20-24 hours a week with few or no benefits. And this doesn't even count the number of voluntary part timers filling the new jobs, which typically outnumber the involuntary part time workers by 4 to 1! But let's be very conservative, and add just another 100,000 of these voluntary part time workers to the numbers. This results in 338,000 total part-time workers out of the 900,000 new jobs created since March.

Of that 900,000 new jobs, another 117,000 were taken by temporary workers, which typically are paid on average $4 an hour less than permanent jobs and, of course, almost never receive benefits or insurance coverage of any kind.(4)

The two groups, part time and temporary, add up to 445,000 of the 900,000 new jobs—or 49.4 % of the total.

But hold on. We're not through yet. Independent studies show that 28.5% of the new jobs created over the past twelve months were filled by non-citizens. (5) Many of these are without documentation. They do the work many U.S. citizens don't want, they pay taxes like the rest of us, they are workers like any other—except they get super-exploited and are paid at minimum, and often sub-minimum, wages. And they seldom get benefits. That 28.5% adds up to another 260,000 jobs at low, or lowest, pay and almost certainly without benefits.

Let's be conservative once again in adding up the totals and assume 100,000 of these 260,000 are also included in the 338,000 part-time or temporary new jobs created above. That still leaves around another 160,000 of the 900,000 new jobs going to workers at, or near, minimum wage.

That leaves 445,000 plus the 160,000—or 600,000 of the 900,000 jobs—which are undeniably 'low quality' jobs (i.e. either part time, temporary, or very low paid with few if any benefits).

What about the remaining 300,000 jobs? The Economic Policy Institute, a research think tank in Washington D.C., just released a report that showed a majority of the 900,000 new jobs were occurring largely in hotel, restaurant, temp services and other industries that pay on average $8-$12 an hour.(6) So the pay may be higher for this remaining 300,000, and benefits a little better—but not all that much higher or better for the majority of them.

The more than three million high pay, good benefits, permanent, full time jobs in manufacturing and elsewhere that existed before the Bush recession—and which have disappeared during the recession—started coming back all right. But returning this past spring as part-time, temporary, and low paid work. Coming back as low quality jobs with few or no benefits. The good quality, high paid, unionized jobs may have begun returning—but not to America! They're going offshore to India, China, East Europe and elsewhere!

The data show this problem of the quality and content of new jobs created continued in June 2004 as well. Traditionally higher pay-better benefits, often unionized, jobs in manufacturing, construction, and information industries actually experienced a net decline in June 2004. (7). The sector with the highest growth in jobs for the month, professional services, is also the sector that has been adding the highest percentage of temporary jobs since the beginning of 2004. In fact, temporary jobs overall have increased by over 300,000 this past year, growing consistently on average at around 30,000 a month.(8) A similar picture exists for new jobs for part-time and occasional workers, also growing faster than the general workforce(9).

The Restructured Work Force of the Future

George Bush and Corporate America have been quietly restructuring not only the American economy these past four years, but the character and composition of American jobs as well.

Of the 145 million employed in non-military work in America today there are about 50 million Americans employed in less than full time regular permanent jobs or without work. About 20 million of these are without work or involuntarily under-employed. That's more than a third of all American working class families with heads of families either without jobs, working part-time or temporary, or only nominally self-employed. Many millions more struggle to get by in low pay, minimum (or sub-minimum) wage jobs. Virtually all are without health benefits. That's 50 million workers plus their family members, at least 75 million Americans, representing at least a fourth of the total US population.

They are the new, 'restructured' work force of the future in America, and their ranks are growing.

Another Aborted Jobs Recovery?

While the Government's June 2004 jobs data show the March-May trend toward low pay-low quality jobs continued that month— the same June figures show the number of new jobs created has also begun falling off once again from the March-May rate. The June 2004 job figures show the economy grew by only 112,000 jobs. That's 38,000 fewer than even needed to absorb new entrants into the labor force, let alone find jobs for those already looking for work. (10)

Evidence is now accumulating that the US economy may be experiencing a repeat of the first aborted jobs recovery that occurred in the late summer-early fall of 2003. At that time, in the 3rd quarter of 2003, the economy grew and an 8.2% rate and some jobs began to appear. (11) The Bush administration quickly began to trumpet that the economic recovery was underway and new jobs creation would continue to accelerate for remainder of 2003 and throughout 2004. Instead, however, the economy retreated again in the fourth quarter of 2004 and jobs creation fell to almost zero in the latter months of 2003 and early 2004. It now appears something similar to what happened in the fall of 2003 may be in the works once again in mid-2004. We may be experiencing a repeat, 'Second Aborted Jobs Recovery' under Bush.

While the accelerating shift in the composition of new jobs in America to low-pay, part-time, temporary work takes place, and another aborted jobs recovery appears imminent, recent data show real wages for American workers have begun falling more rapidly in the midst of this shift and aborted recovery. (12)

As reported this past July 2004, during May and June real hourly earnings for workers have been falling at the rate of about 1% per month for the past two months—an unheard of rate of decline for many years. (13) Workers' weekly take home pay today is less than it was at the official end of the Bush recession in October 2001. (14) Yet Bush still says the recovery has been underway for three years now and is even accelerating. Today the American workers' take home pay, as a share of the total economy, is at its lowest level since the U.S. Government started keeping track in 1929. (15)

Given the growth in low pay-fewer benefits jobs and workers' falling wages and incomes, it's no wonder recent corporate profits showed the biggest jump in almost 20 years, according to figures released this past March. Up 29% in just the first three months of this year! (16) And that's on top of a previous 35% gain in profits in 2002-03.(17)

The great struggle over the past few years by union (and non-union) workers to maintain their health benefits coverage by agreeing to minimal, if any, wage increases—often for four, five and even more years—could soon turn, over the next two years, into the greatest decline in real wages for American workers since the great depression of the 1930s. Real wages for all American workers in general could continue to decline due to the slow down in new job creation, the low pay character of those fewer new jobs still being created, and recent evidence of now rising inflation. A crisis of falling incomes for American workers on a scale not seen for decades could be the result in the months immediately ahead.

The Path to Recession 2005

Declarations of the end of the jobless recovery period of the past three years may soon prove to be premature. There is increasing evidence and doubt of the US economy's ability to sustain spending by consumers and avoid a return to recession.

The shift to low pay-low quality jobs, the renewed fall off in new jobs creation, the now rising inflation, plus workers' and unions locking in low (or no) wage increases in long term contracts in order to maintain health insurance coverage—together all but ensure a chronic weakening of consumption in the U.S. and thus increasing the risk of return to recession.

In addition, other forces appear to be accumulating in recent months also raising the likelihood of recession in 2005—including a slow down in the growth of exports due to slower economic growth in China and Europe, a retrenchment of business spending in the U.S., the almost certain rise in interest rates engineered by the US Federal Reserve, and a softening of consumer spending in the U.S. due to the end of the housing asset values boom.

The phenomenon of a jobless recovery, which has been growing in duration and intensity in every recession in the U.S. since the Reagan recession of 1980-83, has not been resolved by any means. Its fundamental cause lies in the corporate restructuring of the economy and work force that has been happening in America from Reagan to Bush. Another, more virulent phase of the jobless recovery phenomenon may in fact be just around the corner.

That's not how it 'used to be'. But after all, as Warren Buffet, the richest businessman in America, said: it's a class war and his class is winning!

—Jack Rasmus, National Writers Union, UAW 1981, AFL-CIO.

This article is an excerpt from Jack Rasmus's forthcoming book, THE WAR AT HOME: The Corporate Offensive in America From Reagan to Bush, which is available for pre-ordering along with offerings of other plays, music and videos.

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