Monday, December 06, 2004

Talk About Scrooge

The New York Times
December 6, 2004

Talk About Scrooge

In November, wages grew a whopping 1 cent an hour. But that was clawed back by a six-minute decline in the average workweek, producing a $1.25 drop in weekly earnings. Coming on the heels of a sluggish start to the holiday shopping season, the Labor Department's latest employment report, released Friday, doesn't presage a particularly merry Christmas or happy New Year for millions of working Americans.

In what is becoming a dismally predictable occurrence, the economy produced far fewer jobs than expected last month - 112,000 new slots versus an expectation of 200,000 - for the worst new-job total since last July, which was widely characterized as an economic "soft patch." Moreover, job growth in October and September was not as good as once believed. Those monthly numbers, disappointing on their own, reinforce what is now an unmistakable pattern in which the economy grows at a decent pace and corporate profits surge, while wages lag inflation and job creation barely keeps pace with the growth in the labor market.

We know how we got here. Tax cuts were misdirected at investment rather than consumption, resulting in an economic recovery weaker than it might have been. The budget deficit portends higher interest rates and a weaker dollar, both of which impair business confidence and, in turn, inhibit hiring. And then there's the lack of affirmative policy on jobs, such as a targeted credit that would make hiring more attractive or, at the least, an increase in the minimum wage to help the working poor and put money in the economy, fueling consumption that is critical for job growth.

Persistent subpar job creation might cause some leaders to question their policies. Yet, more high-end tax cuts and higher deficits are the template for President Bush's second term. And flush with a victory, the president is unlikely to undertake any policy reversals. It will be up to Congress to break out of its lockstep with Mr. Bush and take steps to address the real problems of constituents, rather than the intransigent aspirations of the administration.