Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, recently wrote in the New York Times about a new assessment of the United States economy that was published by the International Monetary Fund.
To understand how the recovery is playing out in different people’s lives, you’ve got to ask, just whose fundamentals are improving?
Current growth rates (for GDP) are not fast enough to put much downward pressure on the unemployment rate. When the economy grows at around 2 percent, the unemployment rate tends to stay about where it is as that’s just fast enough growth to balance the flows of people coming into the job market and cycling out of unemployment into work. But it’s not fast enough to really make a big dent in the stock of about 20 million under-employed and unemployed Americans. Moreover, the I.M.F. predicts slower growth (1.9 percent) this year.
There’s a large imbalance between improving labor market conditions and corporate profitability. When the lightly unionized American job market is too slack, as it’s been for years now, low- and middle-wage workers have too little bargaining power to claim much of the growth they’re helping to create. It’s a very different story for large multinationals who can trot the globe seeking profits (and tax shelters). In fact, the compensation share of national income is at a 48-year low, the profit share at an all-time high.
Though a rising stock market benefits some in the broad middle class, mostly through retirement and pension savings, the vast majority of its gains go to the wealthiest Americans --- 80 percent of the value of the market is held by the richest 10 percent of households. It’s actually very simple to describe what’s wrong here: since the recovery began, adjusted for inflation, the Standard & Poor’s 500-stock index is up 57 percent while median household income is down 5 percent.
Our persistent trade deficits have essentially exported demand and jobs for years, often to countries that manage their currencies to maintain a price advantage over us. Policy makers who want to reverse that need to address this currency issue if we are to make serious progress on increasing net exports.
As per the Bureau of Labor Statistics' JOLT report (Job Openings and Labor Turnover Survey) there are 3.8 million job openings for 11.7 million unemployed Americans, and they include full time, part time, permanent, short term and seasonal job openings.
The report says, "Over the 12 months ending in April 2013, hires totaled 52.0 million and separations totaled 50.2 million, yielding a net employment gain of 1.8 million. These figures include workers who may have been hired and separated more than once during the year." That is a lot of turnover (or churn) in the job market.
As companies hold back on hiring in large numbers, scores of workers are applying to
ManpowerGroup, the temporary-staffing agency, which sends more than 600,000 men and women to factories, call centers, cubicle farms and other work sites (up from around 450,000 two years ago.)
The CEO and Chairman, Jeffrey A. Joerres, says Europe accounts for about 65% of their revenue. He has a highly informed view of the labor market and currently chairs the board of directors of the Federal Reserve Bank of Chicago. Here's an excerpt from an interview that he recently had with the Wall Street Journal:
WSJ: Companies typically staff up with temps during a recovery and convert them to permanent workers as conditions improve. Are you seeing that pattern now?
Mr. Joerres: In good times, 60% to 70% of our people will receive a full-time offer while on assignment. Right now, it's around 30%, and the tepid economy is driving that. Permanent recruitment is up about 10% on a year-over-year basis in the U.S.
WSJ: What's your general sense of the labor market?
Mr. Joerres: We're getting little spurts of decent labor market numbers, and then it slides back down. It's symptomatic of the way companies are dealing with their environment. They're on hyper alert for any types of changes. So they start to feel demand, but they don't fill in with a lot of hiring.
WSJ: When will things start to change?
Mr. Joerres: In the U.S., we need to get past this summer and into next year, and understand some implications of health-care reform.
WSJ: How will new health-care laws affect ManpowerGroup? Will companies hire temps to avoid offering health insurance?
Mr. Joerres: We see the Affordable Care Act as incrementally positive for us. It's not a game changer, because 100% of the cost is going to get passed through to clients. They're not laying off permanent people and moving that work to us to avoid paying workers' insurance. But I see this business coming to us when customers have their own internal temporary staff, seasonal workers, internship programs, and they don't want to deal with the issues of who's eligible, who's not, and other liabilities.
WSJ: So employers are operating more as "just-in-time" businesses. How does this affect workers?
Mr. Joerres: They have to be more agile too, and that's stressing the labor force. Those who have intellectual curiosity, who keep their skills fresh, do fine. Others adapt, but live with a real sense of anxiety because they're always out of their comfort zone. And others fight it and just want to do the same job. That will be difficult, and some of those people are moving into long-term unemployment, which is something that the U.S. has not really dealt with much.
American workers "just want to do the same job", as if the days of working the same job at the same place for any given period of time are long over. Nowadays, we have to learn to job hop --- scrambling from one place to another, forever searching for a revenue stream to pay for rent and food.