The jobs report for January was just released by the Bureau of Labor Statistics. Fewer jobs were created than anticipated, wage growth was better but still sluggish (perplexing some economists because of the “tightening labor market”), and it was revealed that exports fell 4.8% in 2015. However, unemployment is at 4.9! No need to worry.
Except that the broader and more accurate unemployment measure, the U-6, is holding steady at 9.9% (15.8 million), the labor participation rate is still hovering around an historic low, and the number of long-term unemployed has changed little since last June. The conventional wisdom on the economic front seems to be that as long as we are not as bad off as we were during the depths of the Great Recession, we don’t have to pay attention to the structural weaknesses that threaten the future prosperity of our economy.
What “analysts” are concerned with is not the condition of working families across the nation, but what the BLS numbers mean in the context of the Fed rate hike; and how will the Fed react going forward. The Fed interest rate hike was designed to ease inflation, which our government officially pretends isn’t really happening since they put less weight on things people buy most often, like food and gas. It is fortunate for the economy that gas prices have dipped recently. Part of this is due to a warm winter, which the Fed then turns around and blames for slow sales (fewer people buying winter clothing, ski slopes not operating, etc.). What the Fed really wants is to prevent wage inflation, since that would slow hiring in the industries that boost monthly job numbers – restaurants, service industry, retail. Even though a 0.5% increase in wages indicates no labor shortage whatsoever, it is still enough to “concern the Fed.” The best way to tamp down wages? More immigration!
The sweet spot the Fed is trying to hit is an economy where wages increase just enough to keep up with the pace of inflation. This way, corporate profits don’t take a hit from higher labor costs, while workers have some discretionary income, however meager, to go out to eat a few times a month, or to buy their kids a new pair of school shoes.
Americans still have lot to be thankful for compared to much of the rest of the world, but this shouldn’t obscure the fact that our economy is rigged to benefit a narrow elite at the expense of everyone else. This isn’t a cliché, though it is rendered meaningless when politicians spout off about they are going to hold Wall Street accountable by satisfying its demand for tens of millions of more foreign workers.
It has taken the rise of unconventional (to say the least) presidential candidates to bring to the attention of D.C. power players the fact that Americans are dissatisfied (to put it mildly) with the status quo. One of the main sources of dissatisfaction, if not the main source, is that our immigration system operates against the best interest of the vast majority of Americans. It remains to be seen if Republicans and Democrats are ready to confront this reality, or will continue to view their fellow citizens as little more than potential voters who can won over by the promise of a gilded future.
Updated: Fri, Feb 19th 2016 @ 1:40pm EST