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When will workers feel the recovery?

By Alan Maass | October 17, 2003 | Page 7

"TURNING THE corner." "Out of its rut." "Finally on the rebound." Those phrases littered reports in the corporate media after the government released statistics showing that the U.S. economy added jobs in September for the first time in eight months.

Business Week magazine even gushed that the news "certainly elicited sighs of relief from the millions of job seekers who have been unable to find work." Don't feel bad, though, if you forgot to "sigh"--because a closer look at the statistics shows that there's been little "relief" for U.S. workers.

According to the figures released by the Bureau of Labor Statistics, 57,000 more people were on payrolls throughout the economy in September than the month before. That's the first monthly increase this year.

But it wasn't much of an increase--compared to the 2.7 million jobs lost since March 2001. More than half of the total payroll increase was accounted for by temp workers--giving employers more flexibility to cut jobs again later.

The government also reported a sharp 10 percent increase last month in the number of part-time workers who say they want full-time work, but can't find it. And the number of long-term jobless--people who have been without work for more than 26 weeks--jumped again in September, reaching the highest level in more than a decade.

Economists say that employment is always the last aspect of the economy to turn around following a recession. But the current recovery is especially weak in terms of jobs.

For example, the recovery that followed the recession of the early 1990s--and was known even to the likes of Business Week as the "jobless recovery"--was averaging an increase of 268,000 jobs during the third year after the recession officially ended. This time around, the third year of the recovery will officially begin in November--and even optimistic estimates put job growth at no more than 100,000 a month at that point.

Even that level of job creation--more than twice what the economy produced in September--won't be enough to absorb the influx of new workers into the labor force each month. So the overall unemployment rate is likely to remain the same--as it did last month.

Then there is the large number of U.S. workers who-- through recession and recovery alike--have been driven out of the workforce since 2001. Thus, the percentage of the U.S. population officially participating in the workforce is at the lowest level since 1989.

Thus, workers still have little reason to expect a "recovery" for their own economic conditions. In fact, in one of the statistics that didn't get much mention last week, hourly wages for production and non-supervisory workers fell slightly in September, even before inflation was taken into account.

That's the first time there was an absolute decrease in wages since 1989. In other words, employers are using the threat of unemployment to squeeze workers--hard.

This is the reality behind the statistics about the U.S. economy. Overall, the economy is estimated to be growing at a pretty fast clip right now--an annual rate of 5 percent between July and September, according to guesses of Wall Street analysts.

That's good news for corporations, which have announced higher profits during the past several months. But the main source of this profit boomlet is increased productivity--that is, getting fewer workers to work harder and produce more than before.

Productivity growth has averaged 4.5 percent during this recovery--and is responsible for the vast bulk of the increase in overall economic growth, which will be announced with much fanfare in the coming weeks. Several recent surveys of corporate executives report that more companies are planning to increase investments next year.

But these investments are likely to remain centered on machinery and technology to increase productivity further still--rather than on an expansion of production that would lead to real increases in employment. This is the result of the underlying problem that the U.S. economy continues to suffer from--an overcapacity of the means of producing goods and services.

Thus, for example, General Motors is expected to report higher profits so far this week. But the company won't be building any new auto factories when the car industry worldwide has far more capacity to build vehicles than there is demand to buy them around the globe.

All this should tell us something about the happy talk that dominates the corporate media--what Wall Street and the pundits think is good for the economy isn't always good for workers. The statistics that show the economy doing much better can mask the reality--that Corporate America is enjoying a recovery in their profits, while U.S. workers continue to pay the price for the crisis.

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