Happy days are here again for the American economy - or so the numbers say. Gross domestic product rose a pedestrian 3.5 percent in the third quarter of 2009. Goldman Sachs posted strong earnings, Morgan Stanley made a profit for a change, and Ford earned a surprise billion. But for the American worker, the numbers have not translated into steady employment or rising wages. In light of this, Congress is considering legislation to extend unemployment benefits. Lawmakers should put aside partisanship and pass it quickly to ensure that the safety net can continue to support those in need.
Much of the media coverage of the recession and "recovery" focuses on those economic indicators like GDP and the Dow Jones Industrial Average. When those numbers go up, we're been taught that the economy is succeeding. GDP is the sum of all the final goods and services a country sells domestically over the course of a year. Throughout the recession, GDP shrank four consecutive quarters, and its recent uptick has been hailed as a sign of a turnaround. The Dow Jones is an amalgamation of stock market prices of 30 big corporations, and though it plummeted during the depths of the downturn, it has rebounded and hovered just under 10,000 points.
These are the sort of statistics that make for bold headlines and a giddy Jim Kramer. The media goes further in its coverage, however, highlighting the biggest corporations as signs of economic strength. Granted, it does make sense to report on the banks that caused the recession with dubious sub-prime mortgages. But the commentary goes further, hyping the banks' success and implying that it trickles down to the average laborer. Goldman Sachs made a $3.44 and $3.19 billion profit in the second and third quarters of 2009, respectively - so surprisingly profitable that they announced $5.35 billion in bonuses to employees, a figure that represents an 84 percent increase from last year's bonuses. Morgan Stanley, one of the more tenuous bailout recipients, made $757 million in the third quarter. Wells Fargo posted $3.2 billion in profit over the same period.
"We're finally seeing signs of improvement," the anchors report as they point to the GDP and the banks. What they omit in their coverage is the status of the American worker, who, if he is employed, has been slapped with falling wages. It's hard to find big numbers to back up this claim, partly because the government's own Bureau for Labor Statistics doesn't even keep track of falling wage statistics. Instead, one has to look to the United Nations' International Labor Agency. The group reported that wages in the United States fell 2 percent since January. The ILO is also quick to point out that there has not been real median wage growth in the United States for years, even during times of booming prosperity in the 1990s. It just serves to underscore the silence the government and media have in regard for the middle class.
If actions speak louder than words, the government's response to unemployment has been deafening inaction. Unemployment now stands at 9.8 percent, a level unseen in decades. But the numbers again fail to tell the whole truth. The government's measure of unemployment does not include those forced into early retirement or those who have lost hope and given up the job search. Sure, the Obama administration will trumpet the glories of the stimulus package, yet that bill contained more tax cuts than anything else, which do nothing to increase employment. Infrastructure spending and unemployment benefits were the most effective parts of the stimulus. They had the highest multiplier effect for increasing economic growth and were the most important for the unemployed - a job through construction and revitalization projects and help in the meantime.
Now Congress has a chance to push through a similar, albeit smaller, package. The proposal circling would extend spending on unemployment payments, food stamps, and welfare programs for the impoverished, in addition to a tax credit for first-time homebuyers. Unfortunately, the bill will probably take a backseat to the healthcare debate. Congress shouldn't shelve this legislation until later but make an effort at immediate passage. Republicans will probably be wary of adding more to the deficit, so this small bill could be lost in a filibuster. It needs quick implementation to support those who are unable to secure employment and are struggling through foreclosure and starvation.
The marquee statistics don't help the unemployed or the underemployed feed their children or provide a roof over their heads. Goldman's payouts don't help the laid-off factory worker find a job. For those problems to be solved, the government again needs to pass a bailout, not for the banks, but for the people.
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