There are two kinds of people struggling in the American economy today. There are the people who can’t find work or can’t work as many hours as they’d like. And there are full-time workers who can’t seem to get ahead.
In Tuesday’s State of the Union and its response, there wasn’t much for either group — at least when it comes to their biggest problem.
State of the Union 2013
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Both speeches talked about the need for faster economic growth. There was a time that would have been enough. But not today.
In the past three recoveries from recession, U.S. growth has not produced anywhere close to the job and income gains that previous generations of workers enjoyed. The wealthy continued to do well. But a point of increased growth today simply delivers fewer jobs across the economy and less money in the pockets of middle-class families than an identical point of growth produced in the 40 years after the Second World War.
This erosion between growth and the prosperity of average Americas is still vexing economists and a lot of lawmakers have yet to even acknowledged the problem. But repairing this link is arguably the most critical policy challenge for anyone who wants to lift the middle class.
President Obama alluded to this breakdown in his State of the Union address. “Every day,” he said, “we should ask ourselves three questions as a nation: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do those jobs? And how do we make sure that hard work leads to a decent living?”
But outside of some targeted help for manufacturing jobs and some new investments in skills training, the proposals Obama offered focused comparatively little on repairing the relationship between growth and jobs, or growth and income. Obama’s boldest plans included increasing the minimum wage and guaranteeing every child a pre-school education. Both aim largely to boost poorer Americans and help their children gain a better shot at landing the higher-paying jobs that exist already in the economy.
The Republican response to Obama’s speech did not appear to nod to the new reality at all. The speaker, Sen. Marco Rubio of Florida, declared that “economic growth is the best way to help the middle class” and offered few job-creation proposals that appeared materially different from what Republican politicians have pushed since the 1980s.
It’s painfully true that the recovery under Obama has produced slower growth rates than any sustained recovery dating back to the Great Depression. That’s only part of the problem. The growth that has occurred hasn’t produced anywhere close to a historically “normal” level of job creation or income gains.
Nearly four years after the Great Recession ended, 12 million Americans are actively looking for work but can’t find a job; another 11 million are stuck working part-time when they’d like to be full-time, or they’d like to work but are too discouraged to job-hunt. Meanwhile, workers’ median wages were lower at the end of 2012, after adjusting for inflation, than they were at the end of 2003. Real household income was lower in 2011 than it was in 1989.
