Democrats yesterday discounted the news of the growth of the economy and of jobs under President Bush, repeating the claim that it is a “jobless recovery.”
After several years of job losses, the American economy has netted nearly 950,000 new jobs in the past three months, including yesterday’s announcement of 248,000 additional jobs in May.
Democratic leaders say that jobs still are below the level attained under President Clinton and that the increase is still not enough.
“Families are still struggling in this economy. Jobs are scarce, and those lucky enough to have one are making $1,500 less each year,” Sen. John Kerry, Democratic presidential candidate, said yesterday.
Mr. Kerry calls the problem a “wage recession.” This means that although economic growth is strong and corporate profits are growing, workers’ salaries and wages are not, even as costs for health care and school tuitions go up. In addition, with the manufacturing sector exporting jobs overseas, those laid-off workers end up in new, lower-paying jobs.
Lee Price, director of research at the Economic Policy Institute (EPI), said wages usually lag behind job growth in a recession, which is probably why Americans still feel the economy is doing poorly.
“As long as the number of jobs was going down, that was the dominant economic fact, and that meant wages would also be softening. Now that we’re gaining jobs, it does not mean most people feel better off,” Mr. Price said.
EPI has calculated that, overall, the current recovery has been far better for corporations than workers. It found a 62.2 percent increase in corporate profits during the past three years, as opposed to a 2.8 percent increase in labor compensation. The average of the past eight recoveries was a 13.9 percent increase in corporate profits and a 9.9 percent increase in labor compensation.
But Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson Inc., a Chicago-based investment bank, said the recent numbers actually show solid gains.
“When you look at personal income, wages and salaries, disposable personal income, all of these are showing that wages are rising dramatically,” he said. “This shift in concern is more politically motivated rather than based in reality about the economy.”
Mr. Wesbury added that personal income is up 5.7 percent in the last year, and proprietary income — which covers sole proprietors and small-business owners — is up 11.7 percent, versus 2.3 percent inflation.
Mr. Wesbury also said when all factors are counted, employees’ earnings are rising faster than inflation.
He said one major reason is that businesses are paying more per employee by spending on benefits such as health care, so an employee’s compensation is rising even if the employee doesn’t realize it.
Mr. Price agreed, but said voters won’t necessarily see these as tangible benefits. He said the economic and political climates are similar to that of 1994, when the labor market was picking up after the 1991 recession, even though some voters hadn’t seen a similar rise in wages.
“They went to the polls in 1994 more upset with the economy because their incomes weren’t doing well,” he said.
Mr. Bush’s performance on economic issues still draws low ratings from voters in opinion polls.
In a National Annenberg Election Survey released yesterday, 55 percent of voters disapproved of Mr. Bush’s handling of the economy, and among “persuadable” swing voters in 20 battleground states, the poll found 60 percent disapproved.
But Vice President Dick Cheney, speaking on CNBC’s “Kudlow and Cramer” program yesterday, said he thinks voters will eventually credit the president with a solid economic performance.
“If they look at the economy, they think about their own circumstances, real disposable income has gone up by 4.9 percent in the first quarter this year. But take-home pay, after-tax take-home pay is up. That’s wealth in the pockets of average Americans,” Mr. Cheney said.
“It’s directly tied to how well the economy is going,” Mr. Cheney added. “I think the public attitudes tend to lag what’s happening with the indicators. I fully expect that the public will come to understand, and I think increasingly do understand, that the economy is in good shape.”
Mr. Bush’s campaign began running an advertisement yesterday accusing Mr. Kerry of searching for a downside to a booming economy.
“After recession, September 11 and war, now our economy has been growing for 10 straight months,” the ad says, crediting Mr. Bush’s tax cuts for job growth, low interest rates and high homeownership. “John Kerry’s response? He’s talking about the Great Depression. One thing’s sure — pessimism never created a job.”