How to Fix the Economy in 13 Easy Charts
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As we say goodbye to 2013, the economy is still failing ordinary workers. What is being done to make it better? Not enough.
Public spending and public investment are too low, wages for increasingly productive workers are flat or falling, and the minimum wage is inadequate.
However, there is hope for 2014. The policies that created these trends can be reversed. There is a renewed push to raise the federal minimum wage, states are raising their own minimum wages, and more policymakers are coming to terms with the downside of economic inequality.
Economic Policy Institute’s top charts of 2013 explain why a full economic recovery and policies that ensure broadly shared prosperity should be policymakers’ foremost priorities in 2014.
In November 2013, the labor market had 1.3 million fewer jobs than when the recession began in December 2007. Further, because the potential labor force grows every month, the economy would have had to add 6.6 million jobs just to preserve the labor market health that prevailed in December 2007. Counting jobs lost plus jobs that should have been gained to absorb potential new labor market entrants, the U.S. economy had a jobs shortfall of 7.9 million in November 2013.
Adapted from: “ Recession Has Left in Its Wake a Jobs Shortfall of Nearly 8 Million,” an EPI Economic Indicator updated Dec. 6, 2013, on www.stateofworkingamerica.org
One of the best measures of labor market health is the share of 25- to 54-year-olds with a job. Looking at 25- to 54-year-olds instead of the entire working-age population provides more certainty that the trends we see are being driven by reduced demand for workers and not supply-related factors such as retiring baby boomers or increased college enrollment of young people. This ratio deteriorated dramatically through late 2009, essentially stalled for two years, and improved modestly over the last two years. But the 75.9 percent share of 25- to 54-year-olds with a job in November 2013 is identical to the share at the official end of the Great Recession in June 2009.
Adapted from: “ Drop in Employment for ‘Prime-age’ Workers during 2007 Recession Truly Stunning,” an EPI Economic Indicator updated Dec. 6, 2013, on www.stateofworkingamerica.org
In today’s labor market, the headline unemployment rate drastically understates the weakness of job opportunities because it does not count the large pool of “missing workers”—potential workers who, due to weak job opportunities, are neither employed nor actively seeking a job. These are people who would very likely be either working or looking for work if job opportunities were significantly stronger. In November 2013, there were 5.7 million missing workers. If they were looking for work and therefore counted as unemployed, the unemployment rate in November 2013 would have been 10.3 percent, significantly above the official 7.0 percent rate.
Adapted from: “ Millions of Potential Workers Sidelined,” an EPI Economic Indicator updated Dec. 6, 2013
The recovery from the Great Recession has been accompanied by the slowest growth of public spending following any recession since World War II. If the current recovery had instead featured public spending growth that mirrored spending growth following the early 1980s recession (one that was similarly as deep, if not as long, as the Great Recession), the economy would be almost fully recovered with more than 7 million additional jobs.
Adapted from: Taking Middle-Out Economics Seriously in This Fall’s Fiscal Debates, an EPI report published Sept. 26, 2013
One economic indicator that has shown extraordinary strength in the recovery from the Great Recession is the share of corporate-sector income claimed by owners of capital instead of employees. By the third quarter of 2013, the share of corporate-sector income accruing to profits and other forms of capital income had reached 25.8 percent, the highest share ever recorded. To put this number into perspective, if the share of corporate-sector income accruing to capital owners in the third quarter of 2013 were 20.4 percent (the 1969–2007 average), every worker in the U.S. economy would have earned $3,200 more in wages.