When it comes to Biden’s jobs bill, bigger is better
The fate of President Joe Biden’s $2 trillion infrastructure package lies with a small number of Senators, some of whom may shudder at its price tag. They shouldn’t. If we more carefully scrutinize the real state of the working and middle class, it’s clear this jobs bill is critical to the country’s future and, if anything, should be more expansive. However bad you think it is for these Americans — it’s worse than that. That’s not because the numbers are wrong, but because we are viewing them through the lens of a post–WWII economy.
Take, as one clear example, the way we understand “median earnings”: By the traditional statistic, that stands at $51,168 today. But here’s the thing: When you adjust for those working part-time gigs and looking for work, the figure drops to $41,444. Put another way, half of America’s workforce is making barely more than $40,000 a year.
The same story applies to unemployment. In February, the Bureau of Labor Statistics reported a U.S. jobless rate of 6.2 percent. But when you include “employed’ workers who are searching for full-time, living–wage jobs because their current employment doesn’t propel them over the poverty level, the rate grows to 25.1 percent. Again, consider the implications: A quarter of Americans are either jobless or unable to secure a position that earns above poverty-level wages.
These numbers speak to the fundamental weakness of the U.S. economy that existed long before the COVID-19 pandemic and will continue to hinder our recovery without decisive action by the Biden administration and Congress.
Why do topline economic indicators fail to accurately reflect the economic condition of so many Americans? One problem is that many of them turn a blind eye to the emergence of the gig economy as workers abandon full-time work — or, perhaps, more accurately, as full-time work abandons them. Likewise, focusing on topline employment data relies on the tacit assumption that someone with a full-time job is not living in poverty, when in fact we know that millions of Americans are toiling in low-wage jobs that fail to offer a living wage.
Recognizing that an overly rosy picture of the economy will yield woefully inadequate policy prescriptions, researchers at the Ludwig Institute for Shared Economic Prosperity (LISEP) have been working to develop metrics that provide a more comprehensive picture of the economic challenges facing low- and middle-income Americans.
These statistics paint a much more troubling picture — and it’s one that policymakers of all stripes must consider.
For example, LISEP’s research reveals that median wages have grown only 9 percent since 2000. Over the same period, gross domestic product (GDP) grew at 45.3 percent; domestic corporate profits ballooned by 119 percent. Think of that. Profits have more than doubled as wages have barely budged, even as the accoutrements of the new reality — the vaunted flexibility of the “gig” economy — distracts from the growing crisis. The amount of money people earn for their toil simply isn’t keeping pace with costs.
The discrepancies go on. The official figures might lead you to conclude that earnings increases for Black workers have largely tracked those among whites, hinting that the gap is largely holding steady. But, likely because minority communities are on the whole more reliant on part-time work, LISEP’s figures reveal that the gap is actually growing. Because of this uneven growth, Black members of the workforce earned 77 percent of their white counterparts in 2000, but the figure has since fallen to 72 percent.
All of these facts point to the need for generational investments that will close the opportunity gap that has pushed the American dream further out of reach for too many middle- and working–class Americans.
Biden’s proposed jobs plan includes not only long-overdue investments to repair our roads and bridges, but also investments in technology — like broadband internet — that can help spur next-generation industries and generate broad-based growth.
Policymakers shouldn’t be fooled by a bullish stock market or what appears to be plummeting unemployment rates. Now is not the time to take our foot off the gas. If the COVID relief package was our economy’s shot in the arm, the jobs package is the second and even more crucial dose that will help ensure a more sustainable and equitable recovery. A $2 trillion-plus jobs package seems but a necessary down payment on righting the ship for working-class Americans.
Gene Ludwig is the chair of the Ludwig Institute for Shared Economic Prosperity (LISEP) and the author of The Vanishing American Dream. He is the former comptroller of the Currency, founder of the Promontory family of companies, and managing partner of Canapi LLC. Follow him on Twitter @geneludwig.