money on my mind:
show me the growth
by arlene winkler

I know I can’t be the only one who’s noticed, but there’s a major gap between the official reports on the economy (Great! Expanding! Good news!) and the increasingly grim reality of trying to make ends meet—and no one is addressing the causes.

In fact, the administration seems genuinely surprised by polls showing that Americans are unhappy about the economy. Not surprisingly, they’ve chosen the usual defense: defame the message bearer—i.e., the news media doesn’t understand how to report on the economy. But when the numbers the administration is looking at tell them that people should be happy, but the polls say the opposite, maybe they’re looking at the wrong numbers.

American families don’t care about incremental changes in G.D.P. (Gross domestic Product) They care about jobs, how much those jobs pay and how that pay compares with the cost of living. The bottom line about recent G.D.P. growth, is that it has not produced exceptional gains in employment and wages for most workers haven’t kept up with inflation.

It’s true that the economy finally started adding jobs two years ago. But the addition of four million jobs in the last two years is nothing to write home about. It’s a rise of only 3 percent, only slightly ahead of the growth of the working-age population in the same period.

“But,” you say, “The unemployment rate looks fairly low by historical standards.” Consider this, there are a number of other factors to consider when you look at employment; like the average number of weekly hours worked (low), and the length of time people are out of work (high). This says to me that the demand for labor is still weak compared with the supply.

Look at Northern California, where the unemployment rate is close to the national average. According to The New York Times, when Wal-Mart announced they were hiring at a new store 11,000 people showed up to apply for 400 jobs.

With a ratio that extreme, employers don’t have to raise wages to get workers, so it comes as no surprise that wages are lagging behind the cost of living. According to recent Labor Department statistics, the purchasing power of an average worker has fallen about 1.5 percent since the summer of 2003. In Western North Carolina, this is probably a gross understatement, because we have to fill our gas tanks to get to work or go to the supermarket.

“But,” you say, “The experts say that those concerns are exaggerated. Prices are still below previous peaks when you adjust for inflation.” Once again, the statistic misses the underlying issue. Most of us bought cars and made decisions about where to live when gas was $1.50 per gallon. Now it’s closer to $3.00. I’m guessing, that for the typical Western North Carolina family, this translates to an additional annual expense of some $1,500. In fact, I’ve met a number of women recently who told me they had taken part time jobs specifically to offset the additional cost of gasoline. I’ve also heard from local law enforcement that there has been a sharp increase in the number of people filling their tanks and driving away without paying.

“But,” you say, “Where is the economic growth going, if it isn’t showing up in wages.” And that brings us to another statistic. According to Forbes Magazine, the combined compensation of the chief executives of America’s 500 largest companies rose 54 percent last year. In other words, it’s going to corporate profits, rising health care costs and the ballooning compensation of executives.

The bottom line is that we have good reason to feel unhappy about the economy. If this is indeed an economic expansion, it not only hasn’t trickled down—a vast number of people are worse off than they were a year ago. It will take more than a clever spin on the statistics to make people feel better.

Arlene Winkler is a freelance financial writer, specializing in institutional finance. Her articles are published in financial trade journals all over the world. But don’t bother to GOOGLE her, they’re all credited to the executives who employ her. A former ad agency president and enthusiastic participant of life on the New York fast track, she moved to Asheville in 2002 with her sculptor husband, Robert Winkler. A mother of three, a grand mother of four, and the author of three screenplays she is dealing with her culture shock by writing a North/South novel under her own name.