Where does income come from? Jobs maybe!

10/2/14
 
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from The Gray Area:

Chris Matthews wrote an article today in Fortune Magazine titled, Forget the jobs numbers, America needs to focus on its income problem. The basis for Mr Matthews conclusion is that so many jobs have been created since the recession that we have almost reached a “natural rate of employment”, but people still feel we are in a recession because average incomes have not risen with jobs. “Policy makers and the media should be paying attention to income, not jobs. It’s great that there are many more people employed today than four years ago, but it’s time to focus on America’s income problem.”

This week’s improved jobs numbers dropped the unemployment rate to under 6%. An increase in part time jobs and a continuing decrease in overall job seekers has contributed to this numerical illusion of prosperity returning. And, the participation rate, the percentage of Americans actually working, dropped to a 3 decade low of 62.7%.

So, stop focusing on jobs and focus on incomes. Huh. I wonder where Mr. Matthews thinks income comes from? Jobs maybe! And if fewer and fewer people are working full time, how does he expect to focus on income?

If jobs are rising, which is clearly debatable, then the real question is why aren’t incomes rising in unison. For that answer you need to evaluate the data without of political ideology and with greater detail than Mr. Matthews and the people at the leftist Center for American Progress do.

Take, for example, this article in Bloomberg Businessweek by Rana Foroohar last week, The 3% Economy. “A 3% economy is better than 2%, but for most Americans it’s actually more worrisome. … Growth is back. Unemployment is down. But only a fraction of the jobs lost during the Great Recession that pay more than $15 per hour have been found. And wage growth is still hovering near zero, where it’s been for the past decade. Something is very, very broken in our economy. It’s a change that’s been coming for 20 years.”

“And while the quantity [of jobs] has come back, the quality hasn’t. The job market, as everyone knows, is extremely bifurcated: there are jobs for Ph.D.s and burger flippers but not enough in between.”

“It’s easy to understand why. … While technology-driven productivity used to be what economists said would save us from jobless recoveries, technology these days removes jobs from the economy. Just think of companies like Facebook and Twitter, which create a fraction of the jobs the last generation of big tech firms like Apple or Microsoft did, not to mention the multitude of middle-class positions created by the industrial giants of old. And we’re just getting started: consider the outcry in certain cities over companies like Zillow, Uber and Airbnb, which are fostering “creative destruction” in new sectors like real estate, transportation and hotels.”

Big Government liberals like Chris Matthews think if you need income, then the government should just give people money in the form of transfer payments or minimum wage and problem solved. They never think a problem through. Clearly giving people money solves nothing. And sorry Mr. Matthews, income does come from jobs. And if middle class jobs are not there due to factors like technology, then lets focus on that. If your union buddies in the 1980s had been visionaries for their members, instead of just extortionists attacking American business, they would have seen this trend coming like everyone else and figured out how to keep its members employed in 21st century jobs.