Unemployment Is Down, but Real Earnings Remain Underwhelming
February 17, 2015
In October 2009, the U.S. unemployment rate was 10 percent; today, it's just 5.6 percent. But while the American economy added 250,000 jobs in January, Americans who are polled still say the country is "heading in the wrong direction." Why?
Unemployment is a misleading figure - as Andrew Biggs of the American Enterprise Institute notes, there are 92 million Americans who have given up looking for work, in addition to 7 million Americans who are working part time but want to be working full-time and more who are "underemployed" -- that is, their jobs and salaries do not match their skills and education levels. Notably, 16 percent of working-age men are not working today.
Rather than look at unemployment rates, Biggs points to wages and salaries. In 2006, total wages and salaries were at $6 trillion; by 2014, real wages had grown to just $6.2 trillion, well below the CBO's projection that earnings would rise to $7.5 trillion. According to Biggs, Americans' wages and salaries will not reach the CBO's 2014 projections until 2025.
What do Americans need? According to Biggs, "What citizens need and deserve is specific policies designed and proven to put Americans back to work." He encourages lawmakers to require food-stamp recipients to work in order to receive benefits, in addition to strengthening rehabilitation and work requirements for disability benefits and other welfare programs.
Source: Andrew G, Biggs, "Unemployment is down, yes, but so are wages," American Enterprise Institute, February 13, 2015.
Browse more articles on Economic Issues