“Anyone claiming that America’s economy is in decline is peddling fiction,” President Obama said in his last State of the Union Address on Tuesday night. “Now, what is true – and the reason that a lot of Americans feel anxious – is that the economy has been changing in profound ways, changes that started long before the Great Recession hit, changes that have not let up.” If you’ve struggled to find momentum in your career in the last eight or nine years, or even just to stay employed, that won’t come as a shock. The question is, what can be done to help American workers weather the change and adapt?
(“Barack Obama Crossing the Cross Hall” by Chuck Kennedy. The Official White House Photostream – originally posted to Flickr as P042909CK-0166. Licensed under CC BY 2.0 via Wikimedia Commons)
That question, essentially, was the first of the four that created the framework for Obama’s final State of the Union: “How do we give everyone a fair shot at opportunity and security in this new economy?”
Progress, So Far
“We’re in the middle of the longest streak of private-sector job creation in history,” Obama said. “More than 14 million new jobs, the strongest two years of job growth since the 1990s, an unemployment rate cut in half. Our auto industry just had its best year ever. That’s just part of a manufacturing surge that’s created nearly 900,000 new jobs in the past six years. And we’ve done all this while cutting our deficits by almost three-quarters.”
The fact check on this part of his speech is less rhetoric-ready. Factcheck.org points out that the 14 million jobs number is private sector jobs added since the very bottom of the job market in 2010; that manufacturing jobs have actually declined by 230,000; and that while the president has cut the deficit by almost three-quarters, “that’s measured from fiscal 2009, which included some increased spending by Obama.”
It’s also true, as critics are wont to point out, that the unemployment rate can be deceiving. If we calculate unemployment based on all people who are out of work and want a job, it’s almost double the 5 percent rate reflected in the past few job reports.
But that’s not a new problem, or one that Obama’s administration invented. The fact is that when it comes to unemployment and job opportunity, Americans are better off today than they were during the recession, more likely to be employed and to have access to affordable health insurance, whether or not they get it through work. The fact that they’re not better off than they were before the recession is a challenge that even “a president with the gifts of Lincoln or Roosevelt,” to use Obama’s words, might find tough to solve.
Why the Job Market Is Different Today
“Today, technology doesn’t just replace jobs on the assembly line, but any job where work can be automated. Companies in a global economy can locate anywhere, and they face tougher competition,” Obama said. “As a result, workers have less leverage for a raise. Companies have less loyalty to their communities. And more and more wealth and income is concentrated at the very top.”
The PayScale Real Wage Index, which looks at the buying power for full-time, private industry workers in the US, shows that while wages have increased 9.5 overall since 2006, the actual value of those wages has declined 6.5 percent.
Wages have increased year-over-year every quarter since the beginning of 2014, and all but three quarters since 2010, but movement is small, even now that that the unemployment rate is hovering around the 5 percent mark many economists call full employment.
Why are wages relatively stagnant? Because workers don’t yet have the power to demand higher pay. As Obama notes, this is partly because of outsourcing and offshoring. It’s also because of continued slack in the labor market in the form of those workers who aren’t counted in the unemployment rate, and the declining influence of unions.
“Middle-class families are not going to feel more secure because we allowed attacks on collective bargaining to go unanswered,” the president said. “Food Stamp recipients did not cause the financial crisis; recklessness on Wall Street did.”
Plans for the Future
The last State of the Union delivered by a president who’s on his way out isn’t necessarily the place to look for concrete policy proposals. Often, it’s more a chance for the president to ask Congress and the voters to support some general goals and hopefully to inspire citizens to look toward a brighter future.
Obama’s vision of the future includes:
- Universal pre-K.
- “Offering every student the hands-on computer science and math classes that make them job-ready on day one.”
- Cutting the cost of college, including making community college free for students with a solid GPA.
- Stronger Social Security and Medicare. (In one of the better burns of the night, the president said, “It’s not too much of a stretch to say that some of the only people in America who are going to work the same job, in the same place with a health and a retirement package for 30 years are sitting in this chamber.”)
- Security for people who lose their jobs, in the form of more accessible unemployment insurance, retraining programs, and wage insurance to cover the shortfall between old and new careers.
As of right now, these are dreams – and ones not likely to find a lot of support from a Republican-dominated Congress. It will be up to the next president, the legislature, and the voters, to determine if they come true.
Read the full transcript of the State of the Union, here.
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