The Pulp: America’s Middle Class Is No Longer The World’s Wealthiest,Yet Dems Cheer April Jobs Report

When it pertains to understanding the critical nature of America’s stagnant economy, I’ve repeated a certain summation: It’s not that we don’t get it, its that we don’t get that we don’t get it. If you tuned in to any of the national media in the past week you probably saw a plethora of stories on the latest jobs report.  Many news reports focused on the strong payroll gains in April of 288,000, which according to Vice President Biden’s former Economic Adviser, Jared Bernstein, was above the the expected 215,0000. Additionally, the main stream media was focused on the unemployment rate dropping by four tenths of one percent to 6.3%, the largest monthly decline since December of 2010 and the lowest unemployment rate since 2008.  On the surface, this jobs report seems to be sunshine and rainbows and a step in the right direction, however a deeper look at the report and the overall health of our economy, paints a vastly different picture.

First things first lets take a deeper look the most recent jobs report. There is mixed news. The drop in unemployment is not the direct result of job creation, but to the overall decline in the labor force participation rate, which fell slightly in the same April jobs report. Again according to Jared Bernstein:

This important and closely watched indicator—the labor force participation rate—also fell 0.4 tenths, reversing recent gains and returning the lpfr [labor force participation rate]  to its low where it stood at the end of last year, commensurate with levels we haven’t seen since the late 1970s…  The BLS noted that the large decline in the labor force—about -800,000—was likely due to fewer entrants as opposed to more leavers.  And this is a volatile number, as I stress below.  But neither can it be dismissed out of hand: it has been essentially stuck at historically low levels for a while now.

Additionally in the most recent jobs report, both hourly wage and weekly hours were flat in the month of April.  The long-term unemployment share of the labor force feel from 2.4% to 2.3%, the lowest its been since early 2009, though this is still elevated when put into historical perspective.

In addition to digging into the jobs report data, I also spent some time reading analysis of certain Federal Reserve analysts as well. One of my golden sources for all things Federal Reserve, is Tim Duy’s blog FedWatch. Duy’s perspective can be summarized as this: this was a difficult jobs report. From Tim Duy: Nonfarm payrolls grew 288k, well above expectations of 215k.  While this numbers pushes the three-month moving average higher, the longer-term trend remains the same:


Duy concludes that the most recent jobs report actually supports an earlier claim from Merril Lynch, that the economic growth figures reported last week, are actual not accurate- that in fact, the first quarter of 2014, was even weaker than the .1% growth figure widely reported. From Merril Lynch:

The advance 1Q GDP report revealed growth of only 0.1%… about a full percentage point less than we had expected. After accounting for weaker-than-expected construction spending and non-durable inventories in March, 1Q GDP is now tracking -0.4%. This is clearly disappointing and pulls down estimates for annual GDP growth… With all the optimism to start this year, nobody was predicting the economy would contract in 1Q. Based on the Blue Chip forecasts in December last year, the average forecast for 1Q was 2.5% with the top 10 highest forecasts of 3.2% and bottom 10 of 2.0%. Obviously, we were all taken by surprise by this brutally cold winter.

I’m not here to play Dr. Doom, that task belongs to the indubitable Nouriel Roubini, but it seems that every time our economy seems to make some sort of progress, it takes  a few steps  back- credit downgrade, Greece being Greece, Tea Pary bringing us to the brink during Debt Ceiling, the subsequent budget sequester that was the result of political gridlock, and yes, even severe weather. There’s just always something.  But, have not fear. Merril Lynch, has some bright spots pertaining to this jobs report and our future. There is some good news:

With the harsh winter weather in our rear view mirror, we can focus on the underlying healing of the economy, which we think has been significant.We believe the economy is on track to bounce back, leading us to revise up 2Q GDP growth to 3.6% from 3.2%. However, this increase does not entirely offset the weakness in 1Q, leaving our forecast for annual GDP growth to slip to 2.5% from 2.7%… Importantly, we think the strength in 2Q is not just a one-quarter bounce. We expect growth to remain strong, averaging 3.4% growth in both 3Q and 4Q.

Now that we’ve dug deeper into the most recent jobs report, we can put into a larger perspective. Let’s examine the quality of jobs that we are creating, the wages that these jobs pay, and most importantly, how is the Middle Class faring in the midst of Obama’s economic “recovery” in light of the fact, that a strong, prosperous and growing middle class is a must to fuel a sustaining economic recovery maintain a fair and clean democracy.

The National Employment Law Project (NELP) , as per their website, is a national organization for employment rights of lower-wage workers. They work with national, state, and local allies to push for policies that create quality jobs, increase socioeconomic mobility, and helping the unemployed get back on the own two feet.  They conduct empirical research on the jobs market, the unemployed, and the quality jobs and produce substantive and thorough reports on said issues.

In April,  NELP released a data brief on an going research project, that confirms some work I’ve done for TFS on the quality of our jobs market.  My piece, focused on the quality of jobs created in the Obama recovery  and the health of the middle class as well: From my piece:

I hate to be the bearer of bad news to delusional Democrats and the puppet punditocracy they follow religiously but the United States is NOT in a better position than before the recession. In fact, the majority of Americans are making less than they were before the financial collapse. According to one recent survey, 76 percent of all Americans are living paycheck to paycheck. Let that sink in….The United States for quite some time, has been replacing good jobs with bad jobs. The Center for Economic Policy and Research defines a “good job” as one that pays at least $18.50 an hour, which according the same study, is the median hourly pay for American workers in 1979 post inflation adjustment. Secondly, the job must provide access to an employer based health insurance plan and furthermore, that employer must cover a portion of the cost of said plan. Finally, the job must provide access to an employer-sponsored retirement plan.


NELP’s report provides quantitative data to support claims in my piece from last summer.  We are more than six years removed from the economy nearly reaching the point of no return and employment is only now, returning to pre-crisis levels. In the ever so quickly globalizing world, the most critical economic issue pertaining to growth, must be the quality of jobs created. Unfortunately, the United States has accepted a growth model that can be summarized as: growth for the sake of growth. That data is alarming, but to me, not surprising.  From NELP:

  • Lower-wage industries accounted for 22 percent of job losses during the recession, but 44 percent of employment growth over the past four years. Today, lower wage industries employ 1.85 million more workers than the start of the recession.
  • Mid-wage industries accounted for 37 percent of job losses, but 26 percent of recent employment growth. There are now 958,000 fewer jobs in mid-wage industries than at the start of the recession
  • Higher-wage industries accounted for 41 percent of job losses but 30 percent of recent employment growth. There now 976,000 fewer jobs in higher-wage industries than at the start of the recession.


If these figures weren’t even to stir your mind, the bad news continues. NELP confirms my prevous hypothesis that our current job growth is overtly concentrated in lower-wage industries. Again from NELP:

  • Four years into the current recovery, private sector employment growth is stronger than it was at the same point following the 2001 recession. Nevertheless, it has taken longer to restore pre-recession employment levels as job losses were greater to the earlier recession.
  • Employment gains following the 2001 recession were polarized, with lower and higher wage industries accounting for a near equal share of job growth. In comparison, the recent recovery is driven largely by lower-wage industries, with higher-wage industries accounting for a significantly smaller share of employment growth.


In short, we still have a serious problem on our hands, but we are all too distracted by other “priorities”- Benghazi, the midterms, missing airplanes, and Chris Brown’s most recent jail sentence. Meanwhile, America’s middle class has fallen behind its northern neighbors in terms of the wealth of its middle class. Let that sink in- once the epicenter of America’s growing economy and he backbone of our society , its middle class is no longer the wealthiest in the world. We are relying on the creation of lower wage jobs to spur an economic recovery. Its not working and its not going to work. In fact, the data shows, its actually making matters worse.  The Guardian, had great article examining how this happened. It examines data provided by another one of my golden sources, the Luxembourg Income Study Database. From The Guardian: …while our economy has been growing more rapidly than those of other nations, a smaller percentage of those households is sharing in that prosperity, the data suggests. income inequality is at its highest level since 1928.

When it pertains to the understanding of the critical nature of our country’s socioeconomic problems, as I’ve said time and time again, its not that we don’t get it. Its that we don’t get that we don’t get it. While our political leaders and media elite want us to be divided on social issues, the quality of the jobs market is an issue that effects ALL Americans of all socioeconomic status, race, creeds, sex, sexual orientations, and yes, immigration status.  If we can all stay focused on economic issues, and put that pressure on our elected officials, we can begin to put this state, and this country, back on the right track. In a forthcoming piece, I’ll further examine the reason why America’s middle class is fell behind and how Democrats can own the economic issue entering the November Midterms.


As always, thanks for reading.





One comment

  1. John Reagan · ·

    Increasing employment has nothing to do with income inequality and the collapse of the American middle class. In any event, the blame for our economic collapse can be laid at Bush’s feet, and the do nothing GOP led Congress can be blamed for a lack of real job growth since then. Blaming the Back Guy in the Oval Office is stupid.


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