No party despite falling unemployment
The unemployment rate no longer seems to reflect America?s mood.
Friday?s strong jobs report showed that the jobless rate the most closely watched gauge of the economy?s health is down to 5.8 per cent. A year ago, the rate was 7.2 per cent. Five years ago, it was 10 per cent.
It?s the kind of sustained decline that would normally suggest a satisfied public.
Not so much anymore. After last Tuesday?s midterm elections, exit polling showed how little falling unemployment has resonated. Most voters said they cast their ballots out of fear for the economy, stripping the Democrats from the Senate majority and implicitly rejecting President Barack Obama.
Many Americans don?t feel they?ve benefited from falling unemployment any more than they have from a sustained rise in the stock market or from solid US economic growth.
Some hints of their discontent can be found within an otherwise glowing jobs report for October: Wages that are barely growing and a stubbornly low proportion of adults who either have a job or are looking for one.
?Underneath the surface, things are not good,? said Michael Mandel, chief economic strategist at the Progressive Policy Institute. ?Both Democrats and Republicans would be making a mistake if they looked at the unemployment numbers and didn?t understand why voters are angry.?
Is there solid evidence that the economy is better? Definitely.
Home values have recovered from their recession-induced lows, according to real estate groups. Government figures show that fewer and fewer workers
are being laid off. Consumers punched the accelerator on auto sales this year. And the stock market has kept up its stampede to record highs.
But the jobs report contains clues to why many voters shrugged off those positive trends.
Consider wages. Workers? pay usually outpaces inflation once the unemployment rate dips beneath 6 per cent. That?s because when fewer people need to look for jobs, employers must raise pay to attract the most desirable among them.
Even with 5.8 per cent unemployment and even though more than five years have passed since the Great Recession officially ended, this phenomenon has yet to take hold. Most workers? pay is barely keeping up with historically low inflation.
Look, too, at the percentage of adults either working or searching for work. It?s a measure called labour force participation. The government counts people without jobs as unemployed only if they?re seeking work. If more people stop looking, labour force participation falls.