The Daily Item, Sunbury, PA

Politics

February 13, 2013

Growth not enough to help middle class

(Continued)

The Republican response to Obama's speech did not appear to nod to the new reality at all. The speaker, Sen. Marco Rubio of Florida, declared that "economic growth is the best way to help the middle class" and offered few job-creation proposals that appeared materially different from what Republican politicians have pushed since the 1980s.

It's painfully true that the recovery under Obama has produced slower growth rates than any sustained recovery dating back to the Great Depression. That's only part of the problem. The growth that has occurred hasn't produced anywhere close to a historically "normal" level of job creation or income gains.

Nearly four years after the Great Recession ended, 12 million Americans are actively looking for work but can't find a job; another 11 million are stuck working part-time when they'd like to be full-time, or they'd like to work but are too discouraged to job-hunt. Meanwhile, workers' median wages were lower at the end of 2012, after adjusting for inflation, than they were at the end of 2003. Real household income was lower in 2011 than it was in 1989.

From 1948 through 1982, recessions and recoveries followed a tight pattern. Growth plunged in the downturn, then spiked quickly, often thanks to aggressive interest-rate cuts by the Federal Reserve. When growth returned, so did job creation, and workers generally shared in the spoils of new economic output.

You can see those patterns in comparisons of job creation and growth rates across post-World War II recoveries. Starting in 1949 and continuing for more than 30 years, once the economy started to grow after a recession, major job creation usually followed within about a year.

At the height of those recoveries, every one percentage point of economic growth typically spurred about 0.6 percentage points of job growth, when compared to the start of the recovery. You could call that number the "job intensity" of growth.

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