Economic recovery not aiding those near bottom
September 23, 2014 - 5:54 am
America’s fast-food workers spoke out, were cited in some cases, and once again are taking your orders.
In nationwide protests, including an energetic turnout in Las Vegas, burrito folders and burger flippers left their jobs briefly to shout for a healthy raise in the minimum wage and the right to form a union. Waving signs reading “Low Pay is Not OK,” “Wendy’s On Strike” and “Burger King On Strike,” they gathered on the Strip and achieved their purpose: to raise awareness and get on the news. Ten people were cited locally. The story rose and fell from the headlines.
Whether you believe the raises are deserved, laughable or an attempt by organized labor to strengthen its ranks, what is undeniable is that the economic recovery continues to creep along in a malaise that isn’t much helping workers near the bottom of the ladder.
Economic indicators continue to rise. Corporations are reporting record profits — but it’s just not benefiting most workers.
Harvard Business School professors Michael Porter and Jan Rivkin believe they know why and make their argument in a recently released report, “An Economy Doing Half Its Job.” The study is based on a survey of approximately 2,000 Harvard business alumni, and while the conclusions aren’t startling, they do reinforce some of the issues that face Nevada’s employers and workers as the recession slowly fades.
“But oddly, the recovery makes this a decisive moment, and potentially a dangerous one,” they write. “Will we as a society now sigh in relief and continue business as usual, grateful for calmer waters? Or will we seize the opportunity to repair the structural weaknesses in our economy that the storms revealed and that, arguably, brought on recent troubles and may bring them on again?”
A crossroads provides an opportunity. Because what we have now isn’t benefiting a large percentage of the workforce. In a competitive world, we’re not keeping pace.
“The meager job creation that has occurred has been overwhelmingly in local industries, not those facing international competition,” they observe. “Labor force participation in America peaked in 1997 and has now fallen to levels not seen in three decades. Real hourly wages have stalled even among college-educated Americans; only those with advanced degrees have seen gains. Notably, all of these trends began well before the Great Recession. They are structural, not cyclical.”
In other words, that flat-wage feeling isn’t a passing storm, but a new reality.
“Our sense that the American economy is doing only half its job is amplified by the recent business cycle, with its jobless, low-wage recovery,” they write. “After the recession that began in late 2007, real gross domestic product recovered to pre-downturn levels in three and a half years, but it took three more years (until May 2014) for the number of jobs in America to return to its prior peak.”
More than six years passed with zero job growth, and when the work returned, it came back in the form of lower pay, fewer benefits and a lot less security.
As the survey suggests, improving the K-12 education system, increasing workplace skill levels in an evolving jobs market and implementing a national transportation infrastructure strategy will be enormous undertakings. Failure to do so will have a debilitating impact on the economy.
The authors call for corporate collaboration to accomplish these improvements — something pretty foreign to traditionally competitive American business models.
“Without such actions, the U.S. economy will continue to do only half its job, with many citizens struggling,” they write. “And in the long run, American business will suffer from an inadequate workforce, a population of depleted consumers, and large blocs of anti-business voters. Businesses cannot thrive for long while their communities languish.”
Laugh at those fast-food workers if you wish, but I’ll wager you’ve only begun to hear the voices of protest in this still-struggling economy.
John L. Smith’s column appears Sunday, Tuesday, Wednesday, Friday and Saturday. E-mail him at jsmith@reviewjournal.com or call 702-383-0295.