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A strong economy isn’t necessarily strong for all households
Despite warning signs at the end of the year, 2018 was a very good year for Michigan’s and the nation’s economy. But the strong economy — characterized by low unemployment and strong growth — was accompanied by 40 percent of Michigan households not able to pay for basic necessities. A majority of those households have a working adult.
This is the new American reality. A strong economy no longer structurally provides the wages and benefits for far too many here and around the country to be able to pay the bills, save for retirement and the kids’ education. This is the prime economic challenge of our generation: creating an economy that provides a path to good-paying jobs and careers for all.
In a time when way too many of our business and political leaders seem satisfied with the economy of today, encouragingly, there are some in both parties who understand the economy is not working for far too many.
Sen. Marco Rubio, R-Florida, in an Atlantic article entitled “America Needs to Restore Dignity of Work” and as part of a Fortune article called “The Shrinking Middle Class,” discusses the need for more middle-class jobs. For Fortune, he writes:
“For too long, Washington and New York have presented American workers with a false choice: economic growth for the few with redistribution, or economic growth for the few without redistribution. Neither framework results in an economy in which regular Americans can provide for a family with their own labor. They deserve a different option.
“My parents came to this country as immigrants and built lives worthy of the American dream. But since I was born in the 1970s, the share of men between ages 25 and 34 earning less than $30,000 a year has almost doubled. Like my father, most of these men do not have an education beyond the equivalent of a high school degree. My mother worked most of her life as a maid, a profession with a median annual income of less than $23,000.
“The solution cannot be simply to get a degree or retrain every time a job is outsourced or eliminated. Workers are not machines that can be broken down, upgraded, reassembled and shipped across the country to the next area of high demand. They are moms and dads who pay rent, with kids who have friends in their schools and on sports teams, and grandparents or family nearby.
“Building a life is as much about stability as it is about pay. … Part of what our country lacks is a consensus on how to create more of these stable and high-paying jobs. While the work of developing one is just beginning, some general goals are clear: more corporate investment in products and R&D over financial engineering; a more balanced system of international trade that makes the U.S. the unquestioned home of next-generation technologies; and a more pro-family system of social insurance.”
In that same Fortune article, Rep. Pramila Jayapal, D-Washington, writes:
“Too many pundits and economists want to join the White House in saying that our economy is strong because unemployment is down and GDP is growing. But the 8.9 million Americans who work full time and still live in poverty certainly don’t think the economy is booming. Neither do the 40 percent of Americans who struggle to meet a basic need, such as buying food or covering rent, or the 62 percent who don’t even have $1,000 in their savings account for an emergency.
“The fact is GDP growth means nothing when 90 percent of it goes to the top 1 percent, as is true today. And while unemployment is low, wage growth has been stubbornly slow and not keeping pace with inflation. It’s past time that we acknowledge a simple truth: an economy in which workers don’t benefit from the profits they help produce isn’t strong — it’s broken.”
What Michigan and the nation needs now is far more Rubios and Jaypals — in both parties — who want to make good-paying jobs and careers the focus of economic policy. And who are willing to work on a bi-partisan basis to implement new ideas on how economic policy can achieve that goal.
In his Atlantic article, Rubio writes: "On public policy, both the right and the left are stale and sclerotic.” Agreement that income — not employment and/or growth — is the measure of economic success that will force both parties to develop new agendas. Developing, debating and implementing the best of those ideas needs to become Michigan’s economic priority. It is far past time that we accept — even celebrate — an economy where 40 percent of households cannot pay for basic necessities.
Lou Glazer is president of Michigan Future Inc.