The following is a letter to the editor that I sent to numerous papers including the Riverside, CA Press Enterprise. It disputes the Administration's contention that the economy and jobs are growing at a robust rate. I believe that the Economy as well as the War in Iraq are critical issues for the Democrats in 2006.

Shayne Munger

In Riverside, CA's newspaper, The Press Enterprise, this morning there was an article by Eduardo Porter from the New York Times News Service. The article, in very large type, was headlined: “Job rate confirms growth” In addition there were statements in the piece like "The news bolsters strong consumer spending and expanding business investment”, "U.S. employers added 200,000 jobs in July" and “providing fresh evidence that workers are beginning to benefit from an economy growing at a steady, robust pace". It further stated that "With the exception of manufacturing the labor market was strong across the board" and "Unemployment stayed steady at a relatively low 5 percent reflecting a growing number of people being drawn back into the labor market."

I want to emphatically dispute the conclusions in this article and point out that the media, both newspapers and television news are always taking the side of the administration and painting a very rosy picture of the economy. Case in point is the job creation number of 200,000 in July. If you look at this number realistically, the 200,000 figure is only 50,000 over the 150,000 monthly job creation rate required just to keep up with the new people entering the job market monthly. Also if you look closely at the graph of the monthly net change in the non-farm payroll employment for the last year, the total growth of the net jobs over that period barely exceeds the 150,000 a month requirement. Thus my contention is that this recovery is a “jobless” recovery and certainly “doesn’t” confirm growth as was stated.

Another interesting part was that the labor market was strong across the board with the “exception of manufacturing”. That’s very interesting as I heard on the Lou Dobbs show on CNN yesterday that most of these 200,000 jobs were created in the Retail and Food Service sectors of the economy. This is another example of good benefit and high paying jobs in the high tech sector of manufacturing and IT being replaced by low paying minimum benefit jobs in the service sector. In other words those American Middle Class workers that have been bringing home a decent living are forced into low paying jobs with little benefits that tend to force them on the welfare rolls and the Medicaid heath care program or even into getting their health services in a hospital emergency room. And they can even be forced into the stricter bankruptcy process that the corporate credit card lobby pushed through Congress (that Congressman Calvert voted for) that doesn't clear many of the obligations of these poor unfortunates. All this public assistance gets loaded on the Middle Class Taxpayers’ shoulders and decreases the number of Middle Class families that can pay that tax.

To emphasize this situation even more is the fact that in the last 44 months (heard on the Lou Dobbs Show) there has been a net loss of hundreds of thousands of Manufacturing and IT jobs from the US economy, I imagine those jobs have been sent to foreign countries to exploit the cheap labor and lack of fair labor, safety and environmental standards in those countries. An example of this loss is the recent announcement by IBM that they are laying off 100,000 employees in the US and Europe and highering 100,000 new employees in India! To make things even worse IBM sold it's PC division to a Chinese Company that is partially owned by the Chinese Government. Where do you think those US jobs in that division will eventually end up?

As to the statement "Unemployment stayed steady at a relatively low 5 percent reflecting a growing number of people being drawn back into the labor market." Let me refer you to a study out of the Boston Federal Reserve that argues the current unemployment numbers are out of whack and undercounting millions of the unemployed. As one story summarizes the report: Labor force participation rates "have not recovered as much as usual and the discrepancies are large," [the author of the study] wrote. "Current low rates of labor market participation thus potentially represent considerable slack in the U.S. labor market" While the official unemployment rate has fallen from a peak of 6.3% in June 2003 to 5% in June 2005, the labor force participation rate remains close to 15-year lows of 66%. Of course the Administration’s toddy Alan Greenspan says that that data doesn’t mean much of anything. I think that it does to the other 34% of the labor force that doesn’t have a job!

As to the fact of the growing economy, I feel that the underlying cause for that growth is something that is being ignored. First of all, and I don’t care what the governments figures are on the inflation rate, there has been double and even triple digit inflation in the cost of health care, prescription drugs, education, housing and energy. (See article from the Washington Post “Pay Lags behind Inflation”) Of course consumer spending has gone up we consumers are forced to spend more if we want to live. Also what’s not being considered is the doubling and tripling of home prices in this “hot” bubble housing market. This has led to people either selling their houses and taking out the huge equity and financing a large amount in the new house they purchase or they refinance their present home and take out the substantial equity that they have accumulated because of this housing bubble. And as a result these home owners are buying “large ticket consumer items” that of course is increasing consumer spending. Thus the economy is growing not because we’re getting richer it’s because we’re getting poorer and deeper in debt. See this following article to prove this point:

NEW YORK (CNN/Money) - So much for the American dream.
August 5, 2005: 12:55 PM EDT
By Les Christie, CNN/Money staff writer

“On average, homeowners have 56.3 percent equity in their homes, according to Demos, a public-interest research group. In 1973, equity averaged 68.3 percent; in the 1950s, it was upwards of 80 percent.
Homeowners are yanking out cash. From 2001 through 2004, Americans took $330 billion in equity out of their homes, according Freddie Mac. In 2005 alone, they'll pull out as much as $160 billion.

Demos's senior research associate and author of A House of Cards: Refinancing the American Dream, Javier Silva, said that, even in the absence of a real estate crash, many families "are facing a financial crisis," partially because they've taken on more mortgage debt.

Already, the average American's financial obligations ratio (FOR) -- all your regular bills you must pay each month compared with income -- has expanded to 18.45 percent. That's up from about 15.5 percent in the early 1980s and among the highest since the Federal Reserve began calculating the statistic.

Until recently, according to Silva, homeowners cashed out home equity to pay for home renovations, college tuition, or maybe to start new businesses, all of which are reasonable motives. Today many mortgage brokers have convinced consumers to cash out equity to buy new cars, boats, or other big ticket items.”

"This has been just another spin on crappy economic numbers by the Administration, the Republicans and the News Media. Why can't you people in the mainline News Media stand up and do some real reporting for a change. Tell the American public the real truth about this supposed "free" trade and the global economy that the corporate controlled Administration, the Republicans and the free trade Democrats (Republican clones) from the Democratic Leadership Council are foisting on the American worker and the American people. Tell the American public how this policy is pushing us towards the Nirvana of the corporate and wealthy community where the US is forced into a third world economy where there is the wealthy class the poor working class and very few middle income people in between. Also tell them that the American Dream is in danger of becoming a nightmare!"

Shayne Munger

Armando (on his blog) Fri Jul 15th, 2005 at 11:58:19 PDT
“Undercounting the Unemployed”

From the Washington Post.com By Nell Henderson, Washington Post Staff Writer, Saturday, July 30, 2005:
“Pay Lags Behind Inflation” but the Overall Economy Keeps Growing, Commerce Dept. Says.”

CNN’s Money August 5, 2005: 12:55 PM EDT By Les Christie, CNN/Money staff writer:
“So much for the American dream”
Link:
money.cnn.com