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Wages Fall Again Despite Jobs and GDP Hype; Projects Needed

Nov. 5, 2017 (EIRNS)—The U.S. Labor Department’s October employment report surprisingly showed Americans’ average hourly and weekly wages falling slightly, and again having risen just over 2% in the past year. The subsequent report on "real wages" will show them flat or even lower than one year ago, even by the suppressed Consumer Price Index inflation measure. This confounds the statement made by President Donald Trump in promoting the Republicans' "tax reform" plan on Thursday. The President noted that for large numbers of Americans, their real wages had not risen for 20 years or more, but assured that "wages—finally—wages are starting to really rise."

The opposite is occurring, and since personal consumption expenditures, led by shelter, healthcare and education costs, are continuing to rise, Americans’ personal debt has risen by about 14% per capita in the past three years. It’s not mortgage debt this time, but it is again becoming an unpayable bubble only smaller than the trillions in unpayable corporate debt.

Leaving aside its crazily adjusted "monthly headline numbers," the jobs report does not show a very productive picture. It follows the Commerce Department reporting a 3% Gross Domestic Product (GDP) growth rate for the third quarter, and also for the second quarter, a marked pickup in "growth" also promoted heavily by the President on Thursday. But the sources are stock market rises above all; secondarily increases in business inventories and increases in business capital investment; and increases in payments for healthcare can’t be forgotten, since healthcare expenditures are one-sixth of GDP.

Employment growth has slipped for the past two months to a 1.9 million/year rate, whereas two years ago this reached a growth rate of about 2.7 million/year. The official unemployment rate keeps going down because this 1.9 million jobs/year is much higher than the growth of the labor force, which continues to be depressionary. In October taken alone, the Household Survey showed a huge dropout of 970,000 Americans from the labor force, making a total of 95.3 million out of the workforce; and a very large drop of -0.4% in labor force participation. Participation, now at 62.7%, is 2.1% lower than the collapsed level of the crash year 2009! It is 4.2% below the level of 2007.

Despite more new jobs than new labor force entrants, the problem continues to be the 85-90% of new job creation which is in unproductive fields and/or effectively temporary, pays relatively low wages, and contributes nothing to real economic productivity. Creating a lot of high-paying productive employment will occur, if at all, through investment in new infrastructure projects. Public construction (a marker for infrastructure investment) has grown by just 1.9% in the past year, and is still below 2008 level.