Issue 1: Jobs and The Economy

10 Issues to Consider in the Months Ahead

This is the first in a series of posts to come between now and Labor Day about ten key issues we face as Americans and need Congress to lead us to solutions on. At the end of the series, we will publish a survey aimed at uncovering the issues that matter most in each district in the country

#1: Jobs & The Economy

I am calling the first issue “Jobs & The Economy.” It is labeled this way because it is the language that almost every current member of Congress uses on their web site. Not surprisingly it has also become a dominant focus in the first months of the 2016 Presidential campaigns, though as I will point out, I’m not sure most of the candidates are really talking about the aspect of the issue I’m guessing most people care about.

This is, though, a guess and I want to describe it as such. I am guessing that a great many, probably most, American citizens care about an improving economy and job creation. I expect it to be one of the central issues of this election cycle. But I am also guessing that the reason this issue matters to most people is that they would like to see more money in their own wallet and savings account. …and this is where the the early rhetoric in the campaign (and if we’re not careful in the 2016 congressional campaigns) differs from what we actually care about.

Earlier this month Jeb Bush and Chris Christie both suggested that they would “grow the economy” by four percent per year if elected. Translated to most accepted views on what constitutes “growing the economy,” this would mean growing the Gross Domestic Product by four percent. By way of comparison the GDP grew at 2.4 percent (adjusted for inflation) in 2014 and last reached four percent growth in 2000.  Not surprisingly, the media jumped on this story and began the debate on whether this was or was not possible. It’s interesting and reading through these arguments will provide interesting perspectives on the overall financial prospects of the country.


But none of the accounts I saw asked a question that seems reasonable to me…why would the average person care? Sure – “The Economy” (GDP) growing gives us a national sense of well being. It is the number the world uses to measure economic success. But for the average American household, which takes in about $52,000 per year, there has not been a statistical correlation between GDP growth and household income for decades. The GDP goes up almost every year. In some years growth is higher than it is in others but the GDP has only gone down from one year to another three times since 1980 (two of them in the Great Recession.) Since 2000 the “Real GDP” of the United States (inflation adjusted) has grown by 28 percent.

GDP or MHI…Oh My

The Median Household Income is a different story. As a reminder,  median looks at the middle figure in a list of figures rather than their statistical mean (average) and many  organizations, including the U.S. Census Bureau and Bureau of Economic Analysis measure and refer to MHI as it provides one of the clearest pictures of how individual Americans are doing financially.  In the same time period (since 2000) in which GDP has grown 28 percent, the Real (inflation adjusted) Median Household Income has actually decreased 6.6 percent and is down almost nine percent from the year before that. In fact, until a very modest increase in the most recent figure, (2013) MHI has gone down every year since 2007 and in all but three years since the turn of this century. Combined with faster than inflation increases in healthcare and housing that leaves most people in this country quite a bit worse off financially than they were a decade ago.


To save you the trouble of reading the very helpful, if somewhat dry, Primer on GDP and the National Income and Product Accounts produced by the U.S. Bureau of Economic Analysis, there are some differences between Gross Domestic Product and Gross National Income, (GNI) which used to be called Gross National Product. The latter takes into account income received from activities based outside the USA but they are generally similar and have risen at about the same rate historically.  The latter figure is used to calculate the Median Household income. Who cares?

Wither $370 Billion?

Well, at a 2.4 percent growth rate, about $370 billion was added to income in this country last year. If that number was divided equally among households, each would have made a bit more than $3,000 more than the previous year. If the MHI just grew at the same modest 2.4 percent, the average household would have received $1,272 more. Instead, that average household made $335 more and this is the first year since 2007 it has made more at all. Our system of government is not designed to distribute wealth equally but that staggering disparity ought to beg the question, why would the average person ask politicians what they are going to do to improve the economy instead of asking what they are going to do to improve their income? With all the lip service given to “fighting for the middle class,” why do politicians (and the media that covers them) focus so much more on income most Americans will never see. It’s a rhetorical question  and any answer we got would likely be equally rhetorical.

Other Questions to Ask

But I would propose asking candidates (and looking for the answers to) a set of very specific questions like these:

  1. What do you propose to do to raise the Median Household Income in a meaningful way?
  2. How much growth in this number is realistic in the year ahead…two years, four years ahead?
  3. What are the barriers in the way? Why haven’t we done this before?
  4. If new programs will create this growth, how much will they cost and where will it come from?

Beware of general language like “we’re going to focus on job creation” or “were going to reduce taxes and allow businesses to create jobs.” The former is too vague to be meaningful (What kind of jobs? How much will they pay? Who will be qualified for them?) and the latter isn’t supported by evidence.

The unemployment rate (5.3 percent in July) has been decreasingly steadily since a high of 10 percent just after the Great Recession and in 2014 more jobs were created in this country than in any year since 1999. From 2010-2014 – the U.S. economy added more than 10 million jobs.  In that five years, Real Median Household Income has increased by a total of $358 (.06%).

Also, reducing taxes isn’t the same as increasing income – it is an inherently regressive activity.  As anyone who does the household books can attest, figuring out a way to make more instead of spending less is a lot more fun.

productivity-vs-wages-parted-waysWhat will make wages actually increase and the rate of income inequality slow in this country? There are a variety of theories. Former Secretary of Labor Robert Reich lists several causes and potential solutions in his recent documentary Inequality for AllA Harvard Business Review article  entitled Profits Without Prosperity from economist William Lazonick last year decried the increase of corporate stock buybacks and suggested they are responsible for the decoupling of productivity, which has risen fairly steadily since World War Two, from wages, which began to level off in the 1970s and have been stagnant for almost two decades. Both are deserving of a read – both can and should also be debated.  What can not be debated is that for the vast majority of Americans income has barely budged over the 15-year course of the last two presidencies, one Republican, one Democrat – both two term.  Whether the next President, regardless of who it is, is able to do anything about that will have everything to do with how the candidates for the House and Senate next year answer the questions above. Let’s ask the questions and judge for ourselves whether they were answered in a believable way.

Next up – Affordable Healthcare






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