Labor Day is the day we "take a break" from our labor to honor those who work. The very first Labor Day holiday was celebrated on Tuesday, Sept. 5, 1882, in New York, a celebration that was created by the Central Labor Union. Two years later, the date was fixed as the first Monday in September.
As we celebrate Labor Day and the traditional end of summer, this year there's a national concern about jobs -- about the number of jobs, the kinds of jobs, the right policies for the creation of jobs.
It seems that not enough people in America can find the kind of personally or financially rewarding work they seek. The nation's unemployment rate stands at 5.7%. That's far from the breadlines of the Great Depression, or even the double-digit rates of the early 1980s when much of our industrial economy went through an upheaval. (We'll get an update on those unemployment numbers on Friday.)
But the 5.7% unemployment rate in this huge economy represents 8.8 million people who say they are looking for work but can't find a job. That doesn't include the millions who have given up the job search -- an estimated 1.6 million so-called "discouraged workers."
Nor does it include the "underemployed" -- those working in part-time positions because they can't find full-time jobs or because their hours were cut back. In July, according to the Bureau of Labor Statistics, the number of people who worked part time for economic reasons rose by 308,000 to 5.7 million.
All the economic statistics mean little, of course, if it is
or someone in your family who can't find a job, or has taken a lower paying position with fewer hours just to try to make the mortgage payment or put food on the table and gas in the car.
Initial claims for state unemployment benefits declined to "only" 425,000 last week, down 10,000 from the previous week. Is the glass half full or half empty? It was the sixth straight week that more than 400,000 people filed claims.
The Good News?
There are, however, some positive signs for the economy. Growth in the second quarter was revised upward last week to 3.3% from an anemic 0.9% in the first quarter. The growth surprised many economists, whose predictions averaged a still-healthy 2.7% gain.
Why the boomlet? Credit the stimulus checks from the government that sent $90 billion into the economy and spurred consumer spending, and the weak dollar, which spurred exports in the second quarter.
Still, Americans are complaining about the jobs they do have -- charging that the best jobs are being sent overseas to those who will demand less pay and benefits.
It's true that those working full time are working slightly fewer hours. In July, the average workweek for production and nonsupervisory workers on private nonfarm payrolls fell by 0.1 hour to a seasonally adjusted 33.6 hours.And workers are making slightly more money -- but not enough to keep up with the current rate of inflation. The BLS reports that over the past 12 months, average hourly earnings increased 3.4% and average weekly earnings rose 2.8%. But the consumer price index was 5.6% higher in July 2008 than a year earlier.
Good Numbers, Bad Policy
We have economic growth today based on government spending and a falling dollar that boosts exports. Those ingredients make for good numbers but bad policy. Spending money the country doesn't have by sending checks to consumers only increases the national debt and triggers fears that we'll "print" more money, which is inflationary and weakens the dollar. That dollar weakness may spur the growth of exports, but it raises the price of everything we import, including oil.
Research shows small businesses created more new jobs, on a net basis, than larger companies in recent years. But many of those small businesses can't afford the health benefits provided by larger firms. So if you start your own small business and grow wealth -- or hire other people to work for you, or purchase supplies from a small business -- you're boosting the economy.
But job growth in small business also means a shift in the way we provide both health and retirement benefits. Individual retirement accounts have taken up some of the burden that was once provided by corporate pensions. But it is undeniable that the employer-linked health care model that worked so well in a different era now must be replaced.
The issue facing Americans -- and the political candidates in this election season -- is how to recognize the changing profile of labor in this country. The challenge is how to provide benefits and incentives that keep the economy and the job market growing, instead of making America noncompetitive in a global marketplace. And that's the central economic issue about to be debated on a national stage.
We don't want to compete for a share of the least productive jobs with the rest of the world. And we can't build a wall to keep the best jobs from moving away.
America always has created the right incentives to keep growing new industries and better jobs and a better standard of living for its citizens. That's our challenge on this Labor Day. And that's the Savage Truth.
Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated. She was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. Savage currently serves as a director of the Chicago Mercantile Exchange Corp.