The uptick in hiring in the U.S. over the last year is real, but more modest than most headlines would have you believe. And the increase comes after a precipitous drop in 2009, followed by an unprecedented five years of no real recovery.
The official unemployment rate gives a false picture of the jobs recovery, in part because millions of jobless workers who have become too discouraged to look for work are not counted by government statisticians. The percentage of the population with a job — a more objective measure — dropped from 63.3 percent in January 2007 to below 59 percent by September 2009, where it remained until last month. Between October 2013 and October 2014, it climbed one percentage point to 59.2 percent, a tangible increase, but still far below pre-recession levels.
The hiring does not signal an end to the world capitalist crisis, for which the employing class has no solution. But it has given a little boost of confidence to working people, helping lay the basis for the current uptick in working-class resistance to the bosses’ assaults on wages, working conditions and benefits.
Meanwhile, average wages have increased only 2 percent over the past year. For working people this has been more than offset by rising food costs, which officially are projected to rise between 2.5 and 3.5 percent this year. Many consider this estimate inaccurate. Craig Johnson, head of consultancy Customer Growth Partners, told Reuters Nov. 10 he believes the figure to be around 5 percent.
In an effort to “stimulate” the economy, the Federal Reserve in December 2008 lowered interest rates to nearly zero. It then began a “quantitative easing” money-printing scheme, in which the government regularly bought government bonds and largely worthless mortgage-backed securities to the tune of $3 trillion over six years to pump money into the financial system. While quantitative easing was ended in October, the zero interest rate remains in effect.
These measures made borrowing cheaper for companies, which supposedly would encourage them to boost production and hire workers. But it has not been profitable for the great majority of bosses to do so. Instead, they accumulated hoards of cash or invested in stocks or other forms of speculative bets where they can turn a profit — as long as the price of such paper “assets” continues to inflate beyond the wealth created through the exploitation of living labor.
“Subprime” auto and mortgage loans are back in fashion this season, scarcely a few years after they were blamed for helping trigger the 2007-2008 world financial crisis. With high and “adjustable” interest rates, these loans are geared in general toward low-income working-class families, many of whom have no way to keep up with onerous payments.
The rulers’ fiscal and monetary schemes and financial speculation can’t lead to increased production. Rather, they affect the circulation and division of wealth among competing capitalists. Among the net results is the further concentration of capital. The “share of wealth held by the country’s richest 0.01 percent — a group of roughly 16,000 families with an average net worth of $371 million — is the largest share they’ve had since 1916, the highest on record,” the Christian Science Monitor wrote Nov. 10. “The top 0.01 percent wealth share is about as large as the top 1 percent income share in 2012.”
The scope of the crisis is more worldwide than at any time in history.
Eurozone countries face “an increasing risk of stagnation,” Catherine Mann, chief economist of the Organization for Economic Cooperation and Development, told the media. Working people are not the only ones laden with debt as capitalists seek avenues for profit. The rulers’ own governments face rising bond payments to the biggest propertied families, prompting moves to cut expenses — starting with higher taxes and cuts to jobs and services that above all affect working people. In Brussels, for example, more than 100,000 took to the streets Nov. 6 to protest plans to raise the pension age to 67 and delay promised wage increases. In Budapest, Hungary, tens of thousands rallied Oct. 26 and Oct. 28 against government plans to tax Internet use, a decision authorities revoked a few days later.
The economy of China — looked to in recent years by capitalists around the globe as a “miracle” engine of world economic growth — continues to show signs of running low on gas. China’s economic expansion slowed to 7.3 percent in the third-quarter, the slowest pace in five years. The housing market also plunged, as indebted property developers “could default on a large scale,” reported Businessweek.
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