Business is booming. Employers are hiring. Job growth is soaring. Profits are near record levels. All true, at least in the retail and restaurant industries. New jobs numbers released Friday show that 47,000 jobs were added in retail in July, and 38,000 jobs were added in food and drinking places. These jobs account for over half of the 162,000 jobs added in July.
True, the overall economy isn't creating enough jobs to absorb all the young people who graduated earlier this year, much less provide jobs for the backlog of millions of unemployed. But retail and restaurants have been a bright spot all year: BLS estimates these two sectors have created 732,000 new jobs in the past 12 months.
The statis elsewhere in the job market is striking: No new jobs were created at all in the healthcare sector, which accounts for over 15 percent of GDP. Nor were any new jobs created in manufacturing, another big part of the economy. Further, the BLS reports:
Employment in other major industries, including mining and logging, construction, transportation and warehousing, and government, showed little change in July.
The finance sector is hiring, and various professional jobs are increasing, too. But otherwise a good swath of the people actually getting hired in America right now are working in stores and restaurants.
All of which underscores the need to increase in wages in these sectors -- as striking fast-food workers have been demanding over the past week. When we have tens of thousands of people getting new jobs every month, but those jobs often don't pay much more than the minimum wage, it's hard to get a broader recovery going. These newly employed workers will only have enough money for bare necessities.
Fifty years ago, it was commonly understood among elites of both parties that broad prosperity depended upon a balanced division of wealth between business and workers. If business took too big a piece of the pie, it would undermine the purchasing power of ordinary people and hurt growth. If workers took too big a piece, business and shareholders would have less excess capital to invest in new plants and equipment.
That consensus fell apart starting in the 1970s for a bunch of reasons. But bringing it back is crucial. And there are some signs that more centrists business types get it. Last week, Henry Blodget wrote in Business Insider that, while he has always hated unions, the U.S. economy was going to need them unless capital did a better job of sharing the wealth with labor.
If American companies were willing to trade off some of their current profits to make investments in wage increases and hiring, American workers would have more money to spend. And as American workers spent more money, the economy would begin to grow more quickly again. And the growing economy would help the companies begin to grow more quickly again. And so on.
But, instead, U.S. companies have become so obsessed with generating near-term profits that they're paying their employees less, cutting capital investments, and under-investing in future growth.
This may help make their shareholders temporarily richer.
But it doesn't make the economy (or the companies) healthier.
And, ultimately, as with any ecosystem that gets out of whack, it's bad for the whole ecosystem.
That's exactly right. Which is why we should all be hoping that the recent strikes by low-wage workers only grow stronger in coming weeks and months.