Economic Numbers May Mean Political Trouble
SCOTT SIMON, host:
This is WEEKEND EDITION from NPR News. I'm Scott Simon.
Coming up, a museum of sex in a city known for it, and we don't mean museums. But first, the federal government's most recent economic statistics paint a mixed picture of the U.S. economy. One hundred and twenty-eight thousand new payroll jobs were added last month and the nation's unemployment rate dipped slightly.
Wages rose, but not as much as some economists had predicted. Peter Morici is a professor at the University of Maryland's School of Business and former chief economist at the U.S. International Trade Commission. He joins us in the studio. Thanks very much for being with us.
Professor PETER MORICI (University of Maryland School of Business): It's a pleasure.
SIMON: And what do you make about these latest numbers?
Prof. MORICI: Well, this is the latest in a succession of sub-par numbers. The growth in jobs that we have indicates that the economy is slowing and it's going to be difficult to keep unemployment down. The unemployment rate fell because many people left the labor force. They quit.
SIMON: And what about wages rising but not as much as some had predicted?
Prof. MORICI: Well, wages hardly rose at all - 1/10th of 1 percent - with inflation outside of - at four percent a year. That's a rate of increase of about, you know, one, one and a half percent a year in wages. That's hardly enough to keep up. And that's pretty much been the story for ordinary people, and that's what that wage number measures. The people who do the hard work. Things have not been keeping up.
SIMON: What are both the weakest and strongest sectors of the economy?
Prof. MORICI: The weakest sector by far is manufacturing. It continues to be clobbered by the trade deficit and imports. Over the last five years they have lost three million jobs. That's an incredible story. Normally at this point in the recovery we would expect to have them get about two million back.
Where are Americans going to work? Things that they don't trade abroad. Things like the hospitality industry and landscaping and things of that nature. That's retail sales, that's what's strong. And of course, the hospital sector, our healthcare sector, simply because we spend so much money on it.
SIMON: What about he generalization that the wages of skilled workers and that section of the economy is growing and unskilled workers and that section of the economy is not?
Prof. MORICI: For the top 25 percent, things have never been better. They're getting wealthier by the day. It's caviar for the best and cake for the rest. For the lower half, things are very tough. Wages don't keep up with inflation. If they lose their job they have trouble replacing it with a job that has comparable wages and benefits. More and more people are going without healthcare.
SIMON: Let me ask you about that, 'cause that's an all-time high now, reportedly: 46.6 million. What impact does having almost 50 million Americans without health insurance have on the economy overall?
Prof. MORICI: Well, it has a terrible impact because it creates a lot of inefficiency. People come to emergency rooms when they should be seeing doctors on a regular basis. The high cost of healthcare keeps us from creating jobs. In sectors where benefits are the norm, some businesses simply can't afford them, so they don't create employment.
SIMON: Do you see anything in these figures that speak to what we're told is the slowdown in the housing market and, as we all know, I think, the rising price of energy?
Prof. MORICI: We haven't really seen the impact of the housing market in the employment numbers yet. We know that fewer homes are being started but still many are being completed. So the construction sector held up pretty well. What we expect to see going forward is a shift in employment from housing to commercial construction, as that sector's picking up a little bit.
SIMON: Do you see, what would you venture to see by way of political implications in these numbers?
Prof. MORICI: Oh, these numbers bode poorly for the Republicans. A lot of the jobs lost in manufacturing fall in communities along the ridge line between red America and blue America. And a lot of the job losses are in districts that could go one way or the other. These numbers will contribute more to a Democratic victory than anything else out there in the economy, if that does happen.
SIMON: Peter Morici, professor at University of Maryland School of Business, thanks for being with us.
Prof. MORICI: You're quite welcome. It's been a pleasure.