The Jobs Report, and America’s Two Economies

looking for workAt a time when corporate profits are through the roof, the Dow is flirting with 12,000, Wall Street paychecks are fat again, and big corporations are sitting on more than $1 trillion in cash, you’d expect jobs be coming back. But you’d be wrong.

The U.S. economy added just 36,000 jobs in January, according to today’s report from the Bureau of Labor Statistics. Remember, 125,000 are needed just to keep up with the increase in the population of Americans wanting and needing work. And 300,000 a month are needed — continuously, for five years — if we’re to get back to anything like the employment we had before the Great Recession.

In other words, today’s employment report should be sending alarm bells all over official Washington. Granted, unusually bad weather may have accounted for some of the reluctance of employers to hire in January. But even considering the weather, the economy is still terribly sick. (Technical note: The official rate of unemployment fell to 9 percent from 9.4 percent, but that’s because more workers have left the labor market, too discouraged to continue looking for work. The official rate reflects how many people are actively looking for work.)

We have two economies. The first is in recovery. The second remains in a continuous depression.

The first is a professional, college-educated, high-wage economy centered in New York and Washington, that’s living well off of global corporate profits. Corporations continue to make money by selling abroad from their foreign operations while cutting costs (especially labor) here at home. Wall Street is making money by taking the Fed’s free money and speculating with it. The richest 10 percent of Americans, holding 90 percent of all financial assets, are riding the wave. And their upscale spending has given high-end retailers and producers a bounce.

The second is most of the rest of America, and it’s still struggling with a mountain of debt, declining home prices, and job losses. In coming months most Americans will also be contending with sharply rising prices of food and fuel.

Our representatives in Washington see and hear mostly the first economy. The business press reports mainly on the first economy. Corporate and Wall Street economists are concerned largely with the first economy.

But the second economy will determine our politics in 2012 and beyond.

Robert ReichAnd not even the first can be sustained permanently on its own. Corporate profits cannot continue to rise on the basis of foreign sales (which are slowing as Europe adopts austerity and China raises interest rates), the purchases of the richest 10 percent of Americans (which are dependent on a rising stock market), and cost-cutting measures at home (which are necessarily limited). Without a strong and broadly-based middle-class recovery, America’s big money economy will fall in on itself. A major stock market “correction” is a certainty.

Robert Reich
Republished with permission from Robert Reich’s Blog


  1. Transparency says

    America’s economy grows sustainable employability for the workforce with management-employee loyalty. As businesses, universities, states, counties, cities stumble through the recession; some find themselves in a phase of creative disassembly. Hundreds of thousands of jobs are shed. World class University of California Berkeley led by Chancellor Birgeneau ($500,000 salary) is dismissing employees, faculty via “Operational Excellence (OE)”: 2,000 fired by end of 2011. Yet many cling to an old assumption: the implied, unwritten management-employee contract.

    Management promised work, upward progress for employees fitting in, employees accepted lower wages, performing in prescribed ways, sticking around. Longevity was good employer-employee relations; turnover a dysfunction. None of these assumptions apply in the 21 century economy. Businesses, universities, public institutions can no longer guarantee careers, even if they want to. Managements paralyzed themselves with a strategy of “success brings successes” rather than “successes brings failure’ and are now forced to break implied contract with employees – a contract nurtured by management that future can be controlled.

    Jettisoned employees are discovering that hard won knowledge earned while loyal is no longer desired in employment markets. What contract can employers, employees make with each other?

    The central idea is simple, powerful: job is a shared partnership.
    • Employers, employees face financial conditions together; longevity of partnership depends on how well customers, constituencies needs are met.
    • Neither management nor employee has future obligation to the other.
    • Organizations train people.
    • Employees create security they really need – skills, knowledge that creates employability in 21st century economies
    • The management-employee loyalty partnership can be dissolved without either party considering the other a traitor.

    Let there be light for employees and management

    • Lynn G says

      Ahh, those poor corporations, having their voices censored. We can see how well that works for workers. For a brief time, workers were actually considered to be contributors, but now only corporations contribute to the economy. How’s that working for ya’?

  2. Nicholas C. Arguimbau says

    I don’t think it is realistic to call Obama a “retard,” either directly or through reference to him with the implicitly racist slur, “the first affirmative action President.” I think it is much more realistic to assume he has done what he intended – to shift American jobs and global oil to China, providing a safe haven there for major businesses and the oil industry itself from the collapse of the oil supply. See

    Nicholas C. Arguimbau

    • Spearmann says

      I don’t think you know what racism is. And Obama called himself a retard… so I think that’s fair.

      As far as what he intended… I don’t think he has the slightest clue what he is doing…

    • Dr. Wayne Gautreau says

      It was not President Obama that sent jobs overseas it was President Ronald Reagan, President Bush Senior, President Bush Junior and to some extent President Clinton with NAFTA. It was the Republican controlled House and Senate that voted to reward corporations that off shored jobs with tax deductions. So called American corporations are creating jobs for people in India, China, the Chez Republic and Mexico. The question you should be asking is how could this happen when it has not happened in any other country? The simple answer is, as long as lobbyists and big corporate money are needed by our representatives to get reelected our elected officials will not represent the interest of the people they will represent the interests of their corporate masters. In almost every European country as well as Canada elections are publicly funded. England last year elected a Prime Minister and the total cost was $200,000 dollars. It is against the law in almost every European country as well as Canada for special interest groups, the wealthy, religious groups or businesses to contribute money to any campaign. Each candidate is given the same amount of tax payer dollars for their campaign. Thus elected officials represent the interest of the people and what is best for their country. Until we change our system this country will move further from a Democracy and closer to a Fascist Theocracy.

Leave a Reply

Your email address will not be published. Required fields are marked *