TheLoop21.com

By: Alyssa Giachino (Add to your loop)
Mon, 02/01/2010 - 01:00

Getting a job doesn't solve all our problems.

We’re all tied together in this hot mess of an economy, as strands in a web that show that the end of our recession pain isn't just over the horizon. And calls for President Obama to forget about everything, except job creation, oversimplify the situation.

Obviously, without more jobs, the economy is in trouble. But for those fortunate enough to have a job, wages and benefits aren’t going up enough to help either. In 2009, wages and benefits went up a tiny bit, 1.5 percent, according to the Labor Department. The increase was the smallest since all the way back to 1982, the Associated Press reports. In other words, we’re kind of stuck in the same place.

Actually, the reports show that we slid backwards from 2008 in wages and benefits, and are now just 1.1 percent higher than in 2001, when we dragged ourselves out of the last recession, as The Wall Street Journal reports.

When people’s wages are stagnating, they’re not likely to go out and spend lots of money, even on hyped new products like the iPad. And, since consumer spending accounts for about 70 percent of our economy, when wages are low, it means we’re not going to be able to buy our way out of this stubborn recession.

So even though the news was positive that the gross domestic product leaped 5.7 percent in the last quarter of 2009, its growth wasn’t based on things that show real improvement in the economy, as The New York Times reports. And of course, we kept losing jobs during the same period.

Last summer, cash for clunkers boosted spending, but we pulled back again in the last three months of 2009. Consumer spending helped lift us out of previous recessions, but this time around, things aren’t looking so good.

So yes, the Obama administration needs to focus on jobs. But that’s no silver bullet. A good portion of the 90 percent who are working still aren’t making enough to feel secure. Not that anybody expected fabulous salary increases in this climate (except Wall Street financiers, of course).

Now the cost of health insurance is a factor in holding down wages and benefits.

For private employers, health insurance costs went up 4.4 percent in 2009, and that’s considered a good number compared to annual increases throughout the last decade. But the lower cost increase doesn’t mean premiums have gone down. It means employers are reducing those benefits--buying cheaper plans and passing costs off on workers.

But still, health reform is supposedly so unpopular because Obama should focus on jobs instead ... well the two things are intimately tied together. Remember, the majority of Americans get their health insurance from their employers.

Americans won’t spend without jobs and better wages. And employers can’t hire unless there’s consumer demand for their products, so cutting the insurance burden would help too. But the cost of health insurance isn’t going to go down without a major overhaul. It’s a sticky web.

Alyssa Giachino is an economics writer for TheLoop21.com. She has worked as a reporter in New York, New Jersey, Mexico City and California covering stories on labor, the environment, immigration and politics.

Will Obama's December jobs forum help unemployment?

Yes, it will make a great impact

No, nothing will change

I'm not holding my breath

I don't know