Slow wage growth shows need for economic shake-up

This editorial appeared in the Pittsburgh Post-Gazette.

Jobs figures announced Sept. 1 by the Department of Labor showed 156,000 created, a downward revision of June and July numbers, and a truly depressingly low 0.1 percent rise in wages.

The numbers had to be discouraging for President Donald Trump, given the promises he had offered during his campaign for president to his core supporters, America’s factory workers, miners and other blue-collar workers, especially in the Midwest. Maybe the worst statistic was the drop in the number of Americans in the 25-to-54 age group who are working, down by 0.3 percent, not a lot but down rather than up.

In general, however, seeking to assess the future impact on United States’ economic growth, particularly in terms of reducing the economic inequality gap, of impending U.S. government actions, the picture is not all bad. In the short run, the rise in fuel prices brought about by the shutdowns and damage to refineries in Texas and Louisiana brought about by Hurricane Harvey will draw down Americans’ spending in other areas. In the longer run, particularly looking at the rest of this calendar year, some matters on the congressional agenda, if passed, could give the U.S. economy a boost.

Smooth passage of a raise of the U.S. debt limit above $20 trillion, hitched to Harvey relief, clean passage of budget and appropriations legislation, Federal Reserve relinquishment of bonds bought as part of post-2008 depression quantitative easing, and a normal, expected rise in the Fed interest rate should encourage second-half growth of America’s gross domestic product above its pallid first-half increase of 2.1 percent.

If Congress and the White House can somehow apply themselves to coming forth with a viable tax reform bill, it could in principle, lead to positive developments. The U.S. economy is definitely in need of a shake-up. Its corporate tax rate certainly needs to be cut.

As long as Washington doesn’t show any interest in shifting government expenditures from defense, nation-building and other overseas ventures to fixing America through infrastructure construction and reconstruction, Americans will have to look to tax reform and smoother responses to the economy’s needs in coming months for reasons for optimism about their standard of living over the next few years.

 

The editorial board is composed of the publisher and four journalists of varied editing and reporting backgrounds. The board's discussions and information gained from its meetings with political, civic, and business leaders drive the institutional voice of The Day, as expressed in its editorials. The editorial department operates separately from the newsroom.

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