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The Jobs Report, and America’s Two Economies

Robert Reich

At 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 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. This 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 is 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.

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