Having a Hard Time? Well, the Economy is Doing Great!
Why are many people having their "slowest/hardest/most grueling year", asks Jenny Blake, when all the economic indicators are looking good?
Despite what you might have heard, the US economy is not in a recession.
Or so says the National Bureau of Economic Research, which gets to make the decision about these things. In fact, there hasn't been a recession since March 2020—which was the shortest recession since 1948.
Unemployment is nearing all-time lows again (it ticked up to 3.8% in August). Employers continue to create jobs at a steady clip. Inflation declined for 12 straight months until rising a bit in July.
GDP is up. The stock market is up. Even consumer confidence is up.
But a July Quinnipiac poll found that only 38% of voters approve of Biden's handling of the economy. And an August CNN poll found that 51% of respondents believe that the economy is still in a slump.
That leads us to a question from. She said that the majority of people she talks to—small business owners who are friends or clients—"are experiencing one of their slowest/hardest/most grueling years of the decade—if they're even still in business."
Maybe it’s just my circles? Or slow work combined with exhaustion? Summer slump? Or do employees and large employers have a recession-free-seeming existence while only small business owners are feeling the pinch? Even the employees I speak with seem afraid to make any moves, and afraid to get laid off. So where is the mainstream optimism coming from??
Jenny is describing a phenomenon that's currently confounding some economists and most business journalists, too. Economist Darren Grant described the situation for Vox in a piece aptly titled, "When it comes to the economy, everything's great and nobody's happy." The Today Explained podcast asked, "Where did the recession go?" The folks at Planet Money even brought in a tarot reader to help guide their recession-related predictions (okay, they consulted some economists, too).does a great job teasing out some key factors of this mismatch. She points out what should be obvious but clearly isn't to most business and economy journalists: two things can be true at once.
The economy can be better than it has been
We can continue to have crushing inequality with people who are still struggling
We need the kind of nuanced analytical approach that Scanlon uses to make sense of this seeming contradiction. We also need a critical philosophical explanation for the mismatch to get to bigger truths.
To do that, I'm going to fiddle with Scanlon's first statement—not because I disagree (I don't) but because it offers a good rhetorical jumping-off point.
The economy can be better than it has been.
To start, let's break this statement into three parts: "the economy," "better than," and "has been."
What are we really talking about when we say "the economy?"
In terms of economic news, "the economy" is a stand-in for a set of metrics: GDP, unemployment rate, consumer price index, inflation, etc. But these metrics are just measurements of particular economic activities. What's more, each metric is an aggregate (even an abstraction) of its own set of more specific metrics.
For instance, "unemployment rate" appears to be a simple measurement—the percentage of the workforce that's out of work:
'What's unemployment at right now?'
'Oh, it's about 3.8%.'
But that single number masks a much more complicated set of unemployment rates.
We can break down 'the' unemployment rate by race, gender, education level, age, etc. And when we do, we see that some groups fare far worse than others.
So, sure—the current unemployment rate is about 3.8%. But that makes it easy to forget that the unemployment rate for Black women is 5.4%. The aggregate unemployment rate also belies the fact that while few people may be completely without jobs, more people are underemployed. That means they would prefer a regular full-time job but can't get more than part-time or contract work. That number stands somewhere between 4.4 and 6.7%.
I don't want to get too mired in the exact numbers. Overall, these numbers are pretty good! Labor is in demand, and worker power remains relatively strong, even if it has softened in the last six months.
My point is that we can say "the economy" is good based on a select set of indicators without telling the whole story. The set of indicators we use is based on value judgments. That is, we decide who, what, and how we're going to count based on assumptions about what's important to measure.
The unemployment rate that gets tossed about only measures people out of work who are looking for work. It doesn't include discouraged job seekers, underemployed workers, or freelance workers who might be having a hard time finding new gigs. The unemployment rate considers "a job" to be the same as any other "job"—when you and I would make no such assumption.
Similarly, GDP (gross domestic product) is an aggregate of many forms of production.
But it also excludes many forms of production based on value judgments. For instance, paid childcare is part of GDP, but unpaid childcare is not. Paid housekeeping is part of GDP, but unpaid housekeeping is not. That means that much of what has been traditionally called "women's work" is not counted in the GDP despite that work being integral to economic production.
Is there a way to measure "the economy" without these assumptions and value judgments? Not really.
Assuming that systems or decisions don't include value judgments simply allows the status quo value judgments to go unchecked. If it wasn't these assumptions and value judgments, we'd have others.
Should we reconsider what we're measuring and whether those measurements reflect our values? Yes, absolutely.
The value judgments we accept should be ones based on what we really care about as a society. But there is no purely objective measure.
So what we mean when we say "'the economy'" is good" is that, based on a series of assumptions and value judgments about preferred economic activities, the numbers are generally up.
Not only are economic indicators based on value judgments, but what constitutes "better" or "worse" are value judgments, too. To name something "better than," there must be a decision about what's good.
“What we intend to do determines how we define words like good and bad.”
— Abby Covert, How to Make Sense of Any Mess
For instance, let's say I have a choice between two projects that will take the same amount of time. One project pays 30% more than the other project. The other project gives me more creative control and a chance to pursue an interest of mine.
Which project is better?
The project that I deem better is based on what I consider good at that time. If I define good as more money, then the project that pays more is better than the other. If I define good as creative control and an interesting subject, then the second project is better than the one that pays more.
To call something "better than," we reveal what we prioritize as the greater good.
It demonstrates what we deem to be valuable—in other words, it demonstrates our values.
The indicators by which we measure the economy reveal our priorities and values as a society. And those indicators skew toward entrenched corporate interests. We measure how wealth is produced and accumulated much more often than we measure indicators of well-being and quality of life.
When we say that the economy is doing "better," we implicate our values. And what we value is whether corporations are making more money and producing more stuff than they have in the past. This is by design.put it this way in :
The fact that many American companies are paying paltry wages to workers while lavishing cash on top executives and investors is no happenstance. It's a policy choice. In the United States we have a tax and regulatory environment that rewards that behavior. We can decide to maintain the status quo or change it.
There are other options. shared the Berggruen Institute's Governance Triangle with me a couple of weeks back. The framework triangulates three broad measures of the success of a society and its government. Part of that triangulation is economic. But it also includes the health of democracy and the capacity of government to provide for the well-being of its citizens. And it makes the measure of quality of life equally important to the other factors.
Adopting a measurement scheme like the Governance Triangle would give us a new, more holistic way to define "good." It doesn't solve the challenge of working with aggregate data over a population of 350 million—but it allows our idea of what's good and what's working to expand into more areas of life that Americans deem valuable.
What we choose to compare today's economic metrics to is also a matter of values.
One way to read "the economy is doing better than it has been" is that "has been" refers to the acute pandemic period. We had the mini-recession in March 2020, and then after that, many economic indicators started to return to baseline, even if supply chain friction caused some erratic ups and downs. The most notable economic metric during the late 2020-early 2022 period was the "quits rate" or the JOLTS rate. This is the number of people leaving their jobs voluntarily.
When workers quit at a higher rate than normal, it's a sign that workers are feeling confident in their prospects. Either they feel confident in their capacity to go without work for a bit, or they feel confident about being able to jump into new work quickly. That confidence is a form of power. But when workers feel empowered, employers feel resentful.
It didn't take long for the Great Resignation to make way for an "unprecedented worker shortage"—at least in terms of political and media framing. Nothing changed on the ground. But the narrative shifted to encourage us to see people who quit as lazy rather than fed up.
We scapegoated workers who exercised their free choice and their health to prioritize more sustainable work opportunities.
Rather than a narrative that invited criticism of contemporary work conditions, society embraced a narrative that invited criticism of workers. This narrative then led to a rollback of pandemic-era provisions for unemployment and other worker programs.
In order to make the economy better than it "has been," companies need to regain their power over workers.
Instead of granting lasting benefits to workers, corporations recorded record profits by raising prices. Then, they blamed those higher prices on people having more money in their pockets. This then increases GDP, decreases the inflation rate, and maintains a low unemployment rate by shuttling now-squeezed workers into jobs they don't want for pay that doesn't add up.
What about business owners & independent workers?
To return to Jenny's original question, it's important to note that businesses don't benefit from "improvements" in the economy in the same way. I've previously argued that small business owners and independent workers have more in common with workers than they do with corporations.
So, while large corporations are doing just fine (even seeing record profits), it follows that the small business owners and independent workers Jenny talks to are feeling the squeeze.
The reason this feels like a hard, even grueling year for small business owners is because, after a short respite, traditional workers are suffering from the same bullshit they were pre-pandemic. And, thanks to rapid technology and process change in the wake of pandemic work-from-home policies, traditional and independent workers alike are dealing with new headaches and cruel expectations. And most of us don’t have access to a public safety net as traditional workers do. Nor do we have reserve cash to tap into or massive expense budgets we can tighten as corporations do.
How we measure The Economy simply doesn’t evaluate the factors that determine the level of discomfort we feel in our daily lives.
It might have at one time—but that time is not now. What’s more, every policy choice that’s made based on our current measurements is a choice that favors corporations over people, capital over labor.
The question, then, shouldn't be whether or not The Economy is doing well when The Economy only represents the interests of a privileged few. The question we must ask is, "How will we account for the quality of life of the many?"
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