By many measures, the American economy has recovered from the 2008 implosion. The stock market is soaring, housing values in many markets have rebounded and GDP is growing at a healthy rate of more than 4 percent. Compared to Spain and Greece, where debt, mass unemployment and hardship remain widespread following the Eurozone crisis, America looks to be on easy street.
Yet scratch below the surface and you’ll see that the United States still has a considerable economic problem. While the official unemployment rate has fallen to 5.6 percent, the lowest since 2008, the percentage of the adult population participating in the labor market remains far lower than it was at the start of the recession. At least in part, headline unemployment numbers look respectable because millions of Americans have grown so discouraged about their prospects of finding work that they no longer try, and thus are no longer counted among the unemployed. Depending on the measures, only 59 to 63 percent of the working-age population is employed, far below recent historical norms.
Millions who lost their jobs during the recession have found work, but at lower wages and often for fewer hours per week than was the case before the financial collapse. In August, the US Conference of Mayors released data indicating that jobs created during the recovery paid an average of 23 percent less than jobs lost during the recession. That represents an extraordinary collapse in living standards for millions of people. Not surprisingly, according to the latest data, nearly one in six Americans are living below the federal poverty line.
The scale of this ongoing crisis has been largely ignored by the country’s political leaders. For many months, when government spending would have done wonders to stimulate demand, they locked horns over austerity budgets. Now they’re battling over who can take credit for the strong economic data. Even among progressive economists, many of whom were the most vocal critics of the post-crash stimulus bill for its half-hearted and short-lived attempt to create jobs, the focus has shifted to address the challenges posed by stagnant wages and rising inequality.
All this puts the economists at the Levy Economics Institute of Bard College well outside the mainstream policy debate. In 2006 Levy Institute scholars led the way in warning about the crash to come. They were, unfortunately, ignored. Since then, looking to plans adopted recently in other countries as well as in earlier moments of US history, they have generated a series of ambitious ideas about achieving the goal of full employment. It would be a shame, for everyone invested in true economic recovery and long-term stability, to ignore them again.
Nestled in the rolling hills of the Hudson Valley, a couple hours’ drive north of Manhattan, the colonnaded white-stone building of the Levy Institute is the intellectual home of some of the country’s most creative economic thinkers and policy analysts. Their workplace has become a laboratory for developing new ways of measuring and understanding poverty, inequality and economic well-being, as well as new ideas to deal with chronic problems in the way globalized labor markets function.