The US powerhouse out of steam? Look again
A VIGOROUS debate will proceed throughout this election year on how the United States economy is doing and who deserves credit and blame. The stakes are substantial. Most analysts believe that the incumbent party is advantaged when voters conclude that the economy is on course and, conversely, that it suffers from the judgment that the economy is failing. And Republicans and Democrats both insist that current economic performance validates their own special assessments and prescriptions.
But a partisan focus is apt to get in the way of understanding what is actually happening. Besides, economic activity in the US is not governed primarily by actions of the president, Congress, and the Federal Reserve. It reflects more basic societal conditions: attitudes and values of the population, the educational system and other resources bearing on technological innovation, and the organization of our economic institutions. These are not Republican or Democratic matters.
Both parties have reason to welcome, then, the growing body of data indicating that the economic performance of the last 15 to 20 years, far from telling a story of national decline, reveals a strength that is impressive even by America's high historic standards.
The unprecedentedly large number of people entering the labor force in the 1960s and '70s could easily have led to massively high rates of unemployment.
Between 1946 and 1955 alone, more than 34 million people were born in the US; by 1980, the youngest among them were 25 years old, and most were in the labor force.
A second reason for the steep rise in the number of people seeking jobs was the jump in what economists call the ``labor force participation rate'' of women. Between 1960 and 1984, the number of women in the work force more than doubled.
Jobs had to be created rapidly - and they were. Between 1970 and 1980, the US increased civilian employment by 20.7 million, and from January 1980 to January 1988, another 16.7 million net were added. This dwarfs the European experience in job creation and far surpasses Japan's record.
It also compares favorably with earlier periods in the US. Civilian employment climbed by 26 percent in the 1970s, and already in the 1980s it has jumped by more than 17 percent. This represents the largest proportionate rise, over a two-decade span, in American history. The biggest single-decade jump came in 1900-10, when civilian employment rose by 28 percent - just two points higher than the increase of the 1970s.
Our performance since 1970 in creating new jobs is an extraordinary achievement. It could not have been cost free, of course. So great an expansion in the number of entry-level jobs had some dampening effect on entry-level salaries. Still, the huge increase has not come disproportionately in low-paying service positions - ``McJobs,'' in Amitai Etzioni's derisive dismissal.
On the contrary, as Neal Rosenthal's careful analysis shows, using the Bureau of Labor Statistics data, the proportion of total employment has climbed in the top and middle thirds of jobs (arrayed by average weekly earnings) and decreased in the bottom third. ``This calculation does not show a trend toward bipolarization, but instead indicates a shift of workers from the low to the middle and high earnings levels, with the middle having the greatest increase.''
Moreover, projections through 1995 suggest that professional, technical, managerial, and skilled craft employment is likely to increase as a proportion of total employment, while the low-income cluster of operatives, laborers, service workers, and farm workers is projected to decline proportionately.
Along with the rate of job creation, growth in national output is a fundamental measure of economic performance. We have a full century of data on real, per capita growth in GNP - covering the bulk of America's experience as an industrial nation. The three decades best for growth were 1900-10 (29 percent), 1940-50 (36 percent), and 1960-70 (32 percent). Next best, though, is the span since 1970. Real per capita GNP climbed by 22 percent in the '70s, and in the first seven years of the '80s it rose an additional 14 percent. Taken together, the years since 1960 have almost certainly been the best period of sustained economic expansion in US history.
Our $4.7 trillion economy has its problems; complacency in the face of them would be foolish. But it also has enormous strengths - which should not be lost sight of in a partisan debate. The US has been widely seen historically as an economic powerhouse. Yet even in the context of such achievement, its performance since 1970 in real growth and job creation stands out.
Everett Carll Ladd is executive director of the Roper Center for Public Opinion Research and professor of political science at the University of Connecticut.