Last week, the Commerce Department announced that the American economy had a strong showing in 2021. Gross Domestic Product (GDP) grew 1.7% in the last quarter of 2021. bringing total annual growth for last year to 5.7%, the largest change that the US has seen since 1984.
The Labor Department also shared some positive news. According to the agency, unemployment is very low in the US, with just 3.9% of Americans filing jobless claims in December 2021. Overall, unemployment dropped 2.8 percentage points over the course of last year, the biggest improvement in annual unemployment on record. Furthermore, the Department announced that the US created a record 6.4 million jobs in 2021. This puts us at roughly 3.6 million jobs short of where we were before the pandemic, but thankfully jobs are recovering faster than anticipated.
President Biden and the Democrats have wasted no time in celebrating these developments on the economic front. We certainly agree that GDP growth, record low unemployment, and record high job creation are causes for celebration. But we also believe that they don’t tell the whole story as to how the American economy is faring today.
Yes, the economy grew quite a lot last year. But the fact of the matter is that most Americans simply did not share in that growth, seeing as most gains went to those at the top of the socioeconomic ladder (as they have for the past few decades). From our own recently released “Taxing Extreme Wealth” report, we learned that America’s 740 billionaires became $2 trillion richer over the course of the pandemic. So, while it’s good that the economy grew in 2021, what’s it worth if income and wealth inequalities are so vast that those at the bottom don’t get to benefit from it?
It’s wonderful that millions of jobs have been recovered and most Americans who suffered at the start of the pandemic are back to work. But it’s important to discuss not just the quantity of jobs but also the quality of jobs being created. Are new jobs high-paying, with good benefits, flexible hours, and safe working conditions? Increased worker empowerment has led to better pay and working conditions for many workers, but for still too many, the answer to this question is, unfortunately, no.
It’s true, thankfully, that average wages in the US are up: Americans took home an average 4.7% more in pay in 2021 than they did in 2020. But the rise in inflation has outstripped and therefore nullified those gains. (The Consumer Price Index, a key measure for inflation, rose 7% between December 2020 and December 2021.) In the end, if the new jobs that the economy is churning out don’t pay wages high enough to keep up with inflation and to afford basic necessities, should we really be celebrating them all that much?
For the most part, the Biden administration has done a pretty good job over the last year with the economic hand they were dealt. But we can’t be content with “pretty good” – the American people deserve great. And by too many measures, the economy is still very, very far from great for most people in this country.
When we talk about the state of the economy, as mentioned, we should be talking about income and wealth inequalities and the quality of jobs being created. We should also be talking about how many adults and children live in poverty. We should be talking about how much student loan debt the average American carries. We should be talking about how affordable childcare is. We should be talking about how affordable prescription medications are. We should be talking about how affordable housing is.
By these accounts and more, the economy is in quite a poor state, and in desperate need of quick and decisive action by the Biden administration and Democrats in Congress. It is shameful that despite months of negotiations, they have not managed to pass President Biden’s signature Build Back Better Act, which would go a long way in addressing these other facets of the economy and lifting the position of the worst off in American society. And as the Federal Reserve looks to address inflation, we can’t look only at the few positives of our economy and give the Fed free rein to slow down an economy that’s actually working too slowly for too many.
Things could certainly be a lot worse when it comes to the state of the economy. But things could absolutely, positively be a lot better. Before it’s too late, Democrats should use the political opportunity that they have now with total control of the House, Senate, and White House to pass the Build Back Better Act to make that happen.