The relationship between inequality and jobs is “bi-directional” where changes in one influence the other and likely create a reinforcing feedback. Wages cannot be so unequal that lower income workers have to borrow to get by — when households reach their borrowing maximum, recessions happen (part of Fazzari’s point). We need a job creation system to get people back to work as well as an inequality strategy that helps workers benefit from economic growth.
Getting people back to work isn’t enough, nor is simply solving inequality. Jobs and inequality are hand in glove. The goal, as daunting as it may sound, is to “grow the pie” to solve unemployment and inequality, not just “re-slice the pie” (borrow the analogy from Chris Benner and Manuel Pastor’s Just Growth).
203K jobs is steady (if not grand) improvement in hiring. The Washington Post suggests that this report shows that the government shut down had little effect on the economy and that the Federal Reserve could consider pulling back its bond buying program to support economic recovery. They also suggest that holiday sales will be 3 percent higher than last year – another sign of recovery.
The Brookings Institute examined how long it will take to return to 6.5% unemployment recently. The level is important because the Federal Reserve set it as the benchmark rate at which it would begin to increase interest rates again. This matters for anyone thinking about starting a business, buying a home, or borrowing money. They conclude that even under the most optimistic of scenarios, we won’t hit 6.5% until early 2014, but it could be as long as 2018 if we continue sluggish job growth. Read the report for a deeper look and an interactive tool!