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Last Updated: Sunday, 5 September, 2004, 18:28 GMT 19:28 UK
US recovery 'not helping workers'
US car factory worker
Lower paid workers have seen their wages shrink, EPI says
Many working families still feel no benefit from the US economic recovery, the Economic Policy Institute says.

While business is improving, average wages have fallen, job satisfaction has declined and the rich-poor gap widened, says a report by the US think tank.

And in terms of recouping jobs since the start of the recession, the US is in a worse position "than any business cycle since the 1930s", it added.

The study is set to harden criticism of President Bush ahead of the elections.

Critics have rounded on Mr Bush for presiding over large-scale job losses since taking office in 2000.

'Jobs growth stalled'

But the EPI State Of Working America 2004/05 report says that after almost three years of recovery, the labour market is still "too weak".

"Unemployment is essentially unchanged, job growth is stalled and real wages have started to fall behind inflation," it added.

With the return of higher unemployment and weaker labour demand, the poverty rate has risen again and real incomes have fallen most quickly for the least well off
EPI
Moreover, unemployment has actually risen 1.3 percentage points since the start of the recession in 2001, when it stood at 4.3%

But Beth Ann Bovino, economist at Standard & Poor, said US job figures released on Friday showed employment was improving.

"The jobless recovery did see a pick-up. But what was good was that the figures for June and July were revised up sharply, and that's a good sign. There have been positive movements in job growth," she said.

The group, a non-profit and non-partisan think tank, also said that while many would expect the improving economy to boost wages and job satisfaction, this was not happening.

In fact, it found wages were "eroding". Blue collar manufacturing and non-supervisory service workers, who account for 80% of US wages, have seen their average real hourly wage fall 1.2% over the past year.

Fuel 'tax'

However, one expert argued that circumstances outside the US's control may be behind the hardships faced by weaker families.

Gary Schlossberg senior economist at Wells Capital said the huge rise in oil prices had "hit lower-income groups harder", as up to 20% of their budgets are eaten up in fuel costs.

"Also if you look at home ownership rates, they have gone up, so lower-income groups have benefited from the recovery - although upper-income levels have benefited the most," he added.

The Institute also highlighted huge differences between expanding and contracting industries.

Annual wages for staff in contracting industries were an average of $51,270 a year, while those in expanding were paid just $30,368 - a difference of 40.8%.

The report also echoes recent findings by the Census Bureau that showed the gap between the rich and the poor is widening in America.

'At a crossroads'

Figures from the bureau show that the ranks of the poor grew by 1.3 million people to 35.9 million.

US poverty rates and numbers in poverty
"With the return of higher unemployment and weaker labour demand, the poverty rate has risen again and real incomes have fallen most quickly for the least well off," the EPI report said.

One of the report's authors, EPI senior economist Jared Bernstein, said that the report provided "a stark reminded of what's at stake when the job market remains as weak as it has been over the past few years".

He added that the US economy was now at a "crossroads", with the "preferable" path leading to a broad-based recovery and tight labour market.

On the other hand, all current trends pointed to an economy "like the 1980s", with lower income groups squeezed, sharp increases in inequality, growing budget deficits and high unemployment.


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