As Tolstoy might have put it, while each recession is unhappy in its own way, all recoveries tend to resemble one another.
First comes the strong rally in stock prices, as Wall Street had last year, with a 26 percent increase in the Standard & Poor's 500-stock index. Within a few months, this is followed by a boom in corporate profits as all those layoffs and cost-cuttings finally fall to the bottom line. These early stirrings only feed into populist notions that the economy is rigged in favor of capitalists and against the workers. And, sure enough, someone trots out the chart showing that the share of national income going to labor is the lowest in a decade or a generation or -- as is the case this time -- since World War II.
That's usually the cue for workers to begin sharing in the recovery. It starts simply, as it has this time, with more jobs. Since the low point in September of last year, 1.4 million jobs have been added, including 248,000 last month alone, the government reported Friday. And not far behind comes the long-awaited increase in wages, salaries, bonuses, overtime hours and benefits. A revised report from the Labor Department this week showed that hourly compensation was 2.7 percent higher in the first quarter than it was a year ago, even after adjusting for inflation. And the trend over recent months clearly shows that growth in productivity is slowing even as growth in compensation is accelerating. That can only mean that labor's share of national income is finally beginning to bounce back.
Last week's data also put the lie to those who fret that only low-wage restaurant and hospitality jobs are being created, though there are plenty of those to be sure. In May, 80 percent of the new jobs were in manufacturing, construction or higher-end services that all pay, on average, more than $16 an hour.
Looking ahead, the Business Roundtable's survey of chief executives of the nation's largest companies found that 38 percent planned to add workers in the next six months, with only 19 percent planning cutbacks.
While this good news has given the Bush administration plenty to crow about, the message has yet to sink in with voters who, for the moment, seem fixated on $2.40-a-gallon gasoline, the federal deficit and rising health care costs. According to a recent CBS poll, 57 percent of potential voters in polls say they still disapprove of the president's performance on the economy, with a third believing the economy was getting worse, not better.