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American Workers Need Higher Wages AND More Mobility: Jason Furman

Daily Ticker
American Workers Need Higher Wages AND More Mobility: Jason Furman

More good news about the economy this week: Third quarter GDP grew 3.6% -- the fastest rate in a year and half -- and the November unemployment rate fell to 7%--the lowest in five years.

But if you dig deeper into those numbers and superimpose them against the backdrop of the actual job market, they're not nearly as impressive.

The GDP gain was largely due to buildup in inventories, the unemployment rate is still high several years into an economic recovery and the percentage of workers participating in the job market -- working or looking for work -- has been declining steadily.

Add to that the impact of the recent 16-day government shutdown and a possible second round of sequester budget cuts -- if Democrats and Republicans fail once again to agree to a budget deal that could avoid them -- and it's not a pretty picture.

"No doubt the government shutdown hurt the economy and the job market" though a "resilient private sector" helped offset the impact, Jason Furman, chairman of the White House Council of Economic Advisers, tells The Daily Ticker's Aaron Task in the accompanying video. 

Related: U.S. Economy Adds 204,000 Jobs in October But What Comes Next Really Matters: Gene Sperling

The government reported Friday that nonfarm payrolls grew 203,000 in November -- better than expected -- and the unemployment rate fell to 7% from 7.2%. Earlier this week ADP reported that private companies added 215,000 jobs in November -- well above expectations for 180,000 -- and revised up its October payroll gain to 184,0000.

"We're making a lot of progress [in the job market] but we still need to do more, " says Furman. He spoke with at The Hamilton Project's conference on "Supporting America's Lower-Middle-Class Families."

"The best antipoverty program is a job," says Furman, quoting an old adage.

So how can the U.S. create more jobs? Invest in education, including preschool, and raise the minimum wage, which increases purchasing power and helps the economy overall, says Furman.

Related: How Raising the Minimum Wage Would Benefit McDonald's and Walmart

"You want to raise people's wages today but you also want to make sure their children have the best possible shot they can have," says Furman. "You want mobility."

President Obama, in a speech on economic mobility, said Wednesday: "A child born in the top 20% has about a 2-in-3 chance of staying at or near the top. A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top. He’s 10 times likelier to stay where he is."

Related: Top Reason to Raise the Minimum Wage: It’s 30% Below 1968 Level After Inflation

Obama also iterated his call for an increase in the minimum wage , and on Thursday thousands of fast-food workers held another strike demanding a minimum wage of $15 an hour. Asked about the possibility that a divided Congress could raise the minimum wage -- which some states and cities have done this year -- Furman suggests it is possible.

"Raising the minimum wage has always been a bipartisan issue," he says.

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