The Dow Jones industrial average yesterday closed above 11,000 for the first time since June of 2001. The news comes as corporations and their government backers are increasingly suggesting that the economy is rapidly improving, despite evidence to the contrary. Job growth, despite having moderate gains for the year, was weaker than expected for December 2005, while an updated analysis of the economy has found that President George W. Bush’s much-trumpeted 2001 tax cuts have failed deliver on promises of faster growth, job creation, and greater investment, all of which were touted as ways to spur an economic “recovery.”
Moreover, as corporate profits continue to rise, benefits for workers are being cut, especially with regard to retirement plans. Last year IBM announced that it would close its traditional pension plan to new employees and instead would offer 401(k) plans to new employees and would, this week, “hard close” existing pensions and transfer current employees into 401(k) plans without guaranteed benefits. Corporations including Verizon, Lockheed Martin, and Motorola have also recently announced pension freezes despite record profits. Similarly, the minimum wage has also remained stagnant with no raise in the $5.15 minimum wage in over eight years, a fact that has prompted many activists and unionists to pursue increases in the minimum wage at the state level in response to the United States Congress’s inaction. Opponents of the minimum wage, and in some case business owners and corporate executives, have argued that an increase in the minimum wage would increase costs and therefore eliminate jobs, although such arguments generally have little substance. Already 17 states have increased their minimum wage above the federal level and various studies, such as one by the Fiscal Policy Institute that found an increase in New York’s minimum wage to six dollars an hour had no adverse effects on the restaurant and retail industry, have suggested that an increase in the minimum wage would not harm the economy.
