Recovery for Whom?

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"A rising tide lifts all the boats."

-- John F. Kennedy, 1963

"This time it hasn't. The tide of the 1990s is different."

-- Stephen Roach, economist at the investment firm of Morgan Stanley, 1994

Kennedy's belief that a growing economy helps everybody to a more abundant life has been gospel for three decades. But Roach's opinion better describes today's reality: the closer one looks at the three-year-old recovery, the more it appears to be unlike any in recent memory. It is a split-level surge in which mass layoffs are continuing side by side with new hiring and heavy overtime; high-income people are making more money, while many others are working at worse jobs for lower wages than a few years ago and still others have seen pay raises, if any, fall behind even today's slow (2.5%) pace of inflation.

True, the people still hurting are a minority. A very large minority, though. Recent national polls show as many as 40% of those queried can see no sign of a recovery in their own finances. They think the nation remains in a recession; a few even say depression.

It is an opinion not lost on President Clinton, who well remembers that he was elected in 1992 primarily because he promised to make life better for the average citizen. Publicly, the President quotes the belief of some eminent economists "that our economy in its fundamentals has the best prospects it's had in two to three decades." But to aides he expressed frustration recently that "this appears to be a recovery for investors," not for the man and woman in the street, as a White House official put it. What to do, though? Clinton's aides disagree even on whether to express displeasure with the Federal Reserve's widely reported plan to raise interest rates again in order to head off any revival of inflation. Some aides even think the recovery could use a wee bit of slowing; slightly less growth in 1995 might make for a faster advance in the re-election year of 1996.

In any case, it is difficult to see much the Administration could do quickly to overcome the fundamental trends -- primarily the economy's wrenching readjustment to sharper foreign competition -- that are making the recovery so lopsided. Some clues to just how lopsided it is:

Caterpillar Inc. is one of the big corporate comeback stories: after slashing its work force from 60,558 in 1988 to 50,749 by the close of 1993, the company has got its costs down and its productivity up and is doing its first rehiring in five years. But Sandy Koicuba, 44, does not feel she is making any comeback -- even though she is one of those rehired. In late 1992 she was laid off as a materials specialist at the York, Pennsylvania, manufacturing plant; she has been recalled to pack materials in a warehouse across the street. Her wage: $9.10 an hour, vs. $17 an hour in her old job -- and she gets only one fringe benefit, inadequate major medical insurance. "I work 60 hours a week, and I still can't make it," she says. "I gross $1,400 a month and take home $1,000 -- and my mortgage is $600 a month. I've been to every bank and mortgage company to refinance. I can't do it because I don't have the money coming in. My friends have taken up a collection to pay my doctor bills. I don't go shopping for clothes; my jeans have holes in them."