Happiness is a warm, equitable economy -- and the U.S. isn’t there yet.
So says the Paris-based Organization for Economic Cooperation and Development in a report released today showing a stronger U.S. growth outlook and a falling unemployment rate in the year ahead.
At the same time, the OECD weighed in on a more unconventional gauge it says has stalled for the past 30 years: happiness. The middle class is less content than the rich, and policy makers have work to do before the country fully cheers up, the group said.
“Americans enjoy, on average, high levels of income and well-being, thanks to the country’s dynamic economy and thriving business sector,” the OECD said in the report. “Nonetheless, there is evidence to suggest that the benefits from these gains have not been sufficiently broad-based.”
The OECD’s observations about income inequality echo the sentiment of Treasury Secretary Jacob J. Lew, who told the Economic Club of New York this week that the U.S. needs broad policy changes to strengthen growth and spread the prosperity.
“The ultimate test for all of us will be how inclusive tomorrow’s economy becomes and how widely our economic gains flow,” he said in a June 11 speech.
The report by the organization of 34 countries said “self-reported happiness” rises with income. That’s “particularly resonant in a country with among the highest levels of income inequality in the OECD and a pattern of income distribution that appears to be moving toward even more concentration at the very top.”
The world’s largest economy will grow 2.5 percent this year and 3.5 percent in 2015, the OECD said. “Near-term prospects are favorable” even as structural changes such as overhauling the tax code “can boost long-term growth.”
Unemployment will fall to 6 percent in 2015 from 6.5 percent this year, and inflation as measured by the consumer price index will rise 1.7 percent next year, compared with a 1.5 percent gain this year, the OECD said.
The labor market has already improved. Payrolls pushed past their pre-recession peak for the first time in May, the fourth consecutive month employment increased by more than 200,000. The jobless rate last month held at an almost six-year low of 6.3 percent.
The OECD suggested policies that would raise labor-force participation, change immigration laws, help parents with young children and ease access to quality education for lower-income groups.
Changes in tax laws, including making the system for individuals’ taxes more “redistributive,” would have a key role in spurring the U.S. economy, according to the report.
“A number of options could help to improve job quality and improve work-life balances, especially for working families with young children,” the report said. “If successfully adopted, they would go a long way toward improving well-being.”