One economist, referring to new government data, claims the economy isn't getting worse --- but one has to wonder which economy he's referring to.
For the past 35 years, with the
offshoring of good-paying manufacturing and tech jobs, stagnate wages
(especially in non-union jobs), an ever increasing number of low-wage service,
fast-food and retail jobs (and with average inflation), most of us have been
working harder for less after seeing the costs of rents, food and energy going
up every year. Almost all of us can remember a parent telling us at one time or
another, "The rich are getting richer as the poor are getting poorer".
It's even more true today.
But still, for most people (as far as they would notice in their day-to-day living), the economy is no better or worse this year than it was last year --- such as for those still working the same jobs that they held since before the Great Recession --- while also living in the same homes, working the same hours and earning the same wages --- minus any incremental increases in rent, food or utility costs --- unless of course, they've seen their wages increase to match inflation (such as with union jobs).
And for a much smaller percentage of the population, the economy has come roaring back since the economic crisis of 2008 after the mass layoffs, frozen credit markets, the housing market bust and the stock market crash --- and now they have been enriched far more than ever before (which just happens to also include members of Congress, since most are invested in stocks and are now millionaires.)
But for millions of other working and poor Americans, it's a much different story. Not only has the middle-class been shrinking, but the middle-class is no longer in the middle anymore. The share of the nation’s income channeled to corporate profits is higher now than at any time since the 1920s, while workers’ share languishes at its lowest since 1965 -- and the real wages of workers on the factory floor are lower today than they were in the 1970's (manufacturing and unionization peaked in 1979).
A Department of Commerce study concluded that two-earner families (with a median income of about $60,000) would have a much tougher time acquiring attributes of the middle class today than they did over 25 years ago. Even though they might be more educated, worked more hours, and had less children at a later age -- but for the 56 percent jump in the cost of housing, the 155 percent leap in out-of-pocket spending on health care and the double-digit increases in the cost of college.
Editors Note: Not to mention the dramatically increased cost in food and energy prices --- the true "cost-of-living" --- and not how the index is currently calculated based on the cost of a big screen TV manufactured in China. Social Security benefits may soon use a less accurate measure for the "cost-of-living" (chained-CPI) to cut monthly benefits to seniors and the disabled. (This was described as one way for lowering the cost of Social Security because it accounts for how the elderly switches to pet food when the price of people food rises.)
According to a recently released government report (as noted at the Economist Populist), 15% of America lives in poverty --- and income for households after adjusting for inflation has declined by 8.3% since 2007. American workers earn 9% less in real dollars than they did in 1999. The "median income" for individuals is less than $27,000 a year (50% earn less, 50% earn more). Adjusted for inflation, the real "median household income" of $51,017 a year hasn't been this low since 1995. The top 20% are getting over 50% of the income pie, while the bottom 20% are only getting 3.2% --- as the EP noted, China has better income equality than the United States.
Less money has been going to the average household in wages because more money is going into corporate profits. That in turn drives the personal income of the wealthy --- such as CEOs and senior executives [with stock options for incentive pay] and high-net-worth individuals who invest heavily in stocks and hedge funds --- like Warren Buffett, etc. (See a list of these billionaires at the Forbes Fortune 400). They only pay a 20% tax rate on capital gains, rather than the 25% tax rate someone earning $50,000 a year would pay --- rather than the top marginal tax rate of 39.6% that a neurosurgeon might pay. These billionaire investors and CEOs also don't pay any Social Security taxes on their capital gains --- and have this payroll tax capped at $113,700 in any "regular wages" that they may receive, such as a base salary (whereas, most people pay this tax on 100% of their earnings). Scrap the Cap!
Just yesterday the stock markets hit another all-time record high, but ZERO has "trickled down to average workers for a generation, despite decades of increased worker productivity. Many economists believe that the government report understates the degree of income inequality in the United States, by not including (among other things) earnings from capital gains made on rising stock prices.
The top 5 percent of earners (households making more than about $191,000 a year) have recovered their losses and earned about as much in 2012 as they did before the recession. But those in the bottom 80 percent of the income distribution are generally making considerably less than they had been, hit by high rates of unemployment and nonexistent wage growth.
The labor market continues to look weak, in particular for less-educated and lower-income men. The labor force participation rate of men has fallen steadily for the past 60 years. In no small part, that is because the median earnings of men working full time have not increased in real terms since the early 1970s.
The government’s annual report on incomes, poverty and health insurance underscores that the economic recovery has largely failed to reach the poor and the middle-class. Government programs such as food stamps remain a lifeline for millions of Americans. But many people (33% of working adults?) still greatly resent the less fortunate among us who rely on these programs to live (rather than resenting the corporate job outsourcers, the big banks, the Fed and the politicians) -- even though jobs still remain very scarce. There are still 6 unemployed for every job opening, and for older workers (those over 50), the unemployment situation is even more dire.
Jared Bernstein of the Center on Budget and Policy Priorities at the New York Times:
“The good news from today’s 2012 income and poverty results is that for the first year since the Great Recession hit, things aren’t getting worse. The bad news is that three years into an economic recovery, they’re not getting better either.”
Although many people, especially the long-term unemployed, might tend to disagree with Mister Bernstein --- and probably because they've already exhausted their unemployment benefits, they've already lost their healthcare insurance, they've already had their cars repossessed, they've already had their homes lost to foreclosure (while many are still pending), they've already exhausted their savings accounts (while attempting to maintain the status quo as they were seeking work) and they've already lost their pension funds (or had them drastically reduced) -- and/or they've already been forced into an early Social Security retirement with a greatly reduced monthly benefit.
And starting in November, if they're also relying on food stamps to eat, they will also have their monthly benefits cut (while the GOP is trying to drastically cut them even more). So for many people, not only has their economy been getting worse, it can still get much worse.
According to another new study on the impact of the global economic crisis on suicides, it showed that men in the U.S. had the largest number of excess suicides related to unemployment since 2009 --- 8.7% higher. They no longer need to worry about any economy at all.
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