The recession ended over two years ago (June 2009 believe it or not) and the experts assure us that they are relatively confident that we are not in danger of a double dip. But the recovery remains anemic at best and is regularly characterized as ‘disappointing’ and ‘slower than expected’. Economic indicators are inconsistent with consumer confidence, housing starts, and new orders for goods rising and falling from month to month. Earlier this month Fed Chairman Ben Bernanke told a congressional committee that the two-year-old recovery is “close to faltering,” and John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, reports that “The momentum is less and less positive.” Time Magazine published an article titled, “What U.S. Economic Recovery? Five Destructive Myths” in June of this year, laying out the challenges facing the U.S., not the least of which is the sluggish job growth and the effects of being part of a global economy that is also struggling. Even when there are glimmers of hope – for example the recently reported stronger than expected economic growth in 3rd quarter of this year – Americans continue to be pessimistic.
“For most people, they’re unable to really make a distinction between a recession and just 2 percent growth, which means the economy is growing so weakly it can’t hire enough people to make a dent in unemployment,” said Bernard Baumohl, the chief economist for the Economic Outlook Group.
Indeed, it is this one discouraging statistic that concerns us the most. Unemployment remains very high, and seems to be stuck at around 9 percent. The Bureau of Labor Statistics reported that over 14 million people were unemployed at the end of September, a figure that does not include the 9.3 million who are involuntarily working part-time or the 2.5 million people who do not have a job but who have given up looking for work. That’s a lot of people who aren’t paying taxes, aren’t saving for college or retirement, aren’t spending money on new appliances or cars or going on vacation. Naturally in the recession, and now in the aftermath of the recession (let’s stop calling it a recovery folks), the poor have been disproportionately hit, making their hardscrabble lives even harder. And their ranks have been increased by the number of middle class households that have slid into poverty in the past four or five years. Over 46 million Americans were living in poverty in 2010. Somehow I doubt that number has decreased in the past year. In an interview on PBS, Isabell Sawhill of the Brookings Institute says “it is definitely unemployment that’s driving this increase in poverty rates” and Douglas Besharov of the University of Maryland agrees that “this downturn is sending many millions of people who enjoyed a middle-class or at least a very comfortable lifestyle into poverty…unless we take some pretty drastic action to turn this around, it will be with us for quite a number of years.”
In the very thorough and thought provoking opinion piece in Politico, titled, “The end of the middle class?” the author Robert Borosage says,
“The jobs we’ve been shedding by the millions are solid, middle-class positions — the kind that could support a family and send children to college. The hard reality is that the relatively few jobs being created are service-related —disproportionately low-wage and low-skill. The broad middle class — the triumph and strength of America’s democracy — is sinking. Unless we change course dramatically, we will become even more a nation of haves and have-nots.”
So, is this the new normal? A burgeoning lower class, a decimated middle class and an upper class made of up the top 1 percent of earners whose after tax income has grown over the past 30 years by an amazing 275 percent? This statistic comes from the recent CBO study, titled “Trends in the Distribution of Household Income Between 1979 and 2007” which also reported that during the same period middle class income grew on average only 40 percent. Currently, as I’ve said before in other blog posts, and as the blog My Budget 360 reports, the top 1 percent control some 42 percent of wealth in America and the top 10 percent control nearly 93 percent of the wealth. Conversely the bottom 90 percent own 73 percent of the debt in the country.
That is an enormous inequality and while some might attempt to explain it away by touting the financial acumen of self-made men, under closer inspection that argument can be seen as obfuscation at best and deceit at the worst. In an opinion piece in the Washington Post titled, “The study that shows why Occupy Wall Street struck a nerve,” the clearly liberal writer Eugene Robinson says,
“Indeed, the CBO report says that even the poorest households saw at least a little income growth. Why is it any of their business that the high-earners in the top 1 percent saw astronomical income growth? Isn’t this just sour grapes?
No, for two reasons. First, the system is rigged. Wealthy individuals and corporations have disproportionate influence over public policy because of the often decisive role that money plays in elections. If the rich and powerful act in their self-interest, as conservative ideologues believe we all should do, then the rich and powerful’s share of income will continue to soar.”
Continuing this trend is not in the best interest of the country. It is the road to ruin. It’s oligarchy, the very thing the founders of this country were running from. It’s time to pull our heads out of the sand and take a good hard look at where we are, how we got here, and where we are headed before it’s too late.
The end of the middle class? http://www.politico.com/news/stories/0911/63849.html
The study that shows why Occupy Wall Street struck a nerve. http://www.washingtonpost.com/opinions/the-study-that-shows-why-occupy-wall-street-struck-a-nerve/2011/10/27/gIQA3bsMNM_story.html