Down and Out...in America

We have a long-term growth in income disparity between rich and middle-class, which has since been mostly obscured by the recent meltdown.

By William A. Collins

Hard to live
On lousy pay;
All the good jobs
Went away.

Returning from Haiti makes life in America look pretty sweet…briefly. Until you read the data. The poverty rate here is up to 12 percent, or 39 million people. Unemployment hovers around 10 percent (not even counting the underemployed or those who have given up), 14 percent lack health insurance, and 15 percent endure hunger.

Well, what do you expect? It’s a recession. Indeed, it’s The Great Recession. When the economy is down, people suffer. That’s why we have safety nets: unemployment compensation, food stamps, TANF (welfare), heating assistance, etc. Each of these is now overloaded, with not enough heating fuel to go around. But at least the stigma is reduced. Most families today have someone on unemployment, and people have grown less ashamed of taking food stamps. Sam’s Club, BJ’s, and Costco now welcome them. Poverty is becoming clubby.

Unfortunately, some misleading statistics hint that this economic rough spot has battered our nation fairly evenly across the board. Median family income—the best measure of economic well-being—plummeted in 2008 from $52,000 to $50,000, an unheard-of one-year drop, suggesting that we all took a serious lick.

Uh-uh. Not the rich. Sure, plenty of hedge-funders had to close down the family pool, but overall the top 1 percent of families are doing just fine. They siphoned off for themselves two-thirds of the nation’s income growth over the past five years. The Roaring Twenties ride again.

But an even more revealing wrinkle is that not all this gloom is due to the Great Recession. The past five years, that bonanza period for the rich mentioned above, go back well before these bad times. We’re looking at a long-term growth in income disparity between rich and middle-class, which has since been mostly obscured by the recent meltdown.

For example, a Census Bureau survey back in 2005 found that 20 percent of Americans even then needed help from their families or others just to pay basic expenses. And not everyone got it. But now it’s worse. In point, an Indiana trucking company recently reported 300 applicants for a single $13/hour job. No wonder social service caseloads are booming.

So what’s up? If it isn’t just the collapsed real-estate bubble, then what is it? Well, times change. Most employers used to provide health insurance, but now that’s become so expensive that many are pulling out. The same with rehiring. When business improves these days, many bosses simply outsource the work or rely on long-term temps rather than bringing back the old employees. Some use the opportunity to begin buying abroad. Free trade agreements have made that easier.

Employers that abuse immigrant workers are holding down wage rates, and union-busting has also made great strides under Washington’s glassy eye. Productivity may improve, but there’s no union in the shop to demand that workers get more of the fruits of their work. Thus the “race to the bottom” is not confined to foreign sweatshops. It’s healthy and growing right here at home.

To alleviate this malignant poverty requires money. Luckily there is plenty out there. One promising proposal for raising needed revenues is to slap tiny taxes on trades of stocks, derivatives, and currency. European governments are asking the United States to join them in adopting such taxes as a way to make the big-time financial speculators pay for pressing economic needs. We can also fight poverty by embracing fair trade instead of free trade, providing Medicare for all, and making it easier to form unions. Those would be fundamental actions to get us out of our downward spiral.