Americans Facing Economic Insecurity

For the past seven years, the Independent Report has been chronicling the decline in American incomes and living standards, the reliance on debt, and the increases in poverty, joblessness and low-wage work. But the trouble began long before.

Though the Great Recession wreaked havoc on the U.S. economy and on millions of families, the American worker — in fact, the entire U.S. middle class — had already been under assault for decades.

The inflation-adjusted wages of full-time, male workers are now lower than they were in 1973, according to Census figures, which has forced more women into the workforce. Yet, despite the emergence of female workers and two-income families, household income continues to fall.

The median income of American households was $51,017 in 2012, following a median of $51,100 in 2011, the Census Bureau reported on Sept. 17th. While the Bureau said that the decline was not statistically different, it was a decline nonetheless and it followed two previous annual declines.

Yet, while incomes have been steadily falling, prices have been steadily rising.

Inflation rose 1.6 percent, 3.2 percent and 2.1 percent in each of the last three years, respectively. The government strips out the costs of food and gas from the Consumer Price Index, so the inflation rate is actually higher than reported. Oil still trades at over $100 per barrel, which raises the cost of gas, food and all other consumer goods.

This fall in incomes was not merely the result of the Great Recession. The decline had already been underway for many years.

In 1999, median household income was $56,080, adjusted for inflation, according to the Census Bureau. So, our median household income has fallen more than $5,000 since that time. That's not progress; it's a stark decline.

We're just slowly, steadily, sliding backwards as a nation.

Meanwhile, the U.S. poverty rate was essentially unchanged at 15 percent in 2012, as roughly 46.5 million people were stuck living at or below the poverty line, the Census Bureau reports.

As the Associated Press noted, "It was the sixth straight year that the poverty rate had failed to improve, hurt by persistently high levels of unemployment after the housing bust."

In 2012, 13.7 percent of people ages 18 to 64 (26.5 million) were in poverty compared with 9.1 percent of people 65 and older (3.9 million) and 21.8 percent of children under 18 (16.1 million).

Numbers like these may seem remote and impersonal, but the stark takeaway is this: there are 16 million American children, or one-in-five, living in poverty today.

Yet, the federal poverty rate surely underestimates the true number of poor Americans. For example, the poverty level for 2012 was set at $23,050 (total yearly income) for a family of four. However, if a family of four has $30,000 in annual income, it's safe to say that they are still living in poverty.

For a family trying to pay for housing, medical insurance, food and utilities — especially in a large metropolitan area — even $30,000 doesn't go far.

The official poverty measure ignores critical information like geographical location and the cost of housing. It is determined using the price of certain food staples nationwide and uses a flawed formula to adjust for inflation that doesn't consider the cost of gas.

If the government were being honest about the true scope of poverty and struggle in America, an ugly and shameful picture would emerge.

Forty-five percent of Americans lack basic economic security, or the ability to pay for necessities like housing, utilities, food, health care, child care and transportation, according to a recent report by the nonprofit Wider Opportunities for Women.

It's more evidence that the middle class has been eviscerated.

The wealthiest Americans, however, are doing just fine. The top 10 percent of earners made half of all income in 2012, the most on record, according to IRS data.

Consequently, the gulf between the richest 1% of Americans and the rest of the country reached its widest level in history last year.

The top 1% of earners in the U.S. pulled in 19.3% of total household income in 2012, which is their biggest slice of total income in more than 100 years, according to a an analysis by economists at the University of California, Berkeley and the Paris School of Economics at Oxford University.

One of the economists behind the research, Emmanuel Saez of UC Berkeley, is a top researcher on the topic of wealth and income inequality. He won the John Bates Clark medal last year.

In a separate analysis, Saez found the top 1% of earnings posted 86% real income growth between 1993 and 2000. Meanwhile, the real income growth of the bottom 99% of earnings rose just 6.6%.

Yet, the disparity has only worsened since that time.

According to the latest figures from Saez, the top 1 percent received 95 percent of all real income gains between 2009 and 2012. In 2011, when real real income fell for the bottom 99 percent, the top percentile accounted for 121 percent of the year's income gains.

The richest percentile now accounts for 22.5 percent of total U.S. income.

How can this state of affairs exist in a country that prides itself on greatness?

The U.S. is a plutocracy. The richest one percent have become a controlling class that runs Big Banking, Big Energy, Big Pharma, Big Insurance, Big Healthcare, Big Agra, Big Media and the Military-Industrial Complex. These industries are the core of the U.S. economy.

To repeat; the top 10 percent of earners made half of all income in 2012, the most on record, according to IRS data.

This isn't good in a consumption-based economy. When so many Americans have so little disposable income, it chokes off demand.

It's not a matter of fairness or economic equality; it's a matter of national economic survival. Siphoning off so much income to the top 1 percent, or even top 10 percent, is crushing economic growth and it is driving the emergence of a low-wage economy.

Fifty-eight percent of the jobs created during the recovery have been low-wage positions, according to a 2012 report by the National Employment Law Project. These low-wage jobs had a median hourly wage of $13.83 or less.

Wealth isn't easily defined. To someone making minimum wage, a person who makes $100,000 annually may seem rich. Yet, to someone who earns $1 million annually, $100,000 may seem like chump change. And then there are the stunningly wealthy Americans who make tens of millions of dollars each year, like hedge fund managers and elite Wall Street bankers.

So, how much money do Americans make across the economic strata?

The median income for those employed full-time between the ages of 25 and 64 is $39,000, according to the Census Bureau. The median household income is roughly $51,000 (this means half of American households earned more than that amount, while half earned less).

A household, as the Census defines it, consists of all the people who occupy one house or apartment. That means anyone living under the same roof and includes families, roommates sharing an apartment, and people living on their own.

In 2010, 39% of all households had two or more income earners. As a result 19.9% of households had six figure incomes, even though just 6.61% of Americans had incomes exceeding $100,000.

To be clear, less than 7 percent of Americans make more than $100,000 annually. That's not a large group. And fewer than 1 percent of the U.S. population has an annual income of more than $1 million.

On the other hand, one household out of every four (24.9 percent) makes less than $25,000 a year. This isn't just a national shame; it's a national crisis.

Workers in seven of the 10 largest occupations typically earn less than $30,000 a year, according to data published by the Bureau of Labor Statistics.

As long as capital is treated superiorly to labor, this state of affairs will continue until the economy totally breaks down, with American workers unable to purchase whatever goods they still produce (assuming those goods aren't already produced overseas).

America is devolving into a nation of serfs, ruled by a small class of oligarchs.

As it stands, the U.S. already has the highest income inequality in the developed world, and the fourth highest among all nations. All signs point to this blight continually worsening.

Economic opportunity and a respect for labor drove the emergence of robust American middle class in post-war America. But falling wages, the off-shoring of jobs, inflation, income inequality and diminished opportunity have destroyed the middle class — a group that previously separated America from the rest of the world.

The Rise of (and need for) Female Economic Power

When I was growing up, my father noted that something had noticeably changed in the American economy since he was a young man. Whereas his parents could get by quite well and even live a middle-class lifestyle on just one income, that had changed by the early 1970's.

By that time, maintaining a grip on a middle-class lifestyle typically required two incomes, forcing both parents into the workforce.

Since that time, the situation has become even more pronounced.

According to the Families and Work Institute in New York, 80 percent of today's married/partnered couples have both people in the work force, up from 66 percent in 1977.

The proportion of wives working year-round in married-couple households with children increased from 17% in 1967 to 39% in 1996.

By 2012, the share of married-couple families with children where both parents worked was 59 percent. And the labor force participation rate (the percent of the population working or looking for work) of married mothers with a spouse present was 68.3 percent, according to the BLS.

Of course, the number of women in the workforce is considerably higher when you include single and divorced women. And a dual-income household includes unmarried people, such as cohabiting couples of both sexes, as well as roommates who share expenses.

The issue is the number of families with children that require two incomes just to make ends meet. For most American families, there is no choice in whether a mother or father gets to stay home and parent their children. Having two working parents is now an economic necessity for almost all families.

The annual median wage fell in 2010 for the second year in a row to $26,364, a 1.2 percent drop from 2009, and the lowest level since 1999, according to David Cay Johnston at Reuters. And according to the Census Bureau, per capita income was $27,915 in 2011.

This is why most households now require more than one income to get by.

According to the Social Security Administration, 40.28% of all American workers currently make less than $20,000 a year. One in five people with a job earns only the minimum wage.

This just reaffirms why the majority of American households require two income earners, not just one.

Median household income has been sliding backward for the last six years, according to a new Census Bureau report. In 2007, at the beginning of the Great Recession, it was $55,480. By June, 2009, when the recession had officially ended, it had fallen to $54,478. And by June of this year, it had dropped to $52,098.

Income of that level does not go far in our economy, given the cost of food, energy, housing, education, and healthcare.

During the Great Recession, and even in its aftermath, companies cut jobs and salaries to get leaner and lower costs. But the financial struggles of average Americans are not just a matter of lower incomes; the problem is coupled with the continually diminished purchasing power of our money.

This is attributable to the pernicious effects of inflation, which is engineered by the Federal Reserve (meaning that it is intended). Inflation is not some mysterious phenomena. As the Fed has continually increased the money supply through the decades, it has steadily eroded and devalued the buying power of our money.

Inflation is a topic that I have explored repeatedly on this page through the years.

The effects of inflation, plus stagnant wages, have driven most American women into the workforce over the past four decades. This has resulted in such a historic shift that it can be aptly described as a sea change.

In 2010, for the first time in American history, the balance of the workforce shifted toward women, who now hold a majority of the nation’s jobs.

Women also dominate today’s colleges and professional schools: for every two men who will receive a B.A. this year, three women will do the same.

According to the Bureau of Labor Statistics, women now hold 51.4 percent of managerial and professional jobs — up from 26.1 percent in 1980. They make up 54 percent of all accountants and hold about half of all banking and insurance jobs. About a third of America’s physicians are now women, as are 45 percent of associates in law firms — and both those percentages are rising fast.

To be clear; not all working women are in the workforce simply out of economic necessity. Many women desire to work for a variety of personal reasons. Many of them have a skill or degree that they wish to utilize. Work can provide all people with a sense of community and of belonging. It can provide structure and a sense of purpose. Work can also be socially and mentally engaging. Additionally, it can provide a sense of identity and pride.

But there is no denying the economic impetus that has driven so many mothers into, or back into, the workforce.

It's bad enough that so many mothers are compelled to work as a result of economic necessity, even if they'd rather be at home with their young children. But they are also paid considerably less than their male counterparts for the very same jobs.

Women in the United States today are paid on average 77 cents for every dollar paid to men. The gap is even worse for African-American and Latina women.

Women ages 25 to 34 with only a high-school diploma currently have a median income of $25,474, while men in the same position earn $32,469.

Even among educated women, this wage-gap still exists.

The life-time earnings for a male with a professional degree are roughly 40 percent (39.59%) higher than those of a female with a professional degree, according to the Census Bureau. The lifetime earnings gap between males and females is the smallest for those individuals holding an Associate degrees, with male life-time earnings being 27.77% higher than those of females.

According to a new study done by the National Partnership For Women And Families (NPWF), the median yearly pay for women who are employed full time is $11,084 less than men’s.

This has has major implications for the ability of families and single women to afford essentials like food, housing and gas. According to NPWF, in more than 15.1 million families the woman is the breadwinner. And 31 percent of these families fall below the poverty line.

So, while women have advanced professionally in so many ways relative to men in recent decades, their pay still lags their male counterparts. This affects the men in dual-income households as much as it does the women.

If women were paid commensurately to men, all American families would benefit.

In 1970, women contributed 2 to 6 percent of the family income. Now the typical working wife brings home 42.2 percent. And four in 10 mothers — many of them single mothers — are the primary breadwinners in their families.

However, as women climb the ranks of the professional world, advancement eventually stalls out. Only 3 percent of Fortune 500 CEOs are women. But given societal trends, that will likely change sooner than later.

Women now earn 60 percent of master’s degrees, about half of all law and medical degrees, and 42 percent of all M.B.A.s. Most important, women earn almost 60 percent of all bachelor’s degrees — the minimum requirement, in most cases, for an affluent life.

This is the first time that the segment of Americans ages 30 to 44 has more college-educated women than college-educated men. So this is not a new trend; it has been underway for some time.

As women have stepped up and taken on increasingly larger roles in society and the workplace, their earning power has allowed many more families to maintain their foothold in the middle-class.

In fact, in many cases wives now out-earn their husbands — another historic shift. Of all married couples, 24 percent include a wife who earns more, versus 6 percent in 1960.

But as women have increasingly taken on a larger role in the workplace — whether voluntarily for personal reasons, or less voluntarily due to economic reasons — it has created a greater demand for child care and resulted in more latch-key kids. This has increased the pressure (and expense) for both parents.

It's laudable when women are able to enter the labor force at will to utilize their skills or degrees for their own self-fulfillment. But it's not so great when women must work just make ends meet for their families, yet get paid less than their male counterparts for doing the very same jobs.

The great middle-class expansion in the U.S. began following World War II. Women had entered the workforce during the war as a matter of patriotic duty and necessity. Millions of men were fighting overseas, so women stepped up and fulfilled many of the jobs suddenly left vacant by men.

In 1940, only 28 percent of women were working; by 1945, this figure exceeded 34 percent. In fact, the 1940s saw the largest proportional rise in female labor during the entire twentieth century.

However, more than half of the women drawn into the workforce by the war had left at the end of the decade. The Baby Boom had begun and for most of them work had become a choice — not a necessity.

In contrast, by 2011, 58.1 percent of women were in the labor force (which includes the noninstitutionalized civilian population, 16 years of age and over, that is willing and able to work and is either employed or actively seeking employment). But in recent years that percentage has been shrinking due to high unemployment. The women’s labor force participation rate peaked at 60.0 percent back in 1999.

Having more women working can be viewed as a sign of progress and of gender equality. But the wage difference between men and women remains very antiquated and even sexist. This bias is impacting nearly all American households.

The primary issue is that the post-war rise of the American middle-class was built largely on the backs of a single income-earner (typically men). But in order for the vast majority of American families to maintain their tenuous grip on that middle-class status, it almost certainly requires two incomes these days.

That's surely not a sign of progress.