Tuesday, September 24, 2013
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.