The American Economy and Workers: A Lost Decade?

Maybe it’s just me opining here as a pajama-clad citizen journalist, but I sure don’t see much sense of urgency to spark the economy and get people working again. I know. The Prez came back from holiday and offered up the American Jobs Act and subsequently is doing what he does best: giving speeches on the road selling his plan. The Progressive Caucus in the House has offered up its own plan. And the Republicans say Obama’s plan is worth considering — as long as there are no tax increases to pay for it.

Any possibility that DC fiddles while the rest of the country burns? Snort.

The Census Bureau reported yesterday that more than 2 million Americans slipped into poverty last year — and what we are looking at is a lost decade in terms of economic and job growth. Here’s from the NYT, “Soaring Poverty Casts Spotlight on Lost Decade“:

WASHINGTON — Another 2.6 million people slipped into poverty in the United States last year, the Census Bureau reported Tuesday, and the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years the bureau has been publishing figures on it.

Economists pointed to a telling statistic: It was the first time since the Great Depression that median household income, adjusted for inflation, had not risen over such a long period, said Lawrence Katz, an economics professor at Harvard.

“This is truly a lost decade,” Mr. Katz said. “We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s.”

The bureau’s findings were worse than many economists expected, and brought into sharp relief the toll the past decade — including the painful declines of the financial crisis and recession —had taken on Americans at the middle and lower parts of the income ladder. It is also fresh evidence that the disappointing economic recovery has done nothing for the country’s poorest citizens.

The report said the percentage of Americans living below the poverty line last year, 15.1 percent, was the highest level since 1993. (The poverty line in 2010 for a family of four was $22,314.)

The report comes as President Obama gears up to try to pass a jobs bill, and analysts said the bleak numbers could help him make his case for urgency. But they could also be used against him by Republican opponents seeking to highlight economic shortcomings on his watch.

“This is one more piece of bad news on the economy,” said Ron Haskins, a director of the Center on Children and Families at the Brookings Institution. “This will be another cross to bear by the administration.”

And almost everyone has been touched in some way by this “lost decade” — unless you are in the one or two percent who have consolidated massive wealth. Among those hard hit are the working poor and many of those in the middle class who have moved into the ranks of the working poor.

Demos, a nonpartisan public policy research and advocacy organization in NYC has just issued an informative and comprehensive study, “The Great Unraveling: A Portrait of the Middle Class.” Here’s from the study:

THE AMERICAN DREAM used to mean that if you put in a hard day’s work, you could expect good wages, benefits, and a better life for your kids. But the kinds of jobs that can provide a solid middle-class life in return for hard work are in short supply—unemployment remains high, earnings are volatile, and hard-won benefits are being lost. For the first time, the majority of Americans believe their children will not be better off than them. The future of the middle class, which has been the backbone of our nation’s economy for more than half a century, is at risk.

America’s strong and vibrant middle class didn’t just happen. It was built brick by brick in the decades after World War II by hard work and workers’ strength in numbers that came from the unions that represented them. Unions made sure that as our nation’s wealth and productivity grew, so too did the income and benefits of the people who worked hard to create that wealth. For decades,
our nation’s prosperity was widely shared—wages increased and more employers provided their workers with health insurance, pensions, and paid time 0ff. The middle class was also built by government policies that invested in infra-
structure and basic science, supported home ownership and made a college education accessible to a new generation. Parents without higher education themselves saved to send their kids tocollege, made possible by affordable tuition at state universities and financial aid.

But all of this is changing and the middle class is now threatened. Median income is no higher than it was a decade ago and only workers with at least a bachelor’s degree earn more than their counterparts a generation ago. The nation’s once vibrant manufacturing sector—the engine that drove the growth of the post-war middle class—has gradually declined over the last three-plus decades. The bulk of recent job growth has been in the service sector, where unions are less prevalent, pay is lower, and benefits are limited or non-existent.

There’s been a dramatic shift in costs for health coverage from employers to employees as well as a rapid decline in the number of employers who even offer health insurance. Rising out-of-pocket costs mean that a family illness can lead to substantial expenses and medical debt.  And as employers replace traditional pensions with 401(k)-type plans—again shifting costs and risks to employees—middle-class workers can no longer count on a secure retirement.

The middle class has also been hit by trends outside the labor market as it has become more costly to raise a family. High-quality child care is expensive, yet parents face these costs early in their working years when their earnings are low. Housing is also more expensive relative to household income than it was decades ago. The need for most working parents to have their own vehicle and the high price of gas have further strained middle-class family budgets. The growing gap between incomes and expenses fueled skyrocketing family debt in the two decades preceding the Great Recession.

The threat to the future of the middle class can be seen most clearly in the economic prospects for the nation’s young people. Overall, young workers today are earning less than their parents did a generation ago, with substantial wage declines among men. Skyrocketing college costs are making it hard for middle-class students to stay in school and graduate. The average student debt for college graduates is well over $20,000 and growing. Close to a third of young workers do not have employer-based health insurance, and most young people will pay for the lion’s share of their own future retirement benefits if current trends continue.

And the point?

Now is the time for citizens, workers, employers, and policymakers to come together once again to rebuild
pathways to the middle class, create good jobs with fair pay and decent benefits, and ensure that prosperity is broadly shared for the next generation.

Gotta agree with that. And if we could approach this crisis with some sense of urgency maybe we can prevent another lost decade.

Just sayin’.

 

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