Forbes:  America's Real Economy Isn't Booming

By Ronald Horvath | Sep 04, 2018

"Two-thirds of American households, by this measure, are desperately scrambling to make ends meet from check to check."



Ostensibly, for the past ten years, our economy has been recovering from the 2008 collapse. During the past few years, our comeback seems to have gained momentum. All the official indicators say we’re back in boom times, with a bull market, low unemployment and steady job growth. But there is an alternative set of data that depicts a different America, where the overlooked majority struggles from month to month.

The Nation recently published a stunning overview of the working poor and underpaid. One of the most powerful data points in the piece described how empty the decline in unemployment actually is: having a job doesn’t exempt anyone from poverty anymore. About 12% of Americans (43 million) are considered poor, and yet they are employed. They earn an individual income below $12,140 per year, and slightly more than that for a family of two. If you include housing and medical expenses in the calculation, it raises the percentage of Americans living in poverty to 14%. That’s 45 million people.

At that level of income, there’s almost no way to pay for food and shelter in any sizeable American city. That means people now can both be employed and homeless. Rajon Menon writes, for The Nation:

In America’s big cities, chiefly because of a widening gap between rent and wages, thousands of working poor remain homeless, sleeping in shelters, on the streets, or in their vehicles, sometimes along with their families.

Fewer and fewer people have savings to weather time between jobs or an emergency expense. A third of the U.S. population has no savings and another third has saved less than $1,000. Two-thirds of American households, by this measure, are desperately scrambling to make ends meet from check to check. Nearly half the American population earns too little to live on comfortably:

One-third of all workers earn less than $12 an hour and 42% earn less than $15. That’s $24,960 and $31,200 a year. Imagine raising a family on such incomes, figuring in the cost of food, rent, childcare, car payments (since a car is often a necessity simply to get to a job in a country with inadequate public transportation), and medical costs.

Even in households that combine income from two wage-earners, it’s rarely enough to live on without anxieties about money. It takes an average of a little more than $100,000 per year now for a household to be able to live without anxieties about money.

Slow and steady inflation has eroded buying power over the past decade. According to The Nation, the minimum wage rose to $7.25 by 2009, but since then inflation has eroded 10% of its buying power. So this year, someone will have to work 41 additional days to make the equivalent of the 2009 minimum wage.

Healthcare costs are projected to go up 20% in the coming year.

Credit card debt has crested at a trillion dollars and is projected to increase at 4.7% by 2020.

Wages have been increasing by only 2.9% per year.

For the young, education debt has reached a record $1.52 trillion.

How long is this sustainable?

What’s genuinely astonishing to me is that the private sector doesn’t see the immense danger in all this—not simply the prospect of a collapse from enormous household debt loads, but the prospect of civil unrest after another huge correction like the one in 2008. Our current course is unsustainable. And for all the proposals for changes in public policy to ameliorate income inequality, only the private sector can get the nation on a better track by raising wages, increasing benefits and investing in new ventures and expanded markets.


There are numerous ways in which our wealthiest companies could help change the course of our economy. Here are some suggestions from Larry Thompson, former executive VP for PepsiCo, and his coauthors writing for Fortune magazine:

Get involved in early education for children of employees. Programs that start at birth can lift their earnings by up to 26%. At PNC Financial Services Group, their Grow Up Great program has served over 2 million children throughout the U.S., through grants to organizations that support early learning in math, science, and the arts.

Fund higher education for existing employees. In collaboration with Southern New Hampshire University, Anthem Insurance (ANTM, -0.06%) recently began making associate’s or bachelor’s degrees available at no cost for 50,000 eligible workers. Another company, FedEx, partners with nearly 20 higher education institutions including Western Governors University.

Businesses also should look to re-employ the long-term unemployed, Frontier Communications has hired more than 250 of the long-term unemployed in 2014 alone by eliminating most qualifications and simply observing how well applicants communicated.

These initiatives only scratch the surface, but they are exactly what all companies need to be thinking of doing. If every employer in America came up with even just one modest step—higher wages, regular profit sharing, tuition reimbursement—to help workers spend and save more, the nation would begin to right itself economically. It needs to happen now. We’re running out of time.

Peter Georgescu is the author of Capitalists Arise!

https://www.forbes.com/sites/petergeorgescu/2018/08/22/americas-real-economy-it-isnt-booming/amp/

Comments (2)
Posted by: Ronald Horvath | Sep 06, 2018 18:48

"As The Hill reported on Thursday, House Republicans are expected to unveil the full text of their latest round of proposed tax breaks for the wealthy as early as next week, and a floor vote on the legislation could come as soon as the end of the month.

While the full details of the plan are not yet known, The Hill notes that the bill is expected to consist primarily of “a permanent extension of tax changes for individuals that Republicans passed last year.”

According to a Joint Committee on Taxation (JCT) analysis released on Wednesday, such a move would result in another $627 billion in tax cuts, with the vast majority of benefits going to the wealthy."

"While the GOP has not explained how they plan to pay for this massive giveaway to the rich, some Republicans have been quite explicit about their desire to slash life-saving social programs like Medicare and Medicaid to offset the deficit-exploding effects of their tax cuts.


“I do think we need to deal with some of our spending,” Rep. Steve Stivers (R-Ohio) declared last month, echoing a sentiment expressed by many Republicans following the passage of their $1.5 trillion tax bill last December. “We’ve got try to figure out how to spend less.”

 

https://truthout.org/articles/gop-readies-600-billion-tax-giveaway-for-the-rich/



Posted by: Ronald Horvath | Sep 06, 2018 11:26

"Ronald Reagan’s budget director slammed President Donald Trump as an “ignoramus” and a “Neanderthal” over his understanding of trade and fiscal policy.


During an interview on Bloomberg Television, David Stockman characterized Trump’s pending NAFTA replacement deal with Mexico as essentially the old NAFTA with Trump screw-ups added in.


“There was never a problem with NAFTA anyway, and what he has done is basically remove the name and complicated the machinery [and] given a big wage increase to Mexican workers,” Stockman, who served as the director of Management and Budget in the Reagan administration from 1981to 1985, said on Thursday.


Stockman also described the deal as a “sideshow.”


“And it is proof that Trump is an absolute Neanderthal on trade, has no idea what he’s doing,” Stockman said. “He is a complete ignoramus on fiscal policy and the debt — which is soaring.”


The deal with Mexico would require up to 45 percent of cars to be made by workers earning at least $16 an hour. Though it’s intended to keep jobs in the U.S., it will likely result in a massive pay hike for Mexicans, Stockman said."

https://www.huffingtonpost.com/entry/david-stockman-trump-fiscal-policy_us_5b889c90e4b0cf7b0033e8bb



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