Paul Klee, “Tightrope Walker” (1923)
The United States is becoming a nation of increasing financial insecurity.
According to a new survey by the Consumer Federation of America (pdf), more Americans find themselves living paycheck to paycheck, forced to reevaluate their expectations for retirement, and falling further behind in terms of their retirement savings.
Clearly, in the midst of the Second Great Depression, more and more Americans are being forced to walk a financial tightrope.
The United States is a country in which a growing portion of the population is subject to economic insecurity.
There are many ways of measuring the economic insecurity of the U.S. population. One of them is to calculate Best Economic Security Tables and determine the percentage of the population that falls below that line.
What Jacob Hacker and his colleagues have done is somewhat different: they have calculated the share of Americans experience a major drop in their available family income—whether due to a decline in income or a spike in medical spending—and who lack an adequate financial safety net to catch them when they fall. It’s what they call the Economic Security Index.
According to their latest report [pdf], more than 1 in 5 Americans during the Second Great Depression saw at least a quarter of their available household income vanish without a sufficient financial cushion, a sharp increase from 14.3 percent in 1986. Thus, in 2010, roughly 62 million Americans were economically insecure.
Even more: among those losing a quarter or more of available income and lacking an adequate financial safety net, the typical (median) drop reached a record 46.4 percent in 2009. This means that half of those counted as insecure saw their available income decline by more than this amount between 2008 and 2009. In short, not only are more Americans experiencing large declines in their economic standing; the depth of those drops has also become greater.
The level of economic distress (however measured) that is being experienced by a growing number of Americans can no longer be denied. It is a sign of how current economic arrangements have failed them, even as those same economic institutions and policies continue to enrich those at the very top.
Almost half of all Americans, or 45 percent of the U.S. population, do not earn enough to cover their basic expenses. They live in a state of economic insecurity.
A new report by Wider Opportunities for Women [pdf] documents the extent to which large numbers of Americans—including those who played by the rules and managed to find jobs, form household, and raise children—are living on the edge. They simply do not earn enough to pay ever-increasing housing, food, health care, and other expenses.
A lot depends, of course, on the structure of the household (whether they are one or two adults, and whether or not the households include children), and the gender, racial, and ethnic identity of household members. The report calculates a series of Best Economic Security Tables for all such households.
But I want to focus on one dimension of the study: the difference between 1-worker and 2-worker households.
As you can see from these figures, Americans who live in households with two adults and two children are forced, in order to have an income that achieves economic security, to have the freedom to send both adults into the labor market. And, even then, minimum-wage jobs ($30,624) will only put them slightly above the federal poverty level ($22,050) and the economic security index ($67,933) is still above the median family income ($61,933) in the United States.
The situation is even worse for households led by single mothers, Blacks and Hispanics, and those with only a high school education.
The fact is, the United States is a country that has created a situation of economic insecurity for 45 percent of its citizens.
The Rockefeller Foundation refers to Americans’ growing economic insecurity. For me, it’s a matter of relative immiseration.
A recent study [pdf] by Jacob S. Hacker et al., financed by the Rockefeller Foundation, demonstrates two important changes in the United States: first, that the economic insecurity of American families is greater than at any time since 1985; and, second, economic insecurity is increasing as a long-term trend.
They define economic insecurity in terms of major losses in income, large out-of-pocket medical expenses, and insufficient financial assets to buffer the losses in income and unforeseen medical expenses. And the results are extraordinary:
While the economic insecurity measure does capture some of what is going on right now—a sense of loss and fear for the future, a race to the bottom for a large part of the population—it refers to its opposite, economic security, as the normal state of affairs.
My problem with the term, and what it measures—losses of income, unforeseen expenditures—is that it fails to capture the relative state of what people are forced to endure when they rely on selling their labor power and purchasing commodities (including, but not limited to, health care) in order to survive. It misses out on the growing gap within the United States—the gap between profits and compensation, between wages and productivity, between living standards for the majority and the total wealth being produced, and so on.
In other words, it sidesteps the relative immiseration of working-people, which has been taking place since at least the mid-1970s. Restoring economic security, in the sense of Hacker et al., does not solve the problem of immiseration, which is both a condition and consequence of the current crises of capitalism.
David DeGraw has assembled a report (part 1 of 2) on how the “Economic Elite Have Engineered an Extraordinary Coup, Threatening the Very Existence of the Middle Class.”
It’s what I’ve been arguing for quite a while now: that, apart from (but also in part as a result of) the current crises, there has been a steady immiseration of the U.S. working-class.
The devastating numbers across-the-board on the economic front are staggering. I’ll go through some of them here, many we have already become all too familiar with. We hear some of these numbers all the time, so much so that it appears as if we have already begun “to normalize the unthinkable.” You may be sick of hearing them, but behind each number is an enormous amount of individual suffering, American lives and families who are struggling worse than they ever have.
DeGraw goes through the numbers, with links to the original sources. The upshot is, for the past 30 years or so, the balance has slowly but steadily shifted in favor of capital and against working people. The current crises are both a result of that shift (since the financial bubbles are at least in part a consequence of a worsening the distribution of income and wealth) and one more cause of that shift (since the current crises, and the policies enacted to “save” the system, are enhancing profitability but lowering living standards for the vast majority).
The fact is, neither the mainstream media, which fails to connect the dots, nor mainstream academic economists, who are obsessed with defending their models and pinning the blame on one or another financial enterprise, are helping us make sense of these changes. They are merely serving to normalize the unthinkable. It’s people like DeGraw and Elizabeth Warren who are putting the pieces together and sounding the alarm. The question is, who is listening? And when will we do something about it?
The best Scott Sumner can come up with in response to David Cay Johnston’s analysis of increasing inequality is the argument that living standards are actually rising. So, even though the rate of exploitation is rising and, with it, the signs of economic distress—from increasing unemployment and poverty to record-high food stamp use—Sumner wants to show that things are actually better than they were in 1973.
His evidence? A laundry list consisting of the following:
— 1. Houses are bigger and have more baths.
— 2. Electronics are so much better it is ridiculous. 100 times as many TV channels.
— 3. We take jet vacations to Disney World or Europe, not car trips to a state park.
— 4. Granite counter-tops vs. Formica.
— 5. Thai or sushi restaurants vs. meat and potatoes “supper clubs.”
— 6. Better medical care and longer life expectancy.
— 7. Cars with paint that doesn’t rust out in three years.
— 8. For the lower middle class: Wal-Mart vs. K-Mart.
— 9. No more purple shag carpets.
Just two quick points: First, the household real wage bundle can increase while the rate of exploitation rises, as more family members become involved in wage-labor and the per-unit value of the elements of the wage bundle falls (e.g., through declining quality and imports of cheaper goods). Second, the availability of “more stuff” isn’t an indicator that the standard of living is increasing. The improvements in dorm rooms for a small minority of the population represents a stark contrast to the generalized squeeze on most working people—white-collar, blue-collar, and pink-collar.
U.S. capitalism keeps getting uglier and meaner.*
Food-stamp use is at an all-time high. (One in eight Americans now receives food stamps, including one in four children.) And now we learn from the New York Times that six million Americans receiving food stamps report they have no other income.
In declarations that states verify and the federal government audits, they described themselves as unemployed and receiving no cash aid — no welfare, no unemployment insurance, and no pensions, child support or disability pay.
Their numbers were rising before the recession as tougher welfare laws made it harder for poor people to get cash aid, but they have soared by about 50 percent over the past two years. About one in 50 Americans now lives in a household with a reported income that consists of nothing but a food-stamp card.
This is what we’ve come to as a society: a growing number of people barely keep themselves alive by relying on food stamps—and, in many cases, nothing but food stamps.
*Maybe that’s why I feel compelled to add art and graffiti to this blog.
Because Europeans work shorter hours, they have only 70% of the real market income per person as Americans (adjusted for differences in prices across countries). As a result Europeans face their holidays from a position of poverty rather than abundance.
Those long European holidays are pitiful. They are inefficient, they hurt consumers and they reveal the tedium of European family life. And because Europeans are relatively poor, they cannot afford the frequent upscale vacations that many Americans take for granted.
Robert J. Gordon, in defense of the Economist’s proposition that “Europeans would be better off with fewer holidays and higher incomes.”
That’s Gordon’s justification of why Americans, on average, work longer hours, at lower pay, with worse health care and more insecurity—in short, at a higher rate of exploitation—than the citizens of any other industrialized nation.
In a society in which people are forced to have the freedom to sell their ability to work in order to survive, unemployment is a serious problem. It affects, and is affected by, people’s mental health.
According to a poll of 708 unemployed adults reported in today’s NYTimes,
Almost half have suffered from depression or anxiety. About 4 in 10 parents have noticed behavioral changes in their children that they attribute to their difficulties in finding work.
“Everything gets touched,” said Colleen Klemm, 51, of North Lake, Wis., who lost her job as a manager at a landscaping company last November. “All your relationships are touched by it. You’re never your normal happy-go-lucky person. Your countenance, your self-esteem goes. You think, ‘I’m not employable.’ ”
And, according to the Canadian Mental Health Association, people struggle with mental health issues “are severely affected by social and economic inequality”:
Through no fault of their own they face extended and often lifetime unemployment, social exclusion, isolation, relationship distress, poor physical health and lack of hope for the future. In Canada, the mentally ill constitute a disproportionate percentage of persons living below the poverty line, thus exacerbating problems associated with mental illness and contributing to stressors which cause poor mental health. Persons with mental illness experience a very high rate of unemployment. The correlation between a high incidence of poverty and poor mental health profoundly affects families and creates barriers to education and other economic opportunities.
So, the capitalist job market creates mental health problems, and punishes those suffering from mental health problems. As I reported earlier this year, being either in or out of the the capitalist job market can ruin your health.
Whether it’s called hunger or food insecurity, the problem is causing a rise in the use of food stamps in the United States.
According to Kevin Concannon, an under secretary of agriculture,
“This is the most urgent time for our feeding programs in our lifetime, with the exception of the Depression,” he said. “It’s time for us to face up to the fact that in this country of plenty, there are hungry people.”
Here are the current numbers:
Find your county here.
