Special mention
Archive for July, 2018
“Another day older and deeper in debt”
Posted: 30 July 2018 in UncategorizedTags: chart, debt, inequality, United States, wages, workers
Most Americans are not loading sixteens tons of coal. But they are, even in the midst of the recovery from the Second Great Depression, sinking deeper and deeper into debt.
According to a recent analysis by Reuters [ht: ja], the bottom 60 percent of income-earners have accounted for most of the rise in consumption spending over the past two years even as their finances have worsened.* The data show the rise in expenditures has outpaced before-tax income for the lower 40 percent of earners in the five years through mid-2017, while the middle 20 percent has just about stayed even. However, the upper 40 percent—especially the top fifth—has increased its financial cushion, deepening income inequality and leaving those at the bottom in an increasingly precarious financial position.**
It is this recovery’s paradox.
A booming job market and other signs of economic expansion encourage rich and poor alike to spend more—to pay for transportation and housing, put their kids through college, to cover medical bills—but the combination of rising prices and stagnant wages for most middle-class and lower-income Americans means they need to dip into their savings and borrow more to do that.***
In other words, the U.S. economy relies on individual consumption to sustain the economic recovery but doesn’t pay most Americans enough to cover their expenditures without going into debt.
What that means, of course, is that in 2017 many Americans—71 million (or 31.6 percent of adults with credit records), according to the Urban Institute—had debt in collections, thus putting their financial futures at risk.
It also means that many Americans are reaching retirement age in worse financial shape than the prior generation, for the first time since Harry Truman was president. According to the Wall Street Journal,
They have high average debt, are often paying off children’s educations and are dipping into savings to care for aging parents. Their paltry 401(k) retirement funds will bring in a median income of under $8,000 a year for a household of two.
In total, more than 40% of households headed by people aged 55 through 70 lack sufficient resources to maintain their living standard in retirement. . .That is around 15 million American households.
Finally, it means that the United States is heading for a level of income inequality that hasn’t been seen since 1928. Already, the richest residents in fives states and 30 cities have surpassed that threshold.
According to the Economic Policy Institute,
Income inequality has risen in every state since the 1970s and, in most states, it has grown in the post–Great Recession era. From 2009 to 2015, the incomes of the top 1 percent grew faster than the incomes of the bottom 99 percent in 43 states and the District of Columbia. The top 1 percent captured half or more of all income growth in nine states. In 2015, a family in the top 1 percent nationally received, on average, 26.3 times as much income as a family in the bottom 99 percent.
In the most unequal states—New York, Florida, and Connecticut—the top 1 percent had average incomes more than 35 times those of the bottom 99 percent!
Merle Travis had it right. But these days, the iconic American worker isn’t loading sixteen tons of number nine coal—although they may be packing and shipping the equivalent in Amazon goods. Nor do they owe their soul to the company store—just to the employers who pay them so little and the sellers (of housing, cars and trucks, their children’s education, and healthcare) whose prices keep rising.
As a result, most Americans are either just getting by or finding themselves deeper in debt, falling further and further behind the tiny group at the top. All the while they, like their coal-mining predecessors, are imploring St. Peter not to call them ’cause they just can’t go.
*The top 40 percent of earners usually drive U.S. consumption growth. But 2016-17 was the first two-year span in at least two decades that the bottom 60 percent accounted for about half of the growth in consumption, and that appears to have continued in the first quarter of 2018.
**The Reuters study divides Americans into five groups based on their median before-tax income, as illustrated in the chart at the top of the post.
***Even as the official unemployment rate (the blue line in the chart below) has plummeted, workers’ wages (the green line, for production and nonsupervisory workers) have barely stayed ahead of inflation (the red line, for the Consumer Price Index) in recent years.
The result is a precipitous decline in the labor share of national income, which remains perilously close to its lowest level in 50 years:
Cartoon of the day
Posted: 30 July 2018 in UncategorizedTags: cartoon, equality, inequality, Iran, religion, Trump, United States, wealth
Cartoon of the day
Posted: 29 July 2018 in UncategorizedTags: cartoon, democracy, tariffs, trade, Trump, United States, workers
Cartoon of the day
Posted: 26 July 2018 in UncategorizedTags: Amazon, cartoon, Republicans, Senate, slavery, Trump, United States, workers
Cartoon of the day
Posted: 25 July 2018 in UncategorizedTags: cartoon, Europe, NATO, refugees, Supreme Court, unions, United States, war, weapons
Cartoon of the day
Posted: 24 July 2018 in UncategorizedTags: billionaires, cartoon, real estate, refugees, war
Disappearing poverty
Posted: 23 July 2018 in UncategorizedTags: Argentina, Chile, economists, poor, poverty, Spain, terrorism, Trump, United States, work, workers, working-class
In international human rights law, a “forced disappearance” occurs when a person is secretly abducted or imprisoned by a state or political organization (or by a third party with the authorization, support, or acquiescence of a state or political organization), followed by a refusal to acknowledge the person’s fate and whereabouts, with the intent of placing the victim outside the protection of the law.
The most infamous forced disappearances have occurred in Spain (during and after the Civil War), Chile (after the coup by General Pinochet in 1973), Argentina (during the so-called Dirty War from 1976 to 1983), and the United States (as part of the so-called War on Terror).
Now, Donald Trump’s Council of Economic Advisers (pdf) is attempting to carry out a forced disappearance of poverty.**
The aim of the Council’s report is to make the case for “expanding work requirements among non-disabled working-age adults in social welfare programs.”*** In order to do so, the authors of the report attempt to show that (1) there is a large pool of non-disabled working-age adults who are currently beneficiaries of the three major non-cash welfare programs (Medicaid, food stamps or the Supplemental Nutrition Assistance Program, and housing assistance) who can and should be put to work, (2) independence or self-sufficiency is undermined by participation in government anti-poverty programs, and (3) government assistance to the poor has become outmoded because poverty itself has virtually disappeared in the United States.
We’ve seen all these moves before. As Jim Tankersley and Margot Sanger-Katz explain, the numbers of adults who are beneficiaries of welfare programs but not working are likely exaggerated. For example:
The Center on Budget and Policy Priorities calculated this year that three-quarters of food stamp recipients work within a year of participating in the program. That report suggests that Americans often use assistance programs as bridges to a new job, after they have lost previous employment.
The administration’s numbers may be particularly exaggerated for Medicaid. Under the Affordable Care Act, many states expanded their Medicaid program in 2014 to include more childless adults whose incomes bring them close to the poverty line. But the report examines adults who were enrolled in Medicaid in 2013, before the expansion, when most adults who were signed up were either pregnant women, the parents of young children or adults with extremely low incomes.
According to the council, about 53 percent of adult, non-disabled Medicaid beneficiaries worked less than 20 hours a week. Using a different set of government data from 2017, the Kaiser Family Foundation estimated that 62 percent of such people had full- or part-time jobs. Another 18 percent lived in a household with another working adult. Council officials say the data set they drew upon, while older, is a better measure than the one Kaiser used.
Then there’s the argument about the extent of poverty in the United States. While the government itself reports that poverty is still a large and persistent problem within the United States (since according to the official definition the poverty rate in 2016 was 12.7 percent, and the rate according to the Supplemental measure was 14 percent), the Council chooses to redefine poverty in terms of consumption (based on the work of, among others, Bruce D. Meyer and James X. Sullivan).
And, voilà, poverty is disappeared!****
Finally, they invoke the shibboleth that expanded work requirements respect and reinforce “independence” and the “dignity of work.”
Back in 2012, I suggested we need to contest the meaning of dependence:
In particular, why is selling one’s ability to work for a wage or salary any less a form of dependence than receiving some form of government assistance? It certainly is a different kind of dependence—on employers rather than on one’s fellow citizens—and probably a form of dependence that is more arbitrary and capricious—since employers have the freedom to hire people when and where they want, while government assistance is governed by clear rules.
We can also deconstruct the term by turning it around: why is receiving non-cash benefits from the government a form of dependence but cash distributions of the surplus—to large corporations and wealthy individuals—supported by a wide variety of government programs, is not?
As for the so-called dignity of work, I can only repeat what I wrote just a couple of years ago: what advocates of getting people back to work
choose to overlook or ignore is that, in a world in which the majority of people are forced to have the freedom to sell their ability to work to someone else—in which, in short, labor power is a commodity—there’s no necessary honor or dignity in work. It’s a necessity, born of the fact that people need to earn an income to purchase commodities to sustain themselves and to pay off their debts. And the most likely way to earn that income is to sell their ability to work to a small number of other people, their employers, who in turn get to appropriate and do what they will with the profits.
As I see it, the attempt to disappear poverty is actually a thinly disguised effort to discipline and punish the poor and to convert everyone—poor and non-poor workers alike—into a giant machine for producing surplus for the benefit of a tiny group of employers and wealthy individuals.
Perhaps we need to follow the example of the mothers of Argentina’s “desaparecidos,” who 40 years later are challenging the government’s attempt to erase the memory of those terrible years and put the brakes on the continuation of trials. In the case of the poor working-class today in the United States, we need to make sure they and their deteriorating conditions of life are not disappeared and that a real anti-poverty program—a radical change in economic institutions—is enacted.
*The forty-three figures in the art installation by Toym Imao represent those left behind by victims of forced disappearance. Empty and hollow, each figure represents a year since Martial Law was declared in the Philippines. Instead of portraits and picture frames, the figures hold empty niches, signifying death, the lack of closure, the emptiness, the hollow feeling, and the gut-wrenching pain those left behind must deal with.
Absence remains an open wound. But despite it, the desaparecidos remain present in our hearts and minds. Despite efforts to eradicate their existence, they will never be forgotten.
**Kevin Hassett (Chair, from the American Enterprise Institute, who was appointed by Trump and approved by the Senate in a 81–16 vote on 12 September 2017), as well as Tomas Philipson and Richard Burkhauser (both appointed by Trump), are the members of the current Council of Economic Advisers.
***Kentucky Governor Matt Bevin offered up his state to approve work requirements for Medicaid benefits. Once Federal Judge James E. Boasberg rejected the Department of Health and Human Services’ approval of Kentucky’s plan, Bevin announced that he would deprive Medicaid patients of dental and vision benefits, effective immediately. The Trump administration has just revived its efforts to let et Kentucky compel hundreds of thousands of poor residents to work or prepare for jobs to qualify for Medicaid.
****This comes just after the United Nations Human Rights Council published the report by Philip Alston, its Special Rapporteur on extreme poverty and human rights, according to whom
The United States is a land of stark contrasts. It is one of the world’s wealthiest societies, a global leader in many areas, and a land of unsurpassed technological and other forms of innovation. Its corporations are global trendsetters, its civil society is vibrant and sophisticated and its higher education system leads the world. But its immense wealth and expertise stand in shocking contrast with the conditions in which vast numbers of its citizens live.