It is no secret that the United States has been in the throes of an economic crisis for many years. The credit collapse of 2008 was really just one of many "eruptions" of economic woes that have persisted for most of the 21st century. Unemployment is high, and signs of growing poverty exist in all corners of the nation.
As of the fourth quarter of 2011, the United States Department of Commerce estimated the Gross Domestic Product (GDP) of the United States to be over $15 trillion. GDP represents the total value of all goods and services produced in a given economy. If we directly divided that money (using the conservative figure of $15 trillion), and gave each American citizen resident in the country an equal piece of that wealth, we would give approximately $48,500 to each American (including our children), based on the population figures established by the 2010 Census. That is a lot of wealth in goods and services produced in our economy. Yet, poverty is growing at an alarming rate. The rising level of poverty is proof that this value is not being translated into economic opportunities for most Americans.
One analysis of 2010 Census data shows 1 in 2 Americans living as "low-income" residents. A Pennsylvania State University study estimates that the "living wage," or the amount of hourly income required for one single person to be able to pay for basic necessities such as food, rent, transportation, and so on, is about $11.86 per hour in the nation's most populated city, New York City. For a family that includes two adults and two children, that amount rises to $30.30 per hour. That would mean that for a family of four to survive in New York City, their annual income would need to be at least $63,024. According to a story published in The Huffington Post in October of 2011, the median adjusted wage in the United States is $26,364 per year. That is about 42 percent of what is estimated to be livable wages in someplace like New York City.
The federal minimum wage stands currently at $7.25 per hour, which yields $15,080 per year in annual income. The percentage of the workforce working for minimum wage varies by race, with a low of 4 percent for Asians, to a high of 7 percent for African Americans. So, for workers earning minimum wage in New York City, or other cities where the cost of living approaches that of New York City, workers are currently earning less than one quarter of what is needed to survive.
Something has gone horribly awry in our economy. The estimated amount of the United States GDP translates into approximately $194,000 worth of value for each family of four. If we use a median wage of $26,364 as a measure of the income that most single income families might have access to, we would note that most of these families live off of less than 14 percent of the value of GDP generated per family. And be aware, the median wage is likely skewed higher by the outrageous amount of wealth concentrated among the top income earning individuals in the economy. Most people likely live on less than the median wage.
The Bureau of Labor Statistics reports a rise in "nonfarm payroll employment" in March of 2012. That number was cited as an "improvement" by some in the political sphere. What was not mentioned was that about 865,000 workers simply gave up looking for work (known officially as "discouraged workers") and are no longer counted in the same manner when collecting unemployment data. That means that the better part of one million people simply decided, for one reason or another, that looking for work was no longer something worth pursuing. Many studies cite a lack of available jobs as the primary reason that most become "discouraged workers."
Assuming that these Americans still need income, this means that programs providing public assistance income (such a Food Stamps and Temporary Aid for Needy Families, or "TANF") will likely pick up much of the slack in new claims. These programs have been systematically been cut in nearly all the states that actually participate, and deeper cuts loom on the horizon as Federal support for such programs continues to decrease.
One report puts the amount committed to the TARP Bailout at around $12.2 trillion (as of April 2011). Most of that money was focused on protecting the economic viability of select large corporations. Since the bailout unemployment has slowed its growth some, but not completely. Most of the jobs added since that time still are not "living wage" jobs, and a good percentage of them represent wages lower than those previously acceptable for their given set of duties, and come without medical and/or other benefits.
According to the Small Business Administration (SBA), 65 percent of all new jobs created over the last 17 years were created by small businesses. They employ half of all private sector employees. While there is much political bickering about how to "stimulate job growth" in our economy, neither major political party seems to be willing to focus on providing grants, easier access SBA Loans, or creating special programs for low-income entrepreneurs who wish to create jobs in their own communities. There is actually an agency within our government that exists solely to encourage economic investment in "emerging economies" other than the United States. For those wishing to start businesses here, the most common methods of funding those ventures is through personal savings and/or bank loans. That leaves the poor out of the mix completely, since most have no savings, and no collateral to obtain loans.
As our leaders in business and government engage in continuing debates about how best to grow the economy, huge numbers of Americans are falling deeper and deeper into poverty.
The "job creators" have clearly failed to create many new economically viable jobs, and the United States government seems to be either unwilling or unable to help create new small businesses. It is clear that sometime in the near future, those suffering the most from this lack of meaningful effort will need to find methods to create economic opportunities for themselves. If they do not, it is likely that their circumstances will continue to deteriorate in the midst of a cruel ongoing recession.
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The stimulus has not dramatically lessened unemployment, yet the answer to our problems is more federal spending for job creation?
I don't know about that.
These are proven facts from modern monetary theory, also known as monetary sovereignty. For more details see my blog
http://my.firedoglake.com/pshakkottai/2012/04/20/misunderstood-deficits/ and
http://rodgermmitchell.wordpress.com/2012/03/22/monetary-sovereignty-for-young-people/