January's increase in hiring is good news, but it masks a bigger and more disturbing story -- the continuing downward mobility of the American middle class.
Most of the new jobs being created are in the lower-wage sectors of the economy -- hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they've agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they've lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago.
Other people are falling out of the middle class because they've lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is now underwater, holding their breath against imminent foreclosure.
The percent of Americans in poverty is its highest in two decades, and more of us are impoverished than at any time in the last 50 years. A recent analysis of federal data by the New York Times showed the number of children receiving subsidized lunches rose to 21 million in the last school year, up from 18 million in 2006-2007. Nearly a dozen states experienced increases of 25 percent or more. Under federal rules, children from families with incomes up to 130 percent of the poverty line, $29,055 for a family of four, are eligible.
Experts say the bad economy is the main factor driving the increase. According to an analysis of census data by the Center for Labor Market Studies at Northeastern University, 37 percent of young families with children were in poverty in 2010. It's likely that rate has worsened.
Mitt Romney says he's not concerned about the very poor because they have safety nets to protect them. He says he's concerned about the middle class. Romney doesn't seem to realize how much of the middle class is becoming poor.
But Romney doesn't like safety nets to begin with. He's been accusing President Obama of inviting a culture of dependency. "Over the past three years Barack Obama has been replacing our merit-based society with an entitlement society," he says over and over, arguing that our economic problems stem from a sharp rise in dependency. Get rid of these benefits and people will work harder.
He and other Republicans point to government data showing that direct payments to individuals have shot up by almost $600 billion since 2009, a 32 percent increase. And 49 percent of Americans now live in homes where at least one person is collecting a federal benefit such as food stamps or unemployment insurance, up from 44 percent in 2008.
But Romney and other Republicans have cause and effect backwards. The reason for the rise in benefits is Americans got clobbered in 2008 and many are still sinking. They and their families need whatever help they can get.
The real scandal, as I've said before, is America's safety nets are too small and shot through with holes. Only 40 percent of the unemployed qualify for unemployment benefits, for example, because they weren't working full-time or long enough on a single job before they were let go. The unemployment system doesn't recognize how many Americans work part-time on several jobs, and move from job to job.
And even those who are lucky enough to be collecting employment benefits are about to lose it. A record and growing percent of the unemployed have been jobless for six months or more, and Republicans in Congress are unwilling to extend benefits.
Romney's budget proposals would shred safety nets even more. According to an analysis by the Center on Budget and Policy Priorities, his plan would throw 10 million low-income people off the benefit rolls for food stamps or cut benefits by thousands of dollars a year, or some combination. "These cuts would primarily affect very low-income families with children, seniors and people with disabilities," the Center concludes.
At the same time, Romney's tax plan would boost the incomes of America's most wealthy citizens, who are already taking home an almost unprecedented share of that nation's total income. Romney wants to permanently extend George W. Bush's tax cuts, reduce corporate income tax rates, and eliminate the estate tax. These tax cuts would increase the incomes of people earning more than a million dollars a year by an average of $295,874 annually, according to the nonpartisan Tax Policy Center.
By reducing government revenues, Romney's tax cuts would squeeze programs for the poor even further. Extending the Bush tax cuts will add $1.2 trillion to the nation's budget deficit in just two years. That's the same as the amount that's supposed to be saved by automatic spending cuts scheduled to start next year -- which, by the way, will hit the poor especially hard.
Oh, I almost forgot. Romney and other Republicans also want to repeal Obama's health care law, thereby leaving 30 million Americans without health insurance.
The downward mobility of America's middle class is the big news, but the GOP apparently hasn't heard about it. Maybe it's too hard to hear about from that far away -- and Mitt Romney is certainly far away. His unearned income last year was more than $20 million. That's about as much as the combined earnings of a thousand American families at or just above the poverty line.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
Romney's Gaffe About the 'Very Poor' Shows Him Courting the ...
The Middle Class and Mitt - David Rohde - Business - The Atlantic
Romney clarifies remarks about poor, says focus is on middle class ...
I only bring up Vegas because the scene was not wealthy people (aside from the occasional business person or celebrity), but struggling middle class Americans still flocking in for the occasional vacation trip. The super wealthy no longer hang here except in private rooms and primarily for business purposes. Tax-evading billionaires would rather jet to private islands than mingle w/the little people blowing their savings on poker. Vegas is left with the struggling, shriveled middle class to survive. Yet another example that Trickle Down does not work and this country needs a thriving middle class if it is to remain strong, whether it be Vegas or any other US city.
http://www.truthdig.com/report/item/20090202_its_not_going_to_be_ok/
Chris Hedges: It's Not Going to Be OK - Chris Hedges' Columns - Truthdig
"...Wolin, who taught political philosophy at the University of California in Berkeley and at Princeton, in his book “Democracy Incorporated” uses the phrase inverted totalitarianism to describe our system of power. Inverted totalitarianism, unlike classical totalitarianism, does not revolve around a demagogue or charismatic leader. It finds its expression in the anonymity of the corporate state. It purports to cherish democracy, patriotism and the Constitution while cynically manipulating internal levers to subvert and thwart democratic institutions. Political candidates are elected in popular votes by citizens, but they must raise staggering amounts of corporate funds to compete. They are beholden to armies of corporate lobbyists in Washington or state capitals who write the legislation. A corporate media controls nearly everything we read, watch or hear and imposes a bland uniformity of opinion or diverts us with trivia and celebrity gossip. In classical totalitarian regimes, such as Nazi fascism or Soviet communism, economics was subordinate to politics. “Under inverted totalitarianism the reverse is true,” Wolin writes. “Economics dominates politics—and with that domination comes different forms of ruthlessness...”
The only difference is in the technological sophistication of man's evolution that allows the exploitation of other people's and planet resources to carry it the same activities, Alexander, Caesar GWB notwithstanding..
Even throughout the postwar period, the U.S. has had high levels of inequality compared to other developed countries. Taft-Hartley, which passed almost immediately after the war, imposed harsh restrictions on organized labor, effectively limiting the scope of reform possible. Deregulation and attempts to rollback the safety net, which have taken decades in Europe, were already well underway when Reagan took office.
But why does Romney insist on compounding already severe problems. Why does he act as if the poor are already taken care of when anti-poverty programs both fail to reach tens of millions and seldom bring their income to the poverty level? Why does the safety net catch the middle class falling into poverty instead of providing universal benefits to enhance economic security?
Quite simply, what passes for free market economics is a complete inversion of classical economics. All profit seeking activity, no matter how extractive, is defended as inherently beneficial.
If politicians genuinely cared about the sustainability of capitalism, they would endorse a fundamentally conservative idea. Namely, the provision of essential services by the government at cost to boost demand and lower costs for business. But there's no room for pragmatism among today's politicians. Mitt is merely leading the pack.
"doesn't seem to realize how much of the middle class is becoming poor" ?????
I believe thats why Romney said he was "worried...the MIddle Class" have no saftey net until they are broke..That was his exact point, Romney also went on to discuss how things were failing for them.
Obama's doing nothing to stop it.
Sidenote: The Republican Party has for decades protrayed itself as the 'pro-family' party. Ask yourself (and be honest), "Does economic instability help or hurt families?"
I give it three missed meals before we bust out the guillotine.
So go ahead, cut these safety nets that keep you and your rich buddies in power. I dare you.
Economists at Goldman Sachs wrote in 2006, “The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income."
http://www.nytimes.com/2006/08/28/business/28wages.html
The latest census gave the first glimpse of what happened to middle-class incomes under Republican governance. While the earnings of middle-income Americans have barely budged since the mid 1970s, the new data showed that from 2000 to 2010, they actually regressed.
For American households in the middle of the pay scale, income fell, to a level not seen since 1996. And over the 10-year period, their income is down 7%. Losses disproportionately hit the lowest 60% of Americans, while the richest 40% actually gained wealth.
Republicans are killing the middle class.
http://rwer.wordpress.com/2010/09/21/5-graphs-on-income-inequality-and-the-great-recession/
http://research.stlouisfed.org/fred2/series/PRS85006173
FRED« Nonfarm Business Sector: Labor Share
While corporate profits are increasing:
http://research.stlouisfed.org/fred2/series/CP
FRED« Corporate Profits After Tax
Mainly because of reduced wages and benefits:
"JPMorgan’s July 11 “Eye on the Market” newsletter put it, “Reductions in wages and benefits explain the majority of the net improvement in [profit] margins… US labor compensation is now at a 50-year low relative to both company sales and US GDP.”
It's amazing more people haven't taken to the streets.
http://www.infoplease.com/ipa/A0104652.html
http://www.clevelandfed.org/research/policydis/no7nov04.pdf
http://resÂearch.stloÂuisfed.orgÂ/fred2/serÂies/PRS850Â06173
Economists at Goldman Sachs wrote in 2006, “The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income."
It doesn't mean your incorrect either. Labors share of National income has fallen. Per Capita Income is a mean value, it does not reflect income distribution. If the distribution of income within a country is skewed, a small wealthy class can increase per capita income far above that of the majority of the population. In this respect Median income is a more useful measure of prosperity than per capita income, because it is less influenced by the outliers.
In other words, per capita takes a countrys wealth and divides it evenly across the population. It has no real bearing on how much a person is paid or brings home as income because it is an aggregate evenly divided.
This reflects the damaging policies of the Republican party during their custody of the federal government, massive poverty to go along with massive debt. But it also lays to rest that "the poor" are living off the government. These were working middle class Americans.
Until wages are returned to the middle class there will be no sustained recovery. 70% of GDP is consumer spending. We can't be strong assaulting wages and benefits of our own people. Consumers are the job creators.
Sometimes I wonder how many different ways Republicans must be shown the failure of their own rhetoric before they get it. But then I remember their intellectually lazy.
http://www.nytimes.com/2011/11/04/us/extreme-poverty-is-up-brookings-report-finds.html
http://www.brookings.edu/papers/2011/1103_poverty_kneebone_nadeau_berube.aspx
http://www.brookings.edu/~/media/Files/rc/papers/2011/1103_poverty_kneebone_nadeau_berube/1103_poverty_kneebone_nadeau_berube.pdf
If GOvernment Borrowing and Spending was good for economys, Italy, Greece, Spain, Portugal would all be in tip top shape...as woudl the USA, Britain, etc..
My problem is I am about to turn 60 (do not look it), I have a 16 year old son in high school and daughter in college. I saved and paid for her college tuition. (Don't even ask about Dad, gone out of the picture years ago)
I finally was approved for unemployment, but then today....shocker. I got my notice for Cobra....there is no way I can do this. To continue my insurance for my two kids and myself, well it will be $1,577 a month. This is just for health care -
that would leave me 195 for expenses from my unemployment. My savings are going down, due to car repairs (old care with 172,000 miles) and home repairs....
Everyday, I go out looking for work, for the first time in my life...... I am terrified....
To start, try to cut every expense you can now, from parking the car if you can, or even selling it and get rid of maintenance, insurance, and licensing expenses. Groceries - check out what is available in food pantries, goodwill, food co-ops, food stamps, etc and do it asap. Sorry to say, college might have to be put on hold, while your may have to go to applying for scholarships and part time attendance combined with part time work.
Lifestyle needs to change as soon as you can and as much as you can, but do it soon because with the clowns we have in D.C., things are just going to get worse, much worse.
The "job creators" schtick is a lie and a bad joke on the nation; the jobs they are "creating" are actually being "created" in slave wage countries like Mexico, India, and China, and the way they are "created" is by our government and business bosses (they call themselves "leaders) facilitating the gutting of the American job market.
The sad truth is that America is now ruled by two GANGS who ignore their duty to represent us and who are not constrained by our Constitution.
I am gut sick of the greed, egos and shallowness of people in the system.