Archive for the ‘middle class’ Tag

Middle Classless in US: It’s the New Economy

As the next election cycle comes up, we’re beginning to hear more about the declining middle class. The stats are in and its irrefutable, the US has lost millions from the middling income levels. People continued their middle-class lifestyle through going into credit card debt during the 2000s and now they don’t have that.

What they need is a decent paying job. What the country needs is for them to have a decent paying job so that they can live well and spend. Without it, our vaunted 70% consumption economy will falter. When people in power make this clear, the media organs sometimes undercut their message with purpposeful deletions of their words, like Jimmy Hoffa’s call for Jobs being deleted by Fox News.

one in three Americans who grew up middle-class has slipped down the income ladder as an adult, according to a new report by the Pew Charitable Trusts

Downward mobility is most common among middle-class people who are divorced or separated from their spouses, did not attend college, scored poorly on standardized tests, or used hard drugs, the report says.

 

“A middle-class upbringing does not guarantee the same status over the course of a lifetime,” the report says.

The study focused on people who were middle-class teenagers in 1979 and who were between 39 and 44 years old in 2004 and 2006. It defines people as middle-class if they fall between the 30th and 70th percentiles in income distribution, which for a family of four is between $32,900 and $64,000 a year in 2010 dollars.

People were deemed downwardly mobile if they fell below the 30th percentile in income, if their income rank was 20 or more percentiles below their parents’ rank, or if they earn at least 20 percent less than their parents. The findings do not cover the difficult times that the nation has endured since 2007.

Pew researchers said the study’s structure did not permit an analysis of whether upward mobility has become more difficult through the years. Nonetheless, some economists point to growing income inequality and widely stagnating wages as evidence that the American Dream is slipping out of reach for many people.

The report found that being married helps people avoid the worst economic outcomes. Women who are divorced, widowed or separated are much more likely to fall down the economic ladder than their married counterparts. For men, the differences are not as dramatic, although married men are more likely than single men to retain their middle- class status as adults.

Education, particularly going to college, is another crucial factor in people’s economic stability, the report says.

Women who graduated from high school are more likely to be downwardly mobile than their counterparts who are college graduates. The same dynamic exists among men, the study found.

Overall, African American men have a particularly hard time clinging to middle-class status. Thirty-eight percent of black men who grew up middle-class are downwardly mobile, nearly double the rate of white men, the report says. Hispanic men are slightly more likely than white males to fall down the economic ladder, but the difference was not statistically significant.

Among African Americans and Hispanics, men are more likely to slip than women, although the reverse is true among whites.

The racial gap in mobility has perplexed researchers at Pew since a 2007 reportthat said nearly half of African Americans born to middle-income parents in the late 1960s plunged into poverty or near-poverty as adults. That report underscored the feeble grip many African Americans had on middle-class life, prompting researchers to probe deeper, said Erin Currier, project manager of Pew’s Economic Mobility Project.

The new report called the performance of blacks on a key standardized test a factor that accounts for virtually the entire mobility gap separating the races. Black males scored much lower than white males on the Armed Forces Qualification Test, which measures reading comprehension, vocabulary and math ability.

“Taking into account differences in AFQT scores between middle-class white and black men reduces the gap until it is statistically indistinguishable from zero,” the report said.

The findings in the report are drawn from the National Longitudinal Survey of Youth, a group of 12,000 interviews that researchers have followed since 1979.
 
A big problem is that jobs are fewer in muber and require particular skill sets as part of the New Economy: which is really finance and poor paying service jobs as Harold Myerson points out below:

Today, the economy that arose on manufacturing’s ashes has turned to ashes itself. The Wall Street-Wal-Mart economy of the past several decades off-shored millions of factory jobs, which it offset by creating low-paying jobs in the service and retail sectors; extending credit to consumers so they could keep consuming despite their stagnating incomes; and fueling, until it collapsed, a boom in construction.

We are only now beginning to understand the toll this economy has taken on America’s workers — and on our working men in particular. A stunning study from Michael Greenstone and Adam Looney of the Hamilton Project, published in the Milken Institute Review, reveals that the median earnings of men ages 25 to 64 declined 28 percent between 1969 and 2009. Within this age group, the median earnings of men who completed high school but didn’t go on to college fell 47 percent, while the median earnings of male college graduates also declined, if only 12 percent.

Part of this decline stems from the shrinking share of working-age men with full-time jobs, which fell from 83 to 66 percent between 1960 and 2009. The other part stems from the fall in inflation-adjusted median yearly earnings of working-age men who have full-time jobs, which have shrunk by about $5,000 since the mid-’70s. Combined, write Greenstone and Looney, these two declines explain why the earnings of American men “haven’t been this low since Ike was president and Marshal Dillon was keeping the peace in Dodge City.”

Anyone seeking to understand the pessimism, frustration and rage of working-class men needs to begin here, with Greenstone and Looney’s two-by-four-to-the-head tale of decline. White working-class men in particular have become a disproportionately receptive audience for those who scapegoat immigrants and minorities for the damage that has actually been caused by economic and political elites blissfully blind to the devastation ushered in by their vaunted new economy.

Since that new economy blew up three years ago, many of those elites have been disabused of the financial fantasies that ordinary Americans long ago ceased to entertain. The fact that Greenstone and Looney’s study emerged from the Hamilton Project — a pillar of new-economy thinking, founded by Clinton Treasury secretary Robert Rubin — is evidence of a paradigm shift in economic vision. From centrist Democratic groups such as the Progressive Policy Institute and Third Way, to economists such as Hoover Institution Nobel laureate Michael Spence, to chief executives and former chief executives such as Dow Chemical’s Andrew Liveris and Intel’s Andy Grove, the new watchword for America’s future — however challenging it may be to get there — is manufacturing.

Post-industrial America turned out to be a bust. The time for neo-industrial America has arrived.

 

 

 

 

 

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American Public Wants

Public Says No To Republicans’ Slasher-Movie Economics

Scott Walker feels the heat as public opinion polls show very low favorable ratings

Are most people sick and tired of losing their jobs, or watching neighbors take pay cuts

Meanwhile, it’s great to be on Wall Street. It must be glorious. You crash the economy, get a taxpayer bailout and hand out record bonuses.

People are marching on banks in cities across the nation complaining about their record bonuses.

From a person who was there:

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This was a very promising beginning, my friends!

For those who weren’t there other chants included:

“We’re not going away! We will make you PAY!” and “Bank of American You Can’t Hide, We Can See Your Greedy (or Evil) Side!” and “The Banks Get Bailed Out / The People Get Sold Out!”

And the top six banks in the US pay on 11% of their tax share instead of the 35% that they should pay because of tax loopholes. They also have not been loaning money out to help out small businesses in the country.

US Economy: consequence of U.S. corporate behavior

Watch Fox or MSNBC. Doesn’t matter, you hear the grim numbers. High unemployment, eight million jobs lost. Country’s in debt to China.

What’s different is the focus and the answers. On Fox it’s tea partiers and on MSNBC it’s the poor workers, money for unemployment and the need to support the middle class in the US.

We always hear about economic cycles. Supposedly they are cyclical and structural. What I like about the editorial that follows is a discussion of an institutional cycle: enjoy

 

Corporate America, paving a downward economic slide

Wednesday, January 5, 2011

The city on a hill and the last, best hope of mankind has entered a new period in its history. We are now America, the downwardly mobile.

The problem isn’t due to the recession. Would that it were. The decade just concluded is the first in which Americans, on average, have seen their incomes decline. Median household income increased by about $4,000 per decade in the 1980s and ’90s: from $42,429 in 1980 to $46,049 in 1990 to $50,557 in 2000 (in 2007 dollars). In 2009, the most recent year for which we have figures, it had declined to $49,777 – but 2009, of course, was a year of deep recession. If we go back to the peak year of the last decade, 2007, we find that median household income was just $50,233- roughly $300 less than it had been in 2000.

Until the housing and financial bubbles burst, of course, we enjoyed the illusion of prosperity through the days of wine and credit. Now we stand on unfamiliar terrain in which almost all the signs of long-term economic health point downward. Our private sector isn’t creating jobs at a rate commensurate with our increasing population, much less at a level to significantly reduce unemployment. The share of our civilian population employed has dropped to 58.2 percent – the lowest level since the early ’80s, when far fewer women had entered the workforce.

The social pathologies long associated with the inner-city poor – single-parent households, births out of wedlock, drug and alcohol abuse – now stalk the white working class in rural and post-industrial regions far removed from big cities. The middle is falling. Rich Lowry, editor of the conservative National Review, has noted that as wages and employment levels have fallen for the Americans who have graduated high school but not college, their level of out-of-wedlock births (44 percent) has approached that of Americans who haven’t completed high school (54 percent). Americans with college diplomas or more, by contrast, have a rate of just 6 percent.

The great sociologist William Julius Wilson has long argued that the key to the unraveling of the lives of the African American poor was the decline in the number of “marriageable males” as work disappeared from the inner city. Much the same could now be said of working-class whites in neighborhoods that may not look like the ghettos of Cleveland or Detroit but in which productive economic activity is increasingly hard to find.

This grim new reality has yet to inform our debate over how to come back from this mega-recession. Those who believe our downturn is cyclical argue that job-creating public spending can restore us to prosperity, while those who believe it’s structural – that we have too many carpenters, say, and not enough nurses – believe that we should leave things be while American workers acquire new skills and enter different lines of work. But there’s a third way to look at the recession: that it’s institutional, that it’s the consequence of the decisions by leading banks and corporations to stop investing in the job-creating enterprises that were the key to broadly shared prosperity.

Our multinational companies still invest, of course – just not at home. A study by the Business Roundtable and the U.S. Council Foundation found that the share of the profits of U.S.-based multinationals that came from their foreign affiliates had increased from 17 percent in 1977 and 27 percent in 1994 to 48.6 percent in 2006. As the companies’ revenue from abroad has increased, their dependence on American consumers has diminished. The equilibrium among production, wages and purchasing power – the equilibrium that Henry Ford famously recognized when he upped his workers’ pay to an unheard-of $5 a day in 1913 so they could afford to buy the cars they made, the equilibrium that became the model for 20th-century American capitalism – has been shattered. Making and selling their goods abroad, U.S. multinationals can slash their workforces and reduce their wages at home while retaining their revenue and increasing their profits. And that’s exactly what they’ve done.

Our economic woes, then, are not simply cyclical or structural. They are also – chiefly – institutional, the consequence of U.S. corporate behavior that has plunged us into a downward cycle of underinvestment, underemployment and under-consumption. Our solutions must be similarly institutional, requiring, for starters, the seating of public and worker representatives on corporate boards. Short of that, there will be no real prospects for reversing America’s downward mobility.

Bloody Bloody Andrew Jackson

Closed last weekend of taking our nephew out in Manhattan with new musical to Broadway, Bloody, Bloody Andrew Jackson.

This rock musical decked out the theater in all kinds of color and props. It created  a great environment with so much to see. Like other shows: re Passing Strange the show has a post-modern veneer that disrupts the fourth wall.

It is filled with imagery and songs that play with the 19th century but says more about today. This is what political junkies will love.

The politician as celebrity that the show evokes says a lot about Sarah Palin as does Jackson’s evoking of a populist campaign style and language. The New York Times critic and my relatives focused on this part to see the show has having much to say about the Tea Party.

That is one reading of the opening song, Populism. The anger of the characters in Bloody Bloody validates the link to the Tea Party.

More intriguing is that the show illustrates the lack of a  populist language coming from the political left.  Jackson’s party spoke for a greater inclusion of the common man (white non-landholding male) in the political process. This was for the expansion of democracy, certainly a trait commonly found on the political left. The “people” believed he was speaking for them as one of them!

The lack of left leaning populist language makes me think of a different current political figure. Barrack Obama talked the language of helping the middle class on the campaign trail in a poetic manner. Yet, there was hardly the feeling of boots on the ground: a deep rooted support among the people that he was speaking for them as one of them that also carried the intensity of wanting to go to the wall with this politician. Jackson had that in reality and in this play.

Indeed, Obama has rarely used populist language as President to push his agenda. The media and other elites have warned him away from using class warfare language. The choice to do so has been part of the limits that have made him unable to generate excitement among the middle class, the people, even the base.

Even member of the Progressive Era elite, Franklin Delano Roosevelt as President attacked the mendacity and organized thievery of financial institutions. Obama has been lukewarm in his condemnation of these things among today’s Wall Streeters. His Justice Department and Securities and Exchange Commission have hardly pursued the criminal aspects of the banks, the Wall Streeters, and others in the financial worlds.

Why is this so? Could this be because Jackson was a member of the common people class. A man who quit the House of Representatives and the U.S. Senate after a single year. What group is Obama a member of? Did voters expect him as a child of raised by a single mother and a former community activist to have sympathies for the poor and middle classes?

Is he not a member of the New Elite? American Enterprise Institute scholar describes this new elite as attending the same Ivy League schools as the older elite, working in finance or consulting, living in isolated areas in a small number of the U.S.’s biggest cities and not being aware of the same cultural events and people as the majority of Americans.

Hell, many will probably be in Washington DC next week for the Jon Stewart Rally. Jon Stewart, who one member of the media elite praised for making him laugh as the person who sits in the back in of the room and shoots spit balls at the goofy “Conservatives” and politicians like former President George Bush. My questions: Was it really that hard to take pop shots at Bush and weren’t the shooters of spitballs disruptive to the class and bullies in school? How is that funny?

Aren’t the people who supported Andrew Jackson and the people who expected more from Obama, tired of the spitball shooters as much as the targets?

Bloody Bloody illuminates the savior aspect of Jackson’s persona. Here, the political analog might be a Tea Party figure. However, a stronger argument can be advanced for 2008’s Barrack Obama. Jackson’s campaign offered in the play offers people change and hope.

The play shows him struggling with Congress, the Supreme Court, and even his supporters, as he attempts to make decisions to affect positive change. Doesn’t that sound familiar. The play seems to emphasize these struggles, making the analogy to the sitting President more obvious.

Bloody, Bloody Andrew Jackson left me wondering about the differences when a politicians supporters embrace his language as speaking for them as opposed to supporters who look on the politician as a savior.