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This entry was written by Heist Co-Producer and Co-Director Frances Causey.

A recent report that the economy contracted the last quarter is no surprise. Despite the recent numbers, we consistently get rosy reports from the mainstream media that the economy is generally improving. But the reality is that tens of millions of Americans have never been less secure financially because the current economy leaves them out in the cold. The numbers never lie.

From 2007 to 2010, the median net worth of each middle class American family dropped by nearly 40%, wiping out 18 years of accumulated wealth. The housing crash contributed to most of the losses. In that same period, middle-class families went from having on average $126,400 to $77,300. Median income for middle class families is now about where it was in the mid-1990’s. These are stunning losses (not JUST a number) and not without severe consequences, particularly when one considers the psychosocial impact to families. The 1% had big losses too during the crash but they were significantly less impacted because their assets were more diversified. Yet consider this. The earnings of the top 1.0 percent grew a staggering 134% between 1979 and 2007 while those in the bottom 90% grew just 15%.

So where are working Americans suppose to make up for their losses? Apparently not by working. Most of the jobs lost in the economic collapse were replaced by low paying jobs with no benefits. One of the most astonishing numbers consistently left out of the national debate is how 40 million good jobs with benefits were lost well before 2007. These also were replaced with low paying, low-skill service jobs. And yet somehow we continue to think this restructuring of the American economy that began in the late 1970’s when Democrats and Republicans alike began to worship at the altar of free market utopianism is good for us.

Since the late 1970’s average workers have faced historic obstacles in the search for decent employment. Current forecasts suggest there will be protracted unemployment for years to come. To put it bluntly, there is little doubt (and Washington knows this) that the living standards of a majority of working Americans will continue to decline over the next decade.

Even many relatively high tech manufacturing jobs today are paying just $10-12 an hour.  In a recent 60 Minutes/CBS News story the reporter filed a piece on the subject of how American manufacturing cannot find enough skilled workers to run their factories.  The piece profiled several workers who went back to school to get the necessary training. And guess how the worker is being rewarded for her initiative? She is being paid $12 per hour! Yet the reporter never questioned the employer about the low wages he pays for his “skilled” workers. And American employers wonder why there is a dearth of candidates applying for these positions? These are not living wages when a gallon of milk costs $5.  Workers simply can’t afford to take these jobs and support their families.

Yet, without rebuke from the people who elected them, politicians on both sides of the aisle continue to cry about a worker “skills gap”.  Just recently, a bi-partisan group of Senators, guided by an addiction to the belief that the market always knows best, just sided 100% with multinational corporations against American high-tech workers by proposing a bill that would overhaul the high-skilled worker visa program. The bill would immediately increase the cap on temporary H-1B from 65,000 to 115,000 a year, giving guest workers an advantage of American workers. How are American workers of any skill level ever able to compete again with the deck so stacked against them?

We hear everywhere that we are in a “recovery” citing the fact that our economy is “growing”.  But since the economic collapse, our Gross Domestic Product is consistently averaging around 2.5%. But that number is not high enough to create enough jobs for those job seekers entering the market for the first time much less the millions who need jobs but cannot find them.

Which brings me to another narrative waffling out there.  A favorite mantra of the corporate and Wall Street class, and Tea Party is that America is a “welfare state”.  Out of work Americans are taking too many handouts and after all “enough is enough.” A closer look at the numbers bearing reality reveals a much different truth.  If readers will recall, President Clinton “reformed” welfare in 1996. To receive cash assistance or Temporary Assistance to nearly enough to meet even the most basic of needs. TANF’s role in providing income support to families has declined dramatically since 1996 yet the need has never been greater. For instance in 2011, only 27 families received TANF for every 100 families in poverty.

If the working poor are on Medicaid its because employers like Wal-Mart don’t offer health care.  If the working poor participate in SNAP or the food stamp program its because they are not paid enough by employers like Wal-Mart to feed their families. Since 2007, over 12 million families have lost their homes to foreclosure.  As of January 2013, another 11 million are underwater on their mortgages and in serious jeopardy of default. Yet, there are currently 1.2 million people in public housing, hardly a huge number given the number of families displaced by the housing crisis. But yet we hear the constant refrain from those who have never wondered where their next meal was coming from complain that our working poor are consistently “on the take”.  Corporate or white collar welfare in the form of subsidies, low tax rates for corporations and wealthy individuals, and the auctioning of public resources like oil, timber and the public airwaves for pennies on the dollar costs taxpayers ten times what blue-collar welfare does.

So what is the solution? Profits are not the problem.  Blind, relentless pursuit of them at any cost by any business small or large is.  American style Democracy has always been grounded in the fact that a majority of America’s citizens worked hard and shared in her prosperity. American worker productivity has never been higher yet American workers are not seeing any return. So we have to make “work” pay again in this country.  But how do we do that?  If we truly grasp and follow the current numbers, we need a revolutionary change in what’s left of our Democracy.  

Through organizing and grassroots efforts, we must rally those left behind in this economy and acting in unison, reconstruct our economy by rebuilding from the bottom up and pressuring those at the top to change policy. This means strengthening the power of workers wherever we can, through workplace laws, policy and unions, which remain the only institutional hedge against the power of Wall Street. Moreover, we must realize that our problems are not just about electing the next politician. Perhaps we even need to redefine the American Dream into one that is more inclusive of all.

This entry is also available at firedoglake.

Originally posted to donnyg1941 on Mon Feb 04, 2013 at 02:03 PM PST.

Also republished by Money and Public Purpose.

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Comment Preferences

  •  Tip Jar (8+ / 0-)

    Heist! how major US corporations orchestrated the greatest theft in history. follow @PolicyMavenMD

    by donnyg1941 on Mon Feb 04, 2013 at 02:03:18 PM PST

  •  It's like Bill Gates walking into a bar (2+ / 0-)
    Recommended by:
    kyril, gorgonza

    The average income of the bar occupants increases dramatically so overall the bar economy is good.

  •  Actually Americans Made No Gains in Wealth Since (2+ / 0-)
    Recommended by:
    MrBigDaddy, katiec

    Carter, except for the top 1%, reported by Scientific American in 2001 or so in a short report on family net worth.

    So the recent lost of net worth would seem to me to take people back to the 70's or 60's, not the 1990's.

    Even the 90th-99th percentiles were not gaining during the Clinton so-called boom. Incomes maybe, but not net worth.
    Image Hosted by ImageShack.us

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Feb 04, 2013 at 02:31:04 PM PST

  •  Automation (0+ / 0-)

    Tell me what exactly labor unions plan to do when machines  do work for the amortized equivalent of $3/hr. Demand $20 plus benefits?

    That's what's going on here. I know because I see it all the time: difficult skilled work replaced by machines. You know how many administrative assistant jobs have been destroyed by MS Office alone? Even higher end professional work like lawyers and doctors are being replaced by scripts and artificial intelligence.

    Machines are displacing manual labor. They work much faster and do the job at a higher quality than humans. Employment is shifting toward a few high-wage technical specialists and otherwise service employees.

    The question is: what do we do about this? How do we handle a world that just needs less people? Not sure I know the answer...

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Mon Feb 04, 2013 at 06:38:30 PM PST

  •  The Real Per Capita Debt (0+ / 0-)

    Owed to the bankers (I am not talking Government Debt!) went up over 15 times from 1950 to 2008

    See Real Per Capita Real Debt owed to Bankers

    By comparison, Real per capita Government Debt went down by 37% from 1950 to 1974 - then tripled till 2008

    See Real Per Capita Government Debt

    It should of course be realized that Government Debt is never the problem as the Government Sector Debt equals the Private and Foreign sector's savings.

  •  OT, seeking clarification re Mosler's (0+ / 0-)

    "cash shredding" anecdote, given in e.g., Warren's oft-cited Seven Deadly Innocent Frauds:

    And what happens if you were to go to your local IRS office to pay your taxes with actual cash? First, you would hand over your pile of currency to the person on duty as payment. Next, he’d count it, give you a receipt and, hopefully, a thank you for helping to pay for social security, interest on the national debt, and the Iraq war. Then, after you, the tax payer, left the room, he’d take that hard-earned cash you just forked over and throw it in a shredder.

    Yes, it gets thrown it away. Destroyed! Why? There’s no further use for it. Just like a ticket to the Super Bowl. After you enter the stadium and hand the attendant a ticket that was worth maybe $1000, he tears it up and discards it. In fact, you can actually buy shredded money in Washington, D.C.

    and in his paper with Forstater:

    Stephanie Kelton, in this interview, says:

    Let’s say you have a tax liability and it’s a hundred dollars and you just mail in a one hundred dollar bill. Apart from the shock of opening the envelope, what are they going to do with this? What do we do with this? Send it to the Fed. That’s where the Treasury banks. Goes to the Fed, and what do they do with it? They shred it. They shred it. Why would they shred it, I mean literally shred it, if they needed it to buy things, if they could use it to spend? Because they don’t use it to spend and they don’t need it to buy things. [00:19:06]
    … if one pays taxes or buys government securities with actual cash, the government shreds it, clearly indicating operationally government has no use for revenue per se.
    Warren does offer, in this reply to a query:
    I guess it’s a matter of semantics/contexts re the word ‘destroyed’

    taxes remove balances from the non govt sector, and in the case of taxes being paid with actual cash- old $20′s for example- the US govt shreds them, which qualifies as ‘destruction.’

    and for the economy, balances in the tsy’s account are, per se, of no consequence whatsoever. it’s just ‘accounting’ on ‘the gov’s side of the ledger’ so as far as the economy is concerned they are as good as non existent.

    But in any case, the context of ‘taxes destroy dollars’ is that they are removed from the economy by the govt. thereby reducing net financial assets. And I suspect I never have used that term ‘taxes destroy dollars’ in the manner others do, even when I use the shredder imagery.

    Also, joebhed challenges the assertion in this related interchange where he first notes:
    I thought that Warren and now, unfortunately, even esteemed Dr Bill Black have said that the IRS shreds the money when you make a payment of taxes.
    Near the end of the exchange:
    [MRW:] The IRS doesn’t shred cash money used to pay taxes. (Who does that anyway?)

    [joebhed:] … I agree with Warren that we cannot become insolvent – except on purpose.

    The Fed does shred some of the money they get from Treas, just as they shred money they get from elsewhere. (refs, e.g.: WP, and the impromptu interview with the Fed's Jerry Nelson at 3:35 min, as pointed to by MRW in the above interchange).

    But the Fed doesn't need to shred -all- the money it gets from Treas.

    A better way to say this seems to be, as given by J.D. Alt, in his 12/17/2012 Monopoly piece:

    … [the currency-issuing government] could take all the money it receives (in taxes, fees or fines) and simply shred it and throw it away: it has no need for it, because when it needs money it simply “issues” the currency.
    where I emphasized could for clarity.

    Sorting through that, I get for general consumption:

    When someone pays their taxes in cash to the IRS (which is part of the U.S. Treasury), the Treasury deposits the cash with the Fed and the Fed credits the Treasury's account accordingly. The Fed, then could take all the money it receives from the Treasury and simply shred it and throw it away: it has no need for it, because when it needs money it simply “issues” the currency.
    Anyone care to correct/elucidate?

    United We Understand — e MMT unum

    by dorkenergy on Wed Feb 06, 2013 at 05:13:50 PM PST

    •  that part near the top should read: (0+ / 0-)

      and in his paper with Forstater:

      … if one pays taxes or buys government securities with actual cash, the government shreds it, clearly indicating operationally government has no use for revenue per se.
      Stephanie Kelton, in this interview, says:
      Let’s say you have a tax liability and it’s a hundred dollars and you just mail in a one hundred dollar bill. Apart from the shock of opening the envelope, what are they going to do with this? What do we do with this? Send it to the Fed. That’s where the Treasury banks. Goes to the Fed, and what do they do with it? They shred it. They shred it. Why would they shred it, I mean literally shred it, if they needed it to buy things, if they could use it to spend? Because they don’t use it to spend and they don’t need it to buy things. [00:19:06]

      United We Understand — e MMT unum

      by dorkenergy on Wed Feb 06, 2013 at 05:43:35 PM PST

      [ Parent ]

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