by Joe Shea
American Reporter Correspondent
September 24, 2009
WHERE THE ROAD GOES DARK
DUMMERSTON, Vt. -- Some economists are talking like the current recession - the worst since the 1930s - is over.
I don't believe it. Do you?
Between the stock market collapse and the bursting of the housing bubble, more than $14 trillion in consumer wealth was wiped out over the past two years.
After about $2 trillion of federal bailouts, the financial markets have recovered about half of their losses and the folks on Wall Street are acting like the worst is over.
Goldman Sachs, which reported in July a quarterly profit of $3.4 billion, has already set aside more than $11.4 billion in bonuses for year's end. Other big investment banks are planning similar bonuses for their top people.
But shift your focus away from the gains on Wall Street, and the story drastically changes. The impact of the current recession on workers is lower median incomes, rising rates of poverty and more financial hardship.
About 70 percent of companies in the S&P 500 have turned in better-than-expected profits for the last quarter, but those profits came by shedding workers, cutting hours and eliminating benefits. One in six U.S. workers has had to take a pay cut in the past year. And with more than 26 million Americans unemployed or underemployed, companies have taken advantage of fear and uncertainty to squeeze more out of the workers still on the payroll.
There are fewer jobs available today than there were in 2000, despite the addition of 12 million workers to the job market since then. Our economy has shed nearly 7 million more jobs than it created in the past two years.
Nearly 40 million people are living below the federal poverty line, the most since 1960, and a bit more than one-third of the nation's poor are under the age of 18. Real median household income is now 4.2 percent lower than it was in 2000.
Meanwhile, the richest Americans have seen their wealth rise to the point that we now have the widest gap between the rich and the poor since 1929. Virtually every bit of income growth since 2000 has gone to the top 10 percent of wage earners - those earning more than $109,000 per year. Two-thirds of all income growth went to the top 1 percent - those earning more than $400,000 per year.
Quite simply, the skewing of income and wealth to the top over the past 30 years has made our economy unstable. When most working Americans are either losing their jobs or afraid of losing their jobs, and when Americans who do have jobs are seeing flat or declining wages, there is no way to have a full recovery. That's because the equation of stagnant wages, greater job insecurity and widening inequality is the reason we got into this mess.
So before we can talk about an economic recovery, a lot of things need to happen.
A return to a progressive federal taxation system and a robust estate tax would help narrow the gap between rich and poor.
Changing the labor laws to make it easier for workers to join unions would help also, for the average union worker earns 11 percent more than the average non-union worker.
How about universal health care, which would eliminate the leading cause of bankruptcy in America?
A second round of economic stimulus with a greater focus on public works spending would give jobs to some of those who do not have them now wouldn't hurt
And, of course, greater financial regulation to keep the financial markets from creating another ruinous cycle of boom and bust is absolutely essential.
In short, when the focus on the economy shifts to improving the lot of the bottom 90 percent of wage earners instead of enriching the top 10 percent, we will see an economic turnaround.
Randolph T. Holhut can be reached at email@example.com.