Working America’s Dismal State – by Stephen Lendman
Two recent studies documented it, both discussed below. In May 2011, Northeastern University’s Center for Labor Market Studies (NECLMS) headlined, “The ‘Jobless and Wageless’ Recovery from the Great Recession of 2007 – 2009: The Magnitude and Sources of Economic Growth Through 2011 (Q I) and Their Impacts on Workers, Profits, and Stock Values.”
From 2007 – 2009, private sector wages and salaries declined sharply, while unemployment, underemployment, and their median and mean durations skyrocketed.
According to the National Bureau of Economic Research (NBER: the official US business cycle arbiter), the recession ended in June 2009. Public opinion polls sharply disagree. Two by ABC in May and June 2010 found 88 – 90% of respondents rating the economy “not so good” or “poor.” They should know. They feel it.
A May 2010 NBC/Wall Street Journal poll showed 76% of respondents saying America’s recession continued, 62% believing it wouldn’t end for one or more years. Hardly a testimony to “recovery.”
In November 2010, a Heldrich Center for Workforce Development study found 89% of respondents saying the economy wouldn’t recover for another year or longer, and 56% said three years, if ever. Moreover, almost 90% believed healthy employment levels would take many years to achieve or perhaps never.
In March 2011, an AP/Viacom poll of 18 – 24 year olds found 75% calling the economy “approximately poor, somewhat poor, or very poor.” Only 9% said it was “very good or somewhat good.”
Despite NBER’s declaration, US households disagree with good reason because they’re unemployed, underemployed, underpaid, living through hard times, and see little assistance from Washington or state capitals helping them when it’s most needed.
For them, the Great Recession, in fact, is a Great Depression, perhaps America’s greatest given dire levels of growing misery for millions.
Moreover, those hardest hit include Blacks, Hispanics, young workers under 30, high school dropouts, others with no college degree, and those in construction, retail, hospitality and accommodation, and business services.
In fact, “(t)he tepid recovery from the 2007 – 09 recession through (Q I 2011) marks the first time in post-World War II history that civilian employment as measured by the” Current Population Survey (CPS) “failed to register any net growth seven quarters following the end of the recession.”
As a result, real unemployment as measured in the 1980s tops 22%, not the manipulated Bureau of Labor Statistics (BLS) 9.1% headline figure. Wages have also stagnated or declined, and benefits are eroding.
In fact, “the overwhelming beneficiary of (rising) national income generated by labor productivity (worker output per unit of time, benefitting employers not them) was corporate (pre-tax) profits” at the expense of workforces.
From 2009 Q II through 2010, real US national income rose $528 billion. Pre-tax corporate profits alone increased $464 billion (88% of real national income) while aggregate real wages and salaries rose only $7 billion or 1%, despite double-digit inflation, not the manipulated BLS 3.6% CPI in the previous 12 months, excluding or underweighting food, energy, transportation, rent, college tuitions, and other sharply rising components.
The study concluded that America’s “recovery” is “both jobless and wageless,” stressing workers as hard times continue.
Economic Policy Institute’s (EPI) “State of Working
Since 1988, EPI published it annually, including data on household incomes, wages, jobs, unemployment, wealth, and poverty. Notably it said from 1948 – 1979, one third of average income growth went to America’s 10% richest.
However, from 1979 – 2007, the richest 10% got 91% of average income growth, an unprecedented disparity still widening as working households experience deepening hard times with no relief in sight because policy initiatives demand greater sacrifices when massive social spending is required to relieve need.
Like NECLMS’ study, EPI called the “highly unequal” distribution of wealth (including wages and incomes) one of its study’s “most salient points.” Specific findings included the following:
Wealth destruction from 2007 – 2009, was disproportionately experienced by 80% of Americans.
The average net worth of America’s wealthiest 1% was 225 greater than the median 2009 household net worth – the highest ratio on record.
In 2009, about 25% of US households had zero or negative net worth. For Black households, it was 40%. Their median net worth was $2,200, “the lowest ever recorded” compared to Whites at $97,900.
In 2009, America’s 20% richest controlled 87.2% of all wealth. The top 1% controlled 35.6%.
In 2009 dollars, median household wealth fell from $71,900 in 1983 to $62,200 in 2009 while America’s richest got richer.
In 2009, the Forbes top 400 wealth averaged $3.2 billion – 523% higher than 1982. Their collective net worth was $1.3 trillion. Today it’s greater.
“In the foreseeable future, there is no reason to believe that the large and increasingly wider disparities in wealth holdings will change or reverse direction.” The imbalance, in fact, almost certainly will get greater as America’s wealthy prosper while poverty overall soars.
During the “Great Recession,” 8.4 million jobs were lost, and long-term unemployment and underemployment registered record highs.
Because of the deepening housing depression, home equity as a percent of property value fell from 59.5% in 2006 Q I to 36.2% in 2009 Q IV. “For the first time on record, the percent of home value (owned outright by homeowners) dropped below 50% – meaning that banks now own more of the nation’s housing stock than people do.” Moreover, one-fourth of mortgage holders are under water because of rising debt and plummeting prices.
Homeowners’ equity as a percent of home value fell from around 70% in the early 1970s to 36.2% in Q I 2009.
The most recent data beyond this study’s timeline show an even greater decline. According to the Case-Shiller index, today’s housing crisis exceeds the Great Depression. Still declining valuations have fallen 33% compared to 31% from the late 1920s to the 1930s’ bottom. Nonetheless, housing prices remain high by historical standards, suggesting more to the downside, perhaps much more without nowhere in sight remedial help.
EPI concluded that recovery “has yet to bring substantial relief to those suffering” from an economic crisis showing no signs of ebbing. Growing evidence, in fact, suggests much greater trouble ahead, what some observers call America’s Greatest Depression, a condition with global contagion.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.