Sunday 24th of November 2024
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stranded in 'aspirational prosperity' .....

‘A magical glow arises from the land. "Our economy is evolving," Labor Secretary Elaine Chao told CNN in September. "It's transitioning to a knowledge-based economy." Many liberals are dazzled by the light, imagining a new era in which poverty is curable by education and the highly educated know no limits. Those who go to college and work hard are set for life, while the clueless and the unprepared drift down into the working poor. Message to Americans in a competitive, globalized world: Sink or swim. It's up to you.

But wasted knowledge piles up all around us, along with the blighted lives of people who made "all the right choices," got their degrees and have either lost or never found their footing. There's the Atlanta-based IT marketing expert who has alternated between professional jobs and janitorial work, the laid-off chemical engineer who's spent time in shelters, the 50-ish Minneapolis cab driver who offers his business card along with the receipt, because he still harbors some dim hope of returning to a job as a media executive.

It's a largely hidden problem, this quiet erosion of the middle class. While the chronically poor have been highlighted by the living-wage movement, downwardly mobile members of the middle class get short shrift, even from people of conscience. True, the college educated are a relative elite, constituting 28 percent of the population and earning, on average, a lifetime total of $1 million more than those who lack a degree. But the middle class has been roiled in recent years by what the economists call "income volatility," or sudden changes in fortune, usually caused by layoffs.

The discarded shrink off in shame - after all, they must have done something wrong - and vanish from the unemployment statistics by going to Circuit City or Starbucks and taking whatever job they can get. To acknowledge their existence would be to admit that the "knowledge economy" is a delusion and to raise a rude finger in the face of the American dream.’

Downsized But Not Out

the fractured fairytale .....

from the Centre for American Progress ….. 

What Economic Boom?

‘In the past few days, President Bush has tried to turn Americans' attention away from the growing chaos in Iraq and toward the "good news" of the economy. Unemployment is at a "historic low" and core inflation remains under three percent. The right wing is also pointing to record Dow Jones levels as evidence of the success of Bush's tax cuts.

However the public refuses to buy the administration's talking points on the country's economic "progress." According to a new USA Today/Gallup poll, 54 percent of Americans believe the economy is getting worse. "It comes down to the issue of credibility. And so many voters feel so pessimistic about the direction of the country," said Amy Walter, a senior editor of the Cook Political Report. Most Americans —including the middle class — have been left behind by Bush's tax cuts and continue to see the costs of living rise, wages stagnate, and financial insecurity increase.

People are working harder, longer hours for the same money. American middle class families are drowning in debt. Americans "know the economy is white hot," says political analyst Charlie Cook, "but they also know they aren't in it…There's a feeling that some people are getting theirs, but we aren't getting ours."

Moreover, American Progress notes, "In the second quarter of 2006, families had to spend 14.4 percent of their disposable income to service their debt — the largest share since 1980." Family savings are -0.6 percent, the second lowest level since the Great Depression.

Wages continue to stagnate, even though Americans are working harder than ever.

Median household income has actually declined under the Bush administration, from $47,599 in 2000 to $46,326 in 2005, even though productivity is up 18.4 percent.

Americans are also having to spend more and work longer to pay for basic middle-class items. In the first quarter of this year, "a typical two-earner, middle-class couple had to work 31.2 weeks to pay for housing, medical care, and transportation and to save for their kids' college education," an annualized increase of 1.3 percent in just one quarter.

Many Americans are feeling the adverse effects of a slumping housing market. Most Americans have their money tied up in the housing market, which is bad and "about to get a lot worse." A higher number of homes on the market is putting pressure on prices, which are starting to fall. An analysis by the Center for American Progress reports, "Homes for sale now stay on the market longer than at any point since 1995.

In August 2006, the real estate market had 6.6 months of supply available — a 44 percent jump from a year earlier." Even the National Association of Realtors estimates that the "median price of a new U.S. home probably will drop 0.2 percent to $240,500" this month alone. While homes are worth less, median monthly home ownership costs — including mortgage payments — have increased more than 49 percent since Jan. 2001.‘

The “American Dream” is increasingly out of reach for many Americans.

Under President Bush and his tax cuts, the American dream has been thrust further out of reach.

Fifty-four percent of Americans now believe the American dream is impossible for most people to achieve. CBPP notes that most American families will likely lose money from Bush's tax cuts over the long run. Additionally, the tax cuts have done very little to help the majority of small businesses. Bush's tax cuts reduced the top individual income tax rate, from 39.6 percent to 35 percent. But just 1.3 percent of filers with small business income are subject to the top income tax rate and actually benefited from lowering it.