We are witnessing an economic race to the bottom. The
recovery has largely been one of low-wage work. This is easily seen
through the
paychecks Americans are receiving.
What isn’t readily visible is what is being slashed on the backend
including healthcare, benefits, and the expanding impact of
inflation on purchasing power.
A report from the National Employment Law Project finds the continuing
trend of the McWage recovery. This is a suitable name for what is
occurring in this so-called recovery that is only exacerbating wealth
and income inequality. For example, 3.6 million higher-wage jobs were
lost due to the recession and only 2.6 million jobs in this segment have
been added back. We are in a net-deficit of good paying jobs by 1
million. On the other hand, we lost 2 million low-wage jobs during the
recession but have added 3.8 million lower-wage jobs during the
recovery. A net add of 1.8 million lower-wage jobs. This is the kind of
recovery being dished out by the bailout happy Wall Street and their
aggressive behind the scenes shenanigans of raiding the pockets of
Americans. The story is the same: corporate welfare and financial
handouts while austerity and a race to the bottom for the rest.
The low-wage recovery
Higher paid industries like those in accounting and legal work for
example shed 3.6 million jobs during the recession only to have 2.6
million being added back. However, the lower-wage industries like those
in fast food, retailing, and hospitality lost 2 million jobs during the
recession but have added a stunning 3.8 million back since. In reality,
what is occurring is a two-tiered workforce. You have massive salaries
at the executive level while we are growing an army of lower-wage
workers that barely have enough to pay the rent. The middle class?
Largely evaporating one worker at a time.
This matters for a variety of reasons but for one, it is showing a
growing inequality gap that is booming in America that is deeply problematic.
People realize that there will be gaps in income and wealth but the
current system favors a plutocracy. Money is buying more influence in
politics and the media already dishes out watered down content to keep
the public numb and blind to what is happening. This is how we can have
47 million people on food stamps
yet have a peak in the stock market. The majority of Americans own no
stocks because they don’t have enough to save after they are paid their
wages. The financial sector in the US has become a giant rent seeking
apparatus that draws money and energy from the productive sectors in the
country. Think of all the big bank bailouts. Just look at pay at the
big banks and ask yourself what the trillions of dollars in bailout
funds and central bank gimmicks have wrought onto the nation. Inflation
is absolutely happening contrary to the
watered down CPI.
Take a look at the net scorecard on what kind of recovery we are in:
Source: NELP
This is a very telling chart but illuminates what is going on in the
country. Those in the top one percent have done exceptionally well
during this recovery but most other Americans are falling further and
further behind.
“Most Americans are playing out the Alice in Wonderland Red
Queen’s race: you keep running faster and faster just to stay in the
same place.”
The above chart truly shows what kind of job recovery we are facing.
The McJobs are outpacing the middle class jobs. Can someone really get
by in the US making $9 or $13 an hour? Not if you want decent
healthcare, a college education for your kids, and the ability to own a
house. However, the structure of the bailouts has allowed large banks to
flood the housing market and crowd out regular Americans. This is why
the homeownership rate continues to fall even though interest rates are
very low:
Being a homeowner in the US used to be the cornerstone of a
middle class life.
That is now becoming much more difficult as fewer Americans have the
income needed to support such a big purchase. Also, many have a hard
time coming up with a down payment because banks have juiced up the
system where low rates focus only on the monthly payment but fail to
look at the actual base cost of an item. In other words, they try to
trick people with low monthly payments while jacking prices up. In large
part, this was the entire mission of QE and all the other bailout
programs – basically freeze accounting rules, lower rates into negative
territory, and let banks rewrite their balance sheets. In the end, what
you have is an economy where housing prices are going up, college costs
are soaring, healthcare costs are going up, yet incomes are stagnant and
falling on an
inflation adjusted basis.
The race to the bottom is on and the circus of this election year is
kicking off. The theme should be the middle class but good luck having
any champions for that cause. Remember, lower-wages and watered down
benefits save someone money. Just look at the
wealth gap in this country and you can see how things are playing out in this McWage recovery.
