Middle class annihilation one penny at a time – 64 percent of Americans do not have adequate savings for an unexpected $1,000 expense. The crushing blow to income and household wealth.
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The American middle class is furious and this is reflected in how people perceive their failed government but also a financial system that has largely profited from the failures of millions. A recent Gallup poll shows that only 13 percent of Americans actually approve of Congress and the way they are handling their job. This is a record low. Of course the financial system for those too big to fail banks is doing just fine thanks to years of accommodative policy, taxpayer bailouts, and politicians that basically collect payroll checks from the HR department of these large financial institutions. As we have noted and the media fails to report, the average per capita income in the United States is $25,000. What is even more disturbing is that a recent poll found that 64 percent of Americans would not be able to shoulder even an unexpected expense of $1,000. If a transmission on a car goes down or additional medical expenses hit, it will cost well over $1,000. This is simply another reflection of how the crushing collapse of the middle class will not be televised.
$1,000 enough to crush many Americans
Source: National Foundation for Credit Counseling
The fact that $1,000 of unexpected expenses would leave many Americans gasping for financial help is troubling enough but the even more disturbing methods of how families would deal with issues that go to the debt addicted psychology of the nation. 9 percent said they would take out a loan (assuming they could) to deal with the expense. 17 percent would borrow from friends or family. Presumably these family members fall in the 36 percent category that actually have savings to deal adequately with a $1,000 unexpected expense. Another 9 percent would take out a cash advance on their credit card which is one of the worst things you could possibly do. 12 percent would sell or pawn current assets assuming it had value enough to cover $1,000. If that isn’t troubling enough, 17 percent would flat out disregard other monthly expenses. Welcome to new reality for the working and middle class in our nation.
How in the world did we get to a point where $1,000 would be a crushing blow to most families? All this coincides with the new gilded age mentality of our nation where financial oligarchs are protected at the expense of the middle class. The media simply keeps singing their songs of praise. We have another 46,000,000 Americans that are living day to day with food stamps, the highest percentage of Americans ever. This does not sound like any sort of recovery to me. To the contrary this sounds like a banking and government system simply trying to keep the public comfortable enough so they don’t realize the scandal that has taken place over the last decade. It really has been a robbery. The facts showing the top one percent income growth and no subsequent growth in the real economy highlight a twisted new system that we live in. These large banking systems abjectly failed but were socialized into existence by taxpayers. When I hear politicians ranting about working and middle class Americans needing to deal with austerity what about the financial system? Why don’t we claw back some of the trillions of dollars the U.S. Treasury and Federal Reserve funneled their way? Every time you hear that line think of this chart:
$1,000 in unexpected expenses is enough to throw most Americans into financial turmoil. Incredible. Yet this does make sense. We know that 1 out of 3 Americans flat out have no savings account so learning that the majority of people are living paycheck to paycheck is not a stunner. Household income growth has been stagnant and has actually fallen over the last decade. Ironically worker productivity has increased yet more of the profits are flowing to a smaller group of people. This mass psychology of believing that the system is not rigged is not working anymore and polls and statistics reflect this. The mainstream press largely constructs a narrative even if it is not based in reality and tries to massage the data one way or another. How many times have you heard about household income in the press? All you hear is talking heads ranting about “jobs” or “taxes” in 30 second pieces that lack any depth. It is theatre. They want to keep people running faster on the hamster wheel so they don’t notice the giant con that is taking place. Do we seriously have any real journalism left at least when it comes to the giant media outlets? I’m expecting to see NASCAR logos on the suits of many of these reporters.
Household income has trended lower for years
Real household income is now back to levels last seen in the 1990s. The only problem of course is the cost of living thanks to the Federal Reserve digitally printing dollars and bailing out its banking buddies has caused inflation. I don’t need to tell you this since you see this in your grocery bill, when you fill up your gas tank, healthcare costs, and sending your kids to college. This is the reality that is not being broadcast. But this comes as no surprise as the sectors adding jobs are in low wage areas:
“This is a very important chart because it tracks jobs lost starting in 2008 and what has been added in the so-called recovery. Over 3.5 million higher wage jobs were lost from January of 2008 to February of 2010. Since that time, only 179,000 higher wage jobs have been added (or 5 percent of what has been lost). Of the 3.2 million jobs lost in the mid-wage industries only 468,000 jobs have been added. Yet the dominant growth comes from the lower-wage sectors. 2 million jobs have been lost but 613,000 have been added. What the chart doesn’t show however is how many of those who lost higher wage jobs are now finding themselves taking jobs in the lower-wage industries. This is simply more evidence showing the crushing blow being leveled at the middle class.”
So what does this all mean? If things don’t change we should get used to this new low wage capitalism world. Take for example what is going on with Texas. It is great that they have been adding jobs but most are in low wage sectors. Companies are going there to leverage the idea that money is scarce and to force more people to do with even less money. Just look at CEO pay and especially the pay in the banking sector and see how bad things really are. You have banking CEOs making 800 times what an American family is making. The middle class is being crushed and some would like to use this opportunity to force Americans to take even less! Next year will be a heated political climate but nothing can change until both sides stop being bought out by financial institutions and those connected to big money. When 64 percent of Americans would be financially knocked into distress because of $1,000 in unexpected expenses the last thing we need is lower paying jobs. What we need is to reform the system and reward businesses that grow the economy by bringing everyone up, not by stealing taxpayer money for the gambling circus with investment banks and hedge funds.