Once upon a time, there was a middle class: This election year will determine whether the middle class falls into obscurity.
In the not too distant past the United States had a vibrant middle class. Prosperity for most families was the rule rather than the exception. This didn’t happen by accident or some odd twist of luck. It happened because as a country we setup a foundation that valued a robust middle class. The Great Depression had taught us some profound economic lessons and humility. But like a car that is neglected and falls into disrepair, the middle class is now a minority group in this country. We tend to romanticize the past but in this case there is some truth to this view of history. Going to college is now putting millions of Americans into incredible levels of debt. Buying a home is moving further out of arms reach for most working families. And the notion of a secure retirement is turning out to be more of a fairy tale than reality. Once upon a time, the U.S. had a majority living in the middle class.
34% of all Americans financially support the rest of the country – 112 million private sector workers support 211 million people.
The latest employment report was lackluster. The math on the employment numbers has concealed a deeper problem in the economy. Many Americans are struggling and the middle class continues to lose ground. The most startling figure coming out was that 562,000 people dropped out of the labor force. While there is a bit more information on those “not in the labor force” the press is still largely quite on this issue. You can frame the topic in a more poignant way by saying that 34 percent of all Americans financially support the rest of the country. With an aging population and record levels of debt, this might be a problem.
New banking normal where lending $2 increases GDP by $1: US bank credit up 44 percent since 2008 while GDP up 21 percent.
Remember a time when people used to be cautious when it came to taking on debt? Probably vaguely since the entire U.S. economic system is built on “gold” and “platinum” credit cards being shelled out to people that can’t afford an ounce of either. In the mail I’m receiving overwhelming offers for credit cards and personal loans. The last time credit was flowing this easily was in 2005 and 2006. I’m not sure if people realize that the Great Recession was caused by excessive debt. Too much leverage. So it should be sobering to hear that since 2008 bank credit is up 44 percent while GDP is up 21 percent. What is basically happening is that for every $2 in lending GDP is moving up by $1. In other words, we are building a house of cards once again.
The Two Income Trap has only gotten worse: America has become a dual-income nation since one income isn’t enough to maintain a household.
America has become a nation where households depend on multiple streams of income just to get by. Many people think that having two incomes is a luxury when in most cases, you need two incomes just to get by and keep up with the rising cost of living. This is reflected in the two income trap. Take for example a couple that works and makes the median household income of $52,000. In many cases if the couple has a child, daycare costs are needed and these can run exceptionally high. Healthcare costs are also incredibly high and have grown unbelievably fast over the last two decades. This recent recession could have been called a Mancession since most of the jobs lost went to men. America is a nation of dual-income households because people are too broke to get by on one income. The current state of the economy hasn’t helped much in supporting economic growth for working families.
Crony capitalism and the rigged system: 0.01% of households gave 33% of money raised by political parties and Congressmen. Most members of Congress are millionaires.
The system is rigged. Like a carnival game, the odds are against you. This isn’t something that started this year or last, but has been going on for many decades. As long as the media was controlled in a few hands the propaganda kept most of the public in the dark. People now have the ability to access information from wherever they want. And that is why in 2016 you have two party outsiders doing so well. Typically, party insiders excel and do well if they follow the party line. The middle class is now a minority in the United States and people are scratching their heads wondering why. That issue is complex but one thing that isn’t complex is how Congress is bought. 0.01% of households gave a stunning 33% of money raised by political parties and Congressmen. It should also not be a surprise that half of Congress is in the millionaire club. In other words, the system does not represent you.
Almost Half of Americans Endure at Least One Aspect of Poverty: The Hidden Recession Continues to Hit Americans Hard.
Poverty is portrayed in a very simplistic fashion in the media. It is usually something that impacts other people far removed from your immediate family. However, poverty is incredibly widespread. This shouldn’t come as a surprise. We already know that half of the country lives paycheck to paycheck and is simply one small emergency from being out on the streets. We also know that in 2015 45,000,000+ people were assisted by food stamps. The number is still incredibly high but this year, nearly 1 million will lose access to food stamps because of how the unemployment rate is reported. Poverty is very real. The Brookings Institute just did a study and found that virtually half of Americans have endured some form of poverty. The report runs counter to the “great recovery” narrative.
The education and employment myth: Almost two-thirds of people in the labor force do not have a college degree.
There is an ongoing perception that most of the workforce has a college degree. When we say college degree we mean at a minimum a bachelor’s degree. You would think that with $1.3 trillion in student debt outstanding a good portion of the work force would be college educated. The opposite is the truth however. Almost two-thirds of the workforce does not have a college degree. That might be surprising to you especially for a country that pushes nearly everyone into college. Yet this blind pushing of people into college has created problems for those choosing careers and paths that simply lead into more debt and very little marketable skills. It is also a case where the younger workforce is more educated but also more indebted. They are paying more for their education and their incomes are simply showing paltry gains. This is why talks of the minimum wage are actually bigger than you think. Many people are what we would consider “working poor” even though the media fails to acknowledge real inflation that is hurting the standard of living. So how does this look on a nationwide scale?