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Economy Screams for Help

Sep 17, 2010 | By: Mr_Blue | Tags: economy, poverty rates, working class, poverty

But will anyone answer the call? It seems that Washington is gripped by an obsession over tax cuts (funny not too long ago people were obsessing over deficit). Meantime, the Census Bureau released a report on poverty and income in U.S. for 2009. The new numbers were bad and should be a wake up call that something is wrong with our economy.

Here is the full report: 2009 Income, Poverty & Health Insurance Coverage. This is just a few of the findings:

1) There were 43.6 million people in poverty, up from 39.8 million in 2008 - the third consecutive annual increase (poverty rate - 14.3% of Americans)!

2) The poverty rate and the number in poverty increased across all types of families (married couples, single parent).

3) The number of people without health insurance coverage rose from 46.3 million in 2008 to 50.7 million in 2009.

4) The poverty rate increased for children younger than 18 (from 19.0 percent in 2008 to 20.7 percent in 2009) and people 18 to 64 (from 11.7 percent in 2008 to 12.9 percent in 2009), while it declined for people 65 and older (from 9.7 percent in 2008 to 8.9 percent in 2009).

5) The earnings of women who worked full time, year-round were 77 percent of that for corresponding men, not statistically different from the 2008 ratio.

6) The real median household income in the United States in 2009 was $49,777, not statistically different from the 2008 median.

7) The Gini index was 0.468 in 2009 (The Gini index is a measure of household income inequality; 0 represents perfect income equality and 1 perfect inequality.) - for comparison - Mexico’s Gini index is .482, Canada’s .321 and Sweden’s .23 (lower number means more equal).

Sure these numbers reflect the depth of the Great Recession but there is something else going on and it reflects the structural defects in our economy. As mentioned above this is the third straight annual increase in poverty numbers. But these numbers don’t reflect the number of families who are living paycheck to paycheck or are having to work more than one job just stay ‘above water’. What about those families that are one job loss or accident/illness away from poverty (unemployment compensation kept 3.3 million people out of poverty)?

Tax cuts do nothing to address the structural defects in our economy. We are facing a new normal of low economic growth and high unemployment and we need policies that focus on job creation and investment in people and infrastructure. But we are getting the same old stuff out of Washington - tax cuts, tax cuts, tax cuts. Tax cuts did very little to create jobs over the past decade.

We need more investment in people and infrastructure as at least one means to address the structural defects in our economy. Yes, this requires much more government spending but we are talking investments that should offer a positive return for our economy - better than tax cuts, tax credits and corporate subsidies. Remember, the issue is not the size of the deficit but WHO benefits from it. As the above poverty numbers indicate, it’s way past time that Working Class Americans start benefiting from the deficit.

Good luck.