Following my last Rock The Capital column, I received some feedback that the whole comparison of life in modern America to Charles Dickens’ “Tale of Two Cities” may be a little too stark; a bit too doomsday in perspective.
Therefore, I thought I would offer just a sampling of a litany of statistics that support the view that America’s middle class is steadily disintegrating. This will allow readers of Rock the Capital to come to their own conclusion.
Here is a sampling of some of the literally hundreds of data points that indicate that the middle class, what has always been regarded the bedrock of American society, is shrinking at a record pace.
1. A total of 43.6 million Americans, or 14.3% of the nation’s population, lived in poverty in 2009, according to an analysis of U..S. Census data conducted by the Institute for Research on Poverty. That’s the largest number of impoverished Americans reported in the 51 years that the U.S. Census has been publishing estimates on the nation’s poverty numbers.
2. Even worse, 21 percent (or more than 1 in 5) of all American children live in poverty according to the Foundation for Child Development, as reported on CNN.
3. U.S. families have seen the equity in their homes lose $6 trillion in value in the past three years according to The Center for Economic Policy and Research. Based on data from the Federal Reserve Board, for the first time in U.S. history, banks own a greater share of net worth in residential housing than that of individual American homeowners. When you think about the fact that home ownership has been the single biggest investment most middle class people make over the course of their lives, the extinguishing of that much value by itself is an economic hydrogen bomb.
4. A recent 2010 poll conducted for Careerbuilder showed that 77 percent of Americans say they always or usually live paycheck to paycheck. Those numbers are up even from the extraordinary 2009 figures, when 61 percent of Americans fell in to that category. These figures have skyrocketed from the 49% in 2008 or the 47% in 2007 who answered the same way.
5. In August of this year, it was announced that the number of Americans on foods stamps as of May 2010 reached a record 40.8 million and that the number receiving this assistance had increased 19 months in a row. The month of August was significant because right around the time of that announcement, the U.S. Senate voted to cut $12 billion from the food stamp program in order to help finance a $26 billion program aimed at preventing teacher layoffs. I guess we’ve gotten to the point in this society that we’d rather worry about whether kids are being taught than fed.
6. The wealthiest top 10% of Americans in wealth now earn 50% of the country’s income according to the Center for Equitable Growth at University of California, Berkeley.
Aside from these sobering statistics, there are multitudes of numbers to suggest that these trends will only get worse over time, not better.
7. Eighty-three percent of all U.S. stocks are in the hands of 1% of the country, according to data compiled from the previous U.S. census and by the ACS Lending Tree report.
8. As of 2007, the top 1% of U.S. households owned 34.6% of privately held wealth followed by the next 19%, which had 50.5%, according to published research conducted this year by Edward N. Wolff at New York University. (So, the top 20% of Americans held 85% of the wealth). The only problem with these numbers is that they may actually underestimate the current disparity since the same noted economist says that the average middle-income household lost 36 % of its wealth since the stock market crash in September 2008 while the top 1% sustained just an 11.1% drop.
9. According to the Wall Street Journal, the U.S. government will have to borrow $4.2 trillion to pay maturing bonds and/or maintain interest obligations on existing debt. That’s right borrow another $4.2 trillion just to keep up with 2011 interest obligations.
10. Separate from the above, here’s a reported fact that underscores the preposterous, obscene difference in income that exists among Wall Street’s elite. In 2009, the top 25 hedge fund managers earned $25 billion. That’s right, 25 managers of hedge funds earned an average of $1 billion each.
Hey I’m all in favor of capitalism, but these guys are not visionaries like Bill Gates or Steve Jobs, or even Facebook’s Mark Zuckerberg; these are hedge-fund managers – you know capitalists who make money when most financial markets are losing money. If that doesn’t make you angry, I think it should.
At the end of the day, any one of the above facts should instill outrage and arouse citizens to demand change. Unfortunately, it seems that the only consistent answer that the Administration and Congress have to the nation’s existing economic problems is to borrow even more money and add to our $13 trillion debt.
And just imagine. Some people thought I was exaggerating.
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