Structural Damage to the Economy
Jobs, Pay, Government Charity, Political Donations,
Jobs, Pay, Government Charity, Political Donations,
Only 1.1% of all household net worth is owned by 50% of U.S. households according to the Survey of Consumer Finances, a report from the Federal Reserve Bank, see the source (or here). 98.9% of wealth is owned by the other half of households. "Mean household net worth [for all households] was $498,800 . . ." --- on average every family has half a million in net worth --- but the mean average net worth for the lower-saving half was less than $11,000 per family or household. Only 11% of households are "average" or above "average". Not Lake Woebegone, here almost no body is above average. We look like the basketball team with one Wilt Chamberlain and nine Spuds, and the Spuds are running around like crazy while the Wilt is causing the spuds to wilt.
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Less than 7% of annual personal income goes to the lower-earning 50% of U.S. workers (76 million out of 151 million). See the two sources, here (the Social Security Administration report on Wage Income) and here, page 28 (the Joint Committee on Taxation report on total reported income, tax year 2012). Total personal income, tax year 2012, was $11.468 trillion, and income to the lower earning 47% was $741 billion, or 6.5% of total personal income. The average income for the higher-earning 53% of workers was $131,225; the average for the lower-earning 47% of workers was $10,340. The highest-earning 1% of households collectively earns more each year than the lower-earning 60% according to this report by Citizens for Tax Justice, and the effective overall tax rates are not that far apart --- 22.6% for the lower-earning 60%, 33.0% for the top 1%.
The economy is not serving the majority who live under its dominion. The median hourly income today is $16.30 an hour, but it would be $28.42 an hour had wage growth kept pace with productivity growth since 1968, according to an article I cite here and below. This is a difference between a median annual cash income of $34,000 and $59,000 for full-time workers. Since many workers are not full-time and year-round, the median worker's annual income in 2011 was $26,965. If --- and it is a very big IF -- wage growth had continued to keep pace with productivity growth, the median worker's annual income would not be around $27,000, it would be around $47,000.
Imagine such a society --- we are generally missing our potential, and the conversation in popular media does not even mention or imagine what a grave loss we've sustained because of the one-sided income imbalance we sustain and have sustained for 40 years. The top earning 1% today earn more (21.9% of all income) than the lower-earning 60% of households (21.4%), see this table from Citizens for Tax Justice. As I mention below, $38,000 per human is the post-tax annual income for EVERYONE. With 2.7 "everyones" in an average household, the average annual post-tax income per family is $102,600. This is from the BEA.gov report on income, it implies a pre-tax average income of $116,000. Here's another reliable source, from the EPI, that shows a pre-tax average household income of $104,163 in 2011 dollars. Maybe your family isn't average? Join the club. Less than 20% are average or above. I've done some re-figuring, using the effective overall post-tax income the CTJ study uses which I cite above, and the post-tax average is closer to $81,000 per family. Is this the society we live in? Would that be an improvement? Today's post-tax household median income is $37,500. Do we care?
This stark nature of inequality is beyond doubt. This inequality is a starting point for analysis. As you'll see, this article goes all over the map, but I'd like readers to take in the three above facts, and proceed. I've written so many articles about this, it's all over this blog. Please dive in.
1979-2011
- See more at: http://stateofworkingamerica.org/charts/real-annual-family-income-growth-by-quintile-1947-79-and-1979-2010/#sthash.60ljbfT2.dpuf
- See more at: http://stateofworkingamerica.org/charts/real-annual-family-income-growth-by-quintile-1947-79-and-1979-2010/#sthash.60ljbfT2.dpufGrowth for the top 5% only:
Since 1980, roughly, family income has grown unevenly, in a lop-sided, polarized way. The lower-earning fifth drops 12% of its income over 30 years, while the higher-earning fifth gains 36% more income. This is a structural defect. Remedying the defect will take democratic change. The CBO also published a report on income distribution stating: "For the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent between 1979 and 2007 (see Summary Figure 1)." ---- OK -- how much is 275% growth? Think QUADRUPLED almost. 100% growth is doubled, 200% growth is tripled, 275% growth is almost QUADRUPLED. The per capita growth was 66% during the 1979 - 2007 period, and the top-earning 1% increased their share of the economic income pie from 8% to 17%, post-tax and post-transfer income. The pie enlarged, and their share of the pie doubled. The threshold to enter the top one percent more than doubled from $165,047 per year to $347,421, a $182,000 increase (in inflation adjusted dollars), while the lower-earning 20% threshold to enter the 21st percentile increased by just $2,000 from $12,000 to $14,000 (see page 35). If the growth rate for the lower-earning 20th percentile had matched the 66% per capita growth rate, then $20,000 would have been the 2007 threshold amount. Robert Reich, on July 1, 2013, writes: "Had the real median household income continued to keep pace with economic growth [since the late 70s] it would now be almost $92,000 instead of $50,000. " (See a less-than-3-minute video of Reich explaining Inequality Is Real.)
Certainly this is a structural defect in a democratic society.
University of California professor Emmanuel Saez reports (page 3 of Striking It Richer) that "Top 1 percent incomes grew by 58% from 1993 to 2010 (implying a 2.7% annual growth rate). This implies that top 1 percent incomes captured slightly more than half of the overall economic growth of real incomes per family over the period 1993-2010." During the same 17 year period the lower 99% of households had 6.4% total growth. Minute trickles enriched a small portion of the lower 99%, enormous floods enriched the already rich.
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This essay installment
is complicated, but I suggest that the reader persist through the paragraph on WEALTH. I have five sections.
1. I try to explain that 32% of all workers (53 million of 163 million total) have either no job, or not enough job, or a poorly paying full-time year-round job.
2. Then I briefly explain how the average post-tax income of $38,008 for all citizens from infants to centenarians hardly reflects real wage income reality. $38,008 is the Bureau of Economic Analysis post-tax annualized income for everyone in the first quarter of 2013. Did you get your check yet? Has your daughter's check arrived? Don't wait for it.
3. I look at government charity programs.
4.Then I take a brief swipe at election campaign funding in 2012.
5. And lastly I add a summation about economic deformity. If a reader gets bogged down in my horrible details, skip this essay and read the next-most recent one -- that's fine, but grab the highlights here. This one is too technical for common consumption. But try to read through the paragraph on WEALTH.
In a while I may add a section
6. The Ryan Budget Plan, but not now, that's my next assignment.
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VIDEO SUGGESTIONS
Here's a new interactive web page about income INEQUALITY -- Just arrived on June 22, 2013.
Here's U.C. Berkeley professor Emmanuel Saez explaining income distribution, and proposing a top marginal tax rate of 50% to 70% to 90%. A New York Times article explains some of it.
Or maybe a VIDEO would make the medicine go down?
Here is a video of Representative Jan Schakowsky, a member of the Progressive Caucus, she explains for 30 minutes the reasonings and proposals of the CPC. Did you know that the incomes of the top 1% increased by 11.2% between 2009 and 2011 and the income of the other 99% decreased by 0.4%? Recovery? Well, did you? Does it surprise you? Her video is the last and seventh one down on the linked web page above.
The Minimum wage would be $18.67, not $7.25 an hour had it kept pace with productivity growth since 1968. The median wage would yield $59,000 a year, not $33,000. The society would be totally different. Heidi Shierholz at the EPI has an article about the disjunct in wage growth in relation to productivity growth. If a minimum wage worker has full-time and year-round work his income is $15,080 a year --- but it would be $38,833 if wages had kept even with productivity since 1968. Today's median wage is $16.30 an hour (or $33,904 yearly for full-time work), but it could be $28.42 an hour, or $59,114 yearly for full-time workers. Compare this to Robert Reich's assertion about $92,000 per year for the median household's income.
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Jobs, Workers and Pay
This is the difficult section -- how many decent jobs are there? How much do most jobs pay? Look at the BLS page on employment here.
This is complicated, and most readers will just want to look at the conclusion: 32% of all workers, some 53 million workers, have either no job, or too little work, or work full-time and year-round for too little pay.
This is complicated, and most readers will just want to look at the conclusion: 32% of all workers, some 53 million workers, have either no job, or too little work, or work full-time and year-round for too little pay.
Now if the reader wants to wade through the details, here they are.
56% -- full-time and year-round with decent wage income
12% -- working part-time but only want part-time work
32% -- no job, or not enough job, or lousy paying job
_______
100% -- all workers in U.S.
Just as 44% in this tally have inadequate income, this finding is supported by the Social Security Administration's 2011 report on Wage and Salary Income showing that 47.4% of workers earn less than $25,000 in 2011.
WEALTH Now to digress, let's deal with WEALTH inequality for a brief minute. The lower-saving half (50%) of households in 2010 owned just 1.1% of all net worth, the other 50% owned 98.9%, according to this Congressional Research Service report (which I found here). If you divide 1.1% of net worth among half the families, the average savings per family comes to less than $11,000 per family. The average household net worth in 2010 was $498,000 per family -- see the Federal Reserve report here, page 17. But only 11% of U.S. households are average or above average in this regard. Another report shows that liquid asset poverty afflicts 43.9% of all U.S. households, which is to say they have less than $6,000 in cash or salable asset reserves to get them through 3 months of no income. And a third report states that in September 2012 68% of households were living paycheck to paycheck. And a report from the FDIC (Federal Deposit Insurance Corporation), May 2011, states that 44% of households facing an emergency $2,000 expense would have great difficulty paying it in 30 days. Read the executive summary here. "Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans."
Annual Income per capita and per worker after taxes As I explain below this section, every human (all 315 million citizens, or per capita) in the U.S. has $38,008 annual income after paying all taxes in 2013, Q1. (See Table 2.1, Personal Income, at bea.gov, and check disposable per capita income at the bottom of the table.) That also translates to average annual post-tax income for every worker of $73,003 (which implies an average worker pre-tax income of $97,300) and that includes every worker -- those who are unemployed, or working part-time, or working temporary jobs, or working for low-wage income full-time and year-round (including the 47% of all U.S. workers, or 71 million workers) who annually earn less than $25,000 a year in wage income, see here). This should not be too surprising, as every worker contributes $109,000 per year to the annual gross output, GDP (see here, adjusted for inflation $113,000 per worker).
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(OK -- you finished.
You can stop, because here begins the really complicated part. Only the fanatics need continue.)
The Economic Policy Institute states that the U.S. median income needed to meet the basic family budget for a family of four is $63,000. Here's the quote: "In the median family budget area, Newaygo County, Mich., a two-parent, two-child family needs $63,238 to secure an adequate but modest living standard. This is well above the 2012 poverty threshold of $23,283 for this family type." See their Basic Family Budget Calculator for your region and family size.
The present median income is close to $50,000 a year. Jobs do not pay enough, and there are not enough jobs. Most of what follows is about jobs.
56% -- full-time and year-round with decent wage income
12% -- working part-time but only want part-time work
32% -- no job, or not enough job, or lousy paying job
_______
100% -- all workers in U.S.
Just as 44% in this tally have inadequate income, this finding is supported by the Social Security Administration's 2011 report on Wage and Salary Income showing that 47.4% of workers earn less than $25,000 in 2011.
WEALTH Now to digress, let's deal with WEALTH inequality for a brief minute. The lower-saving half (50%) of households in 2010 owned just 1.1% of all net worth, the other 50% owned 98.9%, according to this Congressional Research Service report (which I found here). If you divide 1.1% of net worth among half the families, the average savings per family comes to less than $11,000 per family. The average household net worth in 2010 was $498,000 per family -- see the Federal Reserve report here, page 17. But only 11% of U.S. households are average or above average in this regard. Another report shows that liquid asset poverty afflicts 43.9% of all U.S. households, which is to say they have less than $6,000 in cash or salable asset reserves to get them through 3 months of no income. And a third report states that in September 2012 68% of households were living paycheck to paycheck. And a report from the FDIC (Federal Deposit Insurance Corporation), May 2011, states that 44% of households facing an emergency $2,000 expense would have great difficulty paying it in 30 days. Read the executive summary here. "Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans."
Annual Income per capita and per worker after taxes As I explain below this section, every human (all 315 million citizens, or per capita) in the U.S. has $38,008 annual income after paying all taxes in 2013, Q1. (See Table 2.1, Personal Income, at bea.gov, and check disposable per capita income at the bottom of the table.) That also translates to average annual post-tax income for every worker of $73,003 (which implies an average worker pre-tax income of $97,300) and that includes every worker -- those who are unemployed, or working part-time, or working temporary jobs, or working for low-wage income full-time and year-round (including the 47% of all U.S. workers, or 71 million workers) who annually earn less than $25,000 a year in wage income, see here). This should not be too surprising, as every worker contributes $109,000 per year to the annual gross output, GDP (see here, adjusted for inflation $113,000 per worker).
_________________________________________
(OK -- you finished.
You can stop, because here begins the really complicated part. Only the fanatics need continue.)
The Economic Policy Institute states that the U.S. median income needed to meet the basic family budget for a family of four is $63,000. Here's the quote: "In the median family budget area, Newaygo County, Mich., a two-parent, two-child family needs $63,238 to secure an adequate but modest living standard. This is well above the 2012 poverty threshold of $23,283 for this family type." See their Basic Family Budget Calculator for your region and family size.
The present median income is close to $50,000 a year. Jobs do not pay enough, and there are not enough jobs. Most of what follows is about jobs.
56% -- full-time above poverty level
12% -- content part-timers
32% -- No Job, Half Job, Lousy Pay Job
_______
100% of all workers --- how it works out
Workers with no job, half or less than a job, or a full-time year-round job paying below poverty wages, 53 million -- I have not pin-pointed the exact # or % --- out of 164 million workers, make up the 32% number. The actual percentage may be 37.5% or 61.5 million. Between 51% (84 million) of all jobs fall into the category Full-Time Year-Round paying above poverty level wages, or above $23,050 a year. I find that surprising. I have to prove it.
Some 12% work part-time and are content with part-time. That leaves 32.6% who --- work part-time or temporary, are either
1) unemployed, (7.2%)
2) have dropped out of labor force, (4.8%)
3) are working temporary jobs, (4.3%) -- the weakest data point
4) are working part-time but want full-time, (5.3%) or
5) are working full-time and year-round for less than $23,050, (11.0%). --- total 32.6% --- 53 million workers
Here's a BLS table with basic facts: here. And here is another table, and if that link doesn't work, search here and reference Table A-3 under "Seasonally Adjusted Data".
I begin with #5: 11% of all in my expanded work force have full-time and year-round work paying less than poverty.
First, I look at the quote from the National Jobs for All Coalition, their monthly analysis of unemployment which states, "In addition, millions more were working full-time, year-round, yet earned less than the official poverty level for a family of four. In 2011, the latest year available, that number was 17.9 million, 17.6 percent of full-time, full-year workers (estimated from Current Population Survey, Bur. of the Census, 9/2012)." This indicates 101.7 million are working full-time and year-round (not temporary workers).
There are 163 to 164.3 million in the work force, not 155 million, if one uses the 20 year average participation rate between 1986 and 2006. I think that's reasonable because the participation rate took a dive in 2007, but no one in officialdom thinks statistics should take the dive into consideration, except several professors who have voiced a similar opinion. Therefore, only 84 million (102 million full-time year round workers subtracting 18 million who are full-time year round with below poverty wage income) of the 163 million, or 51.5%, work full-time with pay above the official poverty level for a family of four.
But that seems too low, so I use another method. I make a count from the other end, counting the total number in these five classes --- the unemployed, the dropped-out of workforce, the part-time by economic necessity who want full-time work, the temporary workers, and the full-time year-round workers with low pay --- add them all up and subtract from the new work force number that includes the 20 year average participation rate.
12% -- content part-timers
32% -- No Job, Half Job, Lousy Pay Job
_______
100% of all workers --- how it works out
Workers with no job, half or less than a job, or a full-time year-round job paying below poverty wages, 53 million -- I have not pin-pointed the exact # or % --- out of 164 million workers, make up the 32% number. The actual percentage may be 37.5% or 61.5 million. Between 51% (84 million) of all jobs fall into the category Full-Time Year-Round paying above poverty level wages, or above $23,050 a year. I find that surprising. I have to prove it.
Some 12% work part-time and are content with part-time. That leaves 32.6% who --- work part-time or temporary, are either
1) unemployed, (7.2%)
2) have dropped out of labor force, (4.8%)
3) are working temporary jobs, (4.3%) -- the weakest data point
4) are working part-time but want full-time, (5.3%) or
5) are working full-time and year-round for less than $23,050, (11.0%). --- total 32.6% --- 53 million workers
Here's a BLS table with basic facts: here. And here is another table, and if that link doesn't work, search here and reference Table A-3 under "Seasonally Adjusted Data".
I begin with #5: 11% of all in my expanded work force have full-time and year-round work paying less than poverty.
First, I look at the quote from the National Jobs for All Coalition, their monthly analysis of unemployment which states, "In addition, millions more were working full-time, year-round, yet earned less than the official poverty level for a family of four. In 2011, the latest year available, that number was 17.9 million, 17.6 percent of full-time, full-year workers (estimated from Current Population Survey, Bur. of the Census, 9/2012)." This indicates 101.7 million are working full-time and year-round (not temporary workers).
There are 163 to 164.3 million in the work force, not 155 million, if one uses the 20 year average participation rate between 1986 and 2006. I think that's reasonable because the participation rate took a dive in 2007, but no one in officialdom thinks statistics should take the dive into consideration, except several professors who have voiced a similar opinion. Therefore, only 84 million (102 million full-time year round workers subtracting 18 million who are full-time year round with below poverty wage income) of the 163 million, or 51.5%, work full-time with pay above the official poverty level for a family of four.
But that seems too low, so I use another method. I make a count from the other end, counting the total number in these five classes --- the unemployed, the dropped-out of workforce, the part-time by economic necessity who want full-time work, the temporary workers, and the full-time year-round workers with low pay --- add them all up and subtract from the new work force number that includes the 20 year average participation rate.
44.2% of workers (about 72 million out of 163 million) fall into the following classes:
Total Unemployed Including Drop-Outs: 12.0%
-- 7.2% or 11.7 million --- are officially unemployed. Hint: I just enlarged the work force to what I believe it is and in turn I lowered the unemployment rate by 0.3%.
-- 4.8% or 7.8 million --- are unofficially unemployed (see note below about enlarging the work force)
-- 12.0% therefore the more accurate unemployment rate.
Total part-timers who want full-time: 5.3%
-- 16.9% or 27.5 million --- are part-time workers
-- 5.3% or 8.2 million --- are part-time workers who want full-time year-round work, and 12.1% work part-time who are content with part-time. I take this 8.2 million workers number from Dan Alpert's excellent article at EconoMonitor where he states, "Moreover, after falling from a recession high of 9.2 million to a post-recession low of 7.6 million at the end of Q1 2013, the number of people saying they are working part time because they can’t find full time work (part time for economic reasons) crept back up to 8.2 million, double pre-recession levels."
This Dan Alpert article of July 2013 is quite professional, and I find it concurs with my conclusion that the "sick-onomy" is not well.
This Dan Alpert article of July 2013 is quite professional, and I find it concurs with my conclusion that the "sick-onomy" is not well.
Temporary workers: 4.3%
-- 4.3% or 7 million --- are temporary workers. See BLS source. And you'll see that this is a questionable link in my argument. It is probably higher.
Full-time, Year-round working for poverty wages: 11.0%
Full-time, Year-round working for poverty wages: 11.0%
-- 11.0% or 17.9 million --- are working full-time and year-round for less than poverty level for a family of four, $23,050 in 2012. That’s about $11.50 an hour. (See National Jobs for All Coalition site, unemployment for U.S. Census source data.)
Total --- 44.7% or 72.8 million workers or would-be workers (out of a labor force of 162.8 million) have no work, not enough work, too low pay with full-out work.
But that’s too high. I must subtract the content part-timers (12.1%), and 32.6% of all workers ( or 53 million) are
either with no work (12%),
want more work (9.6% which combines 5.3% with 4.3%) ,
or work full-out (11.0%) for wages below the poverty level for a family of four
--- my grand conclusion ---- 32.6%.
Did I get the Percentages Right?
I think it may be 37.3% or almost 61 million workers. Here's how we get there. The official work force is 155.4 million --- but my work force is 164 million ---, total employment is 144.3 million, and 27.8 million are part-time, resulting in 116.5 not-part-time. And 101.7 million are full-time and year-round. That leaves 14.8 million who are left without a classification. Are they temporary workers? 14.8 divided by 164 is 9.0% of my expanded work force of 164 million. And that raises the final percentage of workers to 37.3% or over 61 million out of 164 million. Here is an article by an eminent economist that comes close to my figures.
Here's an article by Dan Alpert writing on July 24, 2013, at EconoMonitor describing the employment picture in his article about the "sick-onomy" -- his term. He claims a higher number of full-time and year-round workers, either 116 million or 114 million, he's not clear. In either case, 7 million are temporary workers --- (but what if it's 14.8 million?) ---, and using his data the percentage of workers with good jobs increases from my 51.2% to his 54% or 55.4%. That almost confirms my numbers, but adjusts them somewhat higher. Here's the reference source, again.
(Alpert co-wrote "The Way Forward" with Nouriel Roubini and Robert Hockett, a very insightful work of October 2011. The "Way" called for a $1.2 trillion public jobs program spread over five years, just one of its proposals.) And here again is the National Jobs for All Coalition source from which I drew my conclusion of 101.7 million full-time and year-round workers, in contrast to Alpert's 116 or 114 million.
Conclusion Admittedly my figures are not iron-clad, the 32.6% number could be higher by 5.2%, but I'll stick with 32.6%.
That is 53 million work-ready adults (out of 163 million) who deserve better from our economy. You might also say that 111 million adults have the work and income they are content with, 53 million do not.
Technical note on the Unemployment Rate: I claim the correct labor force participation rate is higher. I used a 20 year average, from 1986 to 2006, to estimate the correct labor participation rate and the employment to population rate. I used the average 20 year labor participation rate, 66.5%, this is the average rate for 20 years, 1987 through 2006. The 20 year average for e/pop. is 62.7%. This 66.5% labor participation rate would yield a work force of 163,166,000 today. But there are in May 2013 only 143,898,000 workers each day. Therefore, 19,268,000 are not working. This yields an unemployment rate of 11.8%. I'm saying 11.8% is the true unemployment rate. Either that or 12.0%. Not 7.6%, the official unemployment rate. If we assume the actual norm for labor participation is the high of 1997, 1998, 1999, and 2000, 67.1%, then the unemployment rate goes up to 12.9%. Why should the norm for participation be so low? Are workers not interested in work? The official standard should reflect how much workers need employment, not how little demand owners/employers have for employees.
Is the grand total 30.6% or 36.1%, why the uncertainty? Look here, reference Table A-3 under "Seasonally Adjusted Data" and see that there are 11.76 million unemployed and 6.712 million "Persons who want a job" among those who "Are not in the labor force" -- and that totals to 18.47 million or 11.3% unemployment in a work force of 163.166 million (my 20 year average workforce) or 11.8% in the official workforce. My calculation, above, states there are 7.8 million not 6.712 million who have dropped out of the workforce. This discrepancy drops my grand total from 32.6% to 31.1%. More recently a report states that 22.2% of the workers are part-time, an increase from 16.7% since 2007. (I state above it is 16.9% part-time workers) Let's assume all the 5.5% gain in part-time workers still wish full-time work. Then the 32.6% grand total increases to 38.1%, and the low estimate of 31.1% increases to 36.6%. This precise rate --- call it the "no job, or not enough job, or good job with lousy pay" rate --- should receive serious academic treatment.
Today's labor participation rate is 63.3%, a low not seen since 1979. The 3.2% difference knocks out (and fails to account for) 7.8 million would-be workers raising U3 unemployment to 12.0%. The Great Recession reduced the labor force participation considerably, and those not counted are also not working.
Here is the labor participation graph showing today's 63.3%:
Here is the employment to population graph showing 58.6%:
Is the grand total 30.6% or 36.1%, why the uncertainty? Look here, reference Table A-3 under "Seasonally Adjusted Data" and see that there are 11.76 million unemployed and 6.712 million "Persons who want a job" among those who "Are not in the labor force" -- and that totals to 18.47 million or 11.3% unemployment in a work force of 163.166 million (my 20 year average workforce) or 11.8% in the official workforce. My calculation, above, states there are 7.8 million not 6.712 million who have dropped out of the workforce. This discrepancy drops my grand total from 32.6% to 31.1%. More recently a report states that 22.2% of the workers are part-time, an increase from 16.7% since 2007. (I state above it is 16.9% part-time workers) Let's assume all the 5.5% gain in part-time workers still wish full-time work. Then the 32.6% grand total increases to 38.1%, and the low estimate of 31.1% increases to 36.6%. This precise rate --- call it the "no job, or not enough job, or good job with lousy pay" rate --- should receive serious academic treatment.
Today's labor participation rate is 63.3%, a low not seen since 1979. The 3.2% difference knocks out (and fails to account for) 7.8 million would-be workers raising U3 unemployment to 12.0%. The Great Recession reduced the labor force participation considerably, and those not counted are also not working.
Here is the labor participation graph showing today's 63.3%:
Here is the employment to population graph showing 58.6%:
Here's the ratio of employment to population, note that for the last 44 months there has been no growth, employment growth matches exactly population growth (a graph from CPEG.online, the Chicago Political Economy Group):
And normal pay for jobs is much too low. That’s the next section.
And normal pay for jobs is much too low. That’s the next section.
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Income Distribution
The next question is: are one out of three workers too lazy or not sufficiently well educated to get a decent job? Or is the system inadequate and not providing enough decent job openings?
Precisely $38,008 per year is the amount of disposable (after-tax) income available to all citizens regardless of age. For a family of four that amounts to $152,032 a year to spend, after taxes. For a family of three: $114,000 annual post-tax income, for just a couple, $76,000, and for bachelors and spinsters, $38,008. This is the Bureau of Economic Analysis figure for 2013, first quarter. Yet, half of all families or households earned less than $50,054 in 2011.
Two problems: there are too few jobs, and in general jobs pay too little.
This is a structural problem, which is to say that if the citizens would democratically change the structure the economy this adjustment would produce more jobs and the jobs would also pay greater wage income.This would be a great boon for many who are scratching along with just a hope and a prayer, and for the entirety of the society. The Progressive Caucus has the best beginning steps in this direction, see this.
Since only 56% of workers have full-time, year-round work that pays above poverty; and
32% of the workers have either no job, not enough job, or a job with enough hours but poor wages, then the conclusion:
The Social Security Administration's report on wage and salary income bears out this conclusion, almost half of all workers, 47% (or 72 million workers), earned less than $25,000 in 2011.
Remember, every citizen regardless of age on average has $38,008 to spend after he or she pays taxes. The key phrase is “on average”. If you take the collective total wage pay of the lower-earning half of workers, $741 billion (a figure from the above link to the SSA report), and divide it evenly among half the population, $4,631 is the before-tax amount each citizen in the lower-earning half receives, not $38,008, the official BEA average post-tax income. $741 billion is also below 7% of all personal income reported to the Congressional Joint Committee on Taxation in Tax Year 2012. (see here, page 28)
???? ------ 44% have less than $6,000, but the average for everyone is $498,000 --- ????
44% of households own less than $6,000 in liquid assets. (See -- http://scorecard.assetsandopportunity.org/2013/measure/liquid-asset-poverty-rate)
In fact the average household net worth (assets less liabilities) for 2010 was $498,000 according to the Survey of Consumer Finances, page 17, a report from the Federal Reserve.
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Government Charity:
The federal government necessarily takes up the slack that the economy does not provide.
I separate real entitlements, which are Social Security and Medicare, from charity programs.
That list of charity programs comes from the CBPP.org site I list here and below.
About Defense: I went to the historical U.S. Federal Budget tables and on page 87 took the departments and totaled all defense expenses for a total of $1,027 billion. You may disagree, but I included Energy, Veterans Affairs, Homeland Security, Other Defense Civil, and a few others to arrive at $1,027 billion.
To simplify:
a third to defense, a third to SSA and Medicare,
a sixth to charity, a sixth to "other". The charity section could be reduced with a direct job program from the federal government. See the Demos plan, Millions to the Middle, page 22, 23, 24, enumerating a direct jobs program creating 8.2 million jobs, reducing unemployment to 4.5%, costing approximately $200 billion per year for 2 years, funded entirely by the elimination
2010 expenditures in $ billions
Entitlements
Social Security ------------ 689
Medicare ------------ 519
Total Entitlements ---------------- 1,208 billion
Charity
Supplemental Security Income 44
TANF (including 4 from states) 11
SNAP 65
School Lunches 10
Earned Income Tax Credit 55
Medicaid
(including 123 from states) 382
(including 123 from states) 382
Children's Health Ins. Program 11
Rental assistance 34
WIC nutrition 6
Low Income Home Energy Assist. 5
Total Charity ------------------------------ 748 billion -- 22%
Social Security and Medicare ----------- 1,208 billion -- 35%
Social Security and Medicare ----------- 1,208 billion -- 35%
Total Entitlements and Charity -------- 1,956 billion -- 57%
Military Defense --------------------------- 1,027 billion -- 28%
Other and Debt Payment ---------------- 473 billion -- 14%
Military Defense --------------------------- 1,027 billion -- 28%
Other and Debt Payment ---------------- 473 billion -- 14%
Total Federal Budget, 2010 --------------- 3,456 billion -- 100%
That list of charity programs comes from the CBPP.org site I list here and below.
Of the "Entitlements and Charity" 38% of "entitlements" are non-entitlement charity expenses paid from the general fund, and 62% are earned payroll-paid entitlements, intergenerational annuities, supported by automatic wage income paycheck deductions.
Charity expenses also represent 18% of all federal spending, after deducting state contributions, $127 billion. And half of this Charity (or 11% of all federal spending) is Medicaid, and half of Medicaid is payments to elders in nursing homes.
Charity -- 18% of expenses
Social Security -- 19.4% of expenses
Medicare --------- 14.6% of expenses
D. of Defense --- 28%
Interest on debt -- 4.6%
Other ------------- 15%
Total ------------- 100%
About Defense: I went to the historical U.S. Federal Budget tables and on page 87 took the departments and totaled all defense expenses for a total of $1,027 billion. You may disagree, but I included Energy, Veterans Affairs, Homeland Security, Other Defense Civil, and a few others to arrive at $1,027 billion.
a third to defense, a third to SSA and Medicare,
a sixth to charity, a sixth to "other". The charity section could be reduced with a direct job program from the federal government. See the Demos plan, Millions to the Middle, page 22, 23, 24, enumerating a direct jobs program creating 8.2 million jobs, reducing unemployment to 4.5%, costing approximately $200 billion per year for 2 years, funded entirely by the elimination
of Bush era tax cuts.
http://en.wikipedia.org/wiki/Defense_budget_of_the_United_States -- see Budget Breakdown section for defense correction
About Revenue breakdown for 2010:
Borrowed selling Treasury Bonds -- 37%
Payroll Tax --------------- 25%
Income Tax -------------- 26%
Corporate and other -------------- 11%
Total Revenues -------------- 100%
See the historical tables here, page 35, and then factor in borrowed amounts and re-calculate as percentages of total expenses.
Income Tax -------------- 26%
Corporate and other -------------- 11%
Total Revenues -------------- 100%
See the historical tables here, page 35, and then factor in borrowed amounts and re-calculate as percentages of total expenses.
One in seven Americans, or 15.5%, of the population, receive their food through the federal government's charity nutritional program SNAP. Each meal costs taxpayers about $1.50, or monthly around $150 per person. Total cost to the nation, $87 billion. The Economic Policy Institute has a Basic Family Budget Calculator and they estimate the normal cost per person for food to be $161 per month.
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The nation’s economic problem should be obvious and well known.
Marriner Eccles, the Chairman of the Federal Reserve during the Great Depression and WWII, 1934 to 1951, stated that modern economies must - it is requisite - provide sufficient income to workers so that they can purchase the value of the goods they produce. Obviously owners of enterprises faced with declining purchases must lay off workers whose purchasing power is then further reduced and the remaining workers have additional downward pressure on their wage income. As today, when half the workers are earning about 7% of all the personal income that the economy generates, then workers will not purchase the value of what they produce. It reminds me of turgor pressure in the botanic world. Plants wilt without enough turgor pressure. The collective wage income for half the workers was $741 billion in 2011, and the total personal income was $11.468 trillion, according to the Joint Committee on Taxation. What would economic activity resemble if instead the minimum wage were gradually elevated to $20 an hour, the median to $28.42 an hour -- as EPI's Heidi Shierholz mentions in her article I cited in the first paragraphs of this post? What if we instituted a mandatory 21 day paid vacation for all corporations with more than 30 employees? Paid sick leaves for employees as is proposed by the Congressional Progressive Caucus? An elevated EITC compensation for low income workers? What is an economy for?
Ours has an obvious a structural defect. Freedom is not destroyed when income and wealth are consciously balanced, freedom is made possible and enhanced. We are traveling backwards on the path towards Mexico, and backwards towards the slave days of the ancient Roman Empire.
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I was reading the work of Paul Buchheit this morning, and that is what got me started. He digs out important facts that help to dispel the pall of ignorance afflicting this nation. See his other articles.
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Campaign funding:
The Open Secrets web page shows that $3.338 billion was raised for the 2012 elections. A third came from donations greater than $10,000, another third between $200 and $10,000, and the last third were amounts less than $200. http://www.opensecrets.org/overview/donordemographics.php ---
Another report from Demos shows that almost $600 million, nearly half of the $1.28 billion in "outside spending" campaign donations came in amounts larger than $100,000. (See http://www.demos.org/publication/election-spending-2012-post-election-analysis-federal-election-commission-data)
Therefore over one sixth of all donations came in amounts above $100,000.
The "outside spending" is not well explained in this report, but it means not candidate spending and not party spending. See this Open Secrets page at bottom: http://www.opensecrets.org/pres12/index.php --- and this page
http://www.opensecrets.org/overview/donordemographics.php
Total donations were $3.3 billion of which $1.28 billion was "outside spending".
Over 121,000,000 voters cast ballots, about 150,000 contributers gave more than $200, which is about 0.1% of voters. Less than 2,000 gave above $100,000 which amounted to a sixth of all donations.
Is it any wonder the politicians do not listen to the majority?
Dollarocracy is the recent book describing the $10 billion perversion of democracy by money. Robert McChesney and John Nichols, veteran journalists, expose the "money and media complex" that excludes all voices that have no money behind them. Here's the web page: Dollarocracy.
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Here’s a comment I left at the end of an article I read:
The Real Heart and Soul of the Economy
The "heart and soul of the economy" is the confidence that our nation provides equal opportunity, shared prosperity and that workers receive a just share of gains. I'm very impressed with the article, but since 2000 the employment to population ratio has dropped off by 6.1%, equal to about 15 million who would be employed today if we maintained that high ratio of 2000. That's an additional 10% of people at work. Wages would also be higher with a tighter labor market. Since December 2000 the private sector employment has grown by only 1.8 million, about 12,000 a month on average, while over 30 million increased the "working age" population. That means the economy is short over 18 million jobs given normal participation and employment rates. This means, again, instead of currently employing 143 million daily the economy would employ 161 million. Over the past 30 years the portion of national income going to the lower-earning 80% of workers has dropped from 57% to 47%, most of the shift went to the top-earning 1%, using the well-known CBO study. National income is around $13 trillion so a 10% shift is $1.3 trillion, and divided evenly among let's say 92 million lower-earning households (representing the lower-earning 80%) that's $14,130 more income per family per year on average. That would raise median household income to about $64,000 -- the point I'm making is that the economy has suffered structural damage in the past 30 years, and repairing the damage would have far greater benefit than the tax and healthcare improvements you have mentioned and made a very strong case for. Just a suggestion. Excellent article.
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Here's a link to the Congressional Progressive Caucus' THE BACK TO WORK BUDGET for 2014. Some 35% of Democratic Party members of the House of Representatives are part of the CPC, and that means 16% of all House reps are members. This budget makes a pretty thorough case for many of the improvements this nation's economy needs.
Here is an article about U.S. investment decline since 2000 by Gerald Friedman from UMass: here. And I left a comment.
Here's a link to the Congressional Progressive Caucus' THE BACK TO WORK BUDGET for 2014. Some 35% of Democratic Party members of the House of Representatives are part of the CPC, and that means 16% of all House reps are members. This budget makes a pretty thorough case for many of the improvements this nation's economy needs.
Here is an article about U.S. investment decline since 2000 by Gerald Friedman from UMass: here. And I left a comment.
