Many Americans Face Economic Catastrophe -- Why Do the Political and Media Establishments Ignore Their Suffering?
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This is what a broken economic model looks like: record profits for corporate America, Wall Street paying out fat bonuses to its execs and the wealthy doing well enough to create a surge in demand for luxury items, while most of the rest of us struggle just to make ends meet in a devastated economic landscape.
You've no doubt heard about the unemployment numbers and the alarming number of Americans losing their homes, but a series of reports that paint a stunningly vivid picture of the human toll of the meltdown – the intense pain felt by the unemployed, the under-employed and the working poor – have gotten less play, in large part because while most of the U.S. remains in the grip of what appears to be a Second Great Depression, the political and media establishment largely ignores -- or at least underplays – the economic catastrophe a huge number of families are experiencing.
Part of the reason for that disconnect is simply that corporate America is sitting on record profits, and the stock market has by and large rebounded from its bottom. It's also due to the fact that a country as large as the U.S. doesn't really have a single economy; we live and work in a number of state and regional economies. And the Washington DC metropolitan area is doing very well – its residents are living in an economy completely divorced from the one in which many Americans are desperately trying to stay afloat.
The unemployment rate in DC is 6 percent – more than a third lower than the nationwide rate of 9.4 percent. It added more net jobs in 2010 than any other area in the U.S. In 2008, before the crash, residents of the metropolitan area enjoyed the third highest incomes in the U.S.; since the meltdown, their wages have remained well above the national average. (It's worth noting, however, that according to the Washington Post , the political class's newfound obsession with cutting the deficit may put a damper on the DC area's fortunes in the coming years as tens of thousands of public sector jobs are killed off.)
Now consider how the capital region is doing compared to the rest of the country. Unemployment has stood at over 9 percent for 20 consecutive months, the longest stretch since the Great Depression. The Wall Street Journal reported that this persistently high level of joblessness is resulting in a “steep, lasting” drop in wages. “Between 2007 and 2009,” wrote the Journal's Sudeep Reddy, “more than half the full-time workers who lost jobs that they had held for at least three years and then found new full-time work ... reported wage declines” and over a third of those workers “reported the new job paid at least 20% less than the one they lost.” That kind of income drop dwarfs that of previous post-war recessions.
Some among that number have been forced to accept minimum-wage jobs. And according to Jeannette Wicks-Lim, a scholar at the University of Massachusetts' Political Economy Research Institute ( PDF), almost nine out of 10 full-time minimum-wage workers can't afford the basic necessities of life, which she defined as making enough “to protect them from serious economic hardships such as worrying about food, relying on a hospital emergency room to meet their health care needs, and having their utilities shut off.”
What many don't understand about the grim reality of the American labor market is that its impact on workers who have faced extended unemployment can reverberate for decades – long after the economy has recovered. Columbia University labor economist Till von Wachter studied the fortunes of workers who faced sudden lay-offs during the 1981-1982 recession in the period since that time. He found that even after 15 to 20 years, those workers' wages were still 20 percent lower than comparable workers who had held onto their jobs in the early 1980s downturn.