7 Mindblowing Economic Trends You Need to Know About
The good, the bad, and the downright crazy in economic trends....
1. America lags behind much of the world on minimum wage. On May 18, the Swiss will vote on a proposed minimum wage of — are you listening American CEOs? — nearly $25 per hour. That would be, oh, about three times the current U.S. minimum of $7.25 per hour. The proposal was put forward by SGB, the country’s biggest union, and backed by the Socialist and Green parties. Though many in Switzerland, including the business community, oppose the hike, the Swiss system of direct democracy, which allows its citizens to vote on a variety of economic issues, can produce unpredictable results.
The U.S., meanwhile, can’t seem to get even a paltry raise through Congress, and falls behind Australia, France, New Zealand, the U.K., Canada, and Japan on minimum wage rates. If you include the robust social services available to many of the low-income workers in those countries, the American rate is even more appalling.
According to the AFL-CIO, in no state in America could a minimum wage worker working a 40-hour week afford a two-bedroom apartment. Even a raise to $10.10 per hour would not be enough to get many people out of poverty.
2. American millionaires: tax us! You read that right. A recent CNBC Millionaire Survey shows that most American millionaires consider inequality to be a “major problem” for the U.S. and that two-thirds support higher taxes on the wealthy. Our rich folks still flatter themselves that they have been rewarded with all their money because of hard work and they remain unabashed about the size of their fortunes. But they seem to have absorbed enough of the public’s increasing alarm about inequality to admit that there seems to be some sort of unfairness going on. Many of them think the problem must be education.
Democratic millionaires, as you might have guessed, are much more open to the idea of taxing the rich. Among those who think inequality is a concern, 78 percent of Democrats would be in favor of higher taxes on the wealthy, compared to only 31 percent of Republicans. Yet in the wake of Thomas Piketty’s bombshell book, Capital in the 21st Century, support for taxing the rich is even creeping into publications you don’t exactly associate with Marxist redistribution, like Forbes, where contributor Joseph Thorndike recently allowed that taxing the rich a bit more — nothing extravagant, mind you — might not be such a bad idea.
3. Retirement nightmare. Americans are freaking out about retirement, according to a new poll. Fifty-nine percent of citizens are afraid they will not have enough money for their senior years, says Gallup's annual Economy and Personal Finance poll, conducted in April among 1,026 adults. The next biggest fear is medical costs.
Experts used to say that a comfortable retirement — not a cushy one, you understand— required $1 million in savings. But now even that ginormous number appears too low, what with rising medical costs, disappearing pensions, insufficient 401(k)s, and low interest rates.
4. Economic fears kill baby-fever. The financial crisis sent birth rates plummeting around the world as couples either lacked money or worried too much about future shortfalls to feel comfortable having children. Today, global birth rates still haven’t bounced back.
This doesn’t bode well for the economy. As Thomas Piketty has pointed out, economic growth is associated with robust population growth — as are lower rates of inequality. When more people join the workforce each year than leave it, you get more people spending and producing. And when there are more babies born, the influence of concentrated wealth is curbed because inheritances mean less.
The birth rate is going down in China, Japan, the U.S., Germany, Italy and almost all other European countries. Researchers have found that births drop when unemployment rises, a trend that was observed during the Great Depression of the 1930s.
5. Capitalism gets fewer likes. In July 2013, the Brookings Institute released a survey showing that 42 percent of Americans did not believe capitalism is working for them. The disillusionment was particularly prevalent among young people.
Now that the Pope has weighed in on the evils of capitalism, and Thomas Piketty’s book has compiled 300 years of data showing that worsening inequality is the inevitable result of unregulated capitalism, that number will likely rise.
You may also have noticed an increasing number of articles announcing that capitalism just isn’t fitting the bill for most people in modern society. “Capitalism isn’t working” even has its own Facebook page.
6. Economic cost of obesity is skyrocketing. Obesity is a global epidemic, and people who become obese require expensive medical intervention. In Tennessee, where 30 percent of the population is obese, the cost is nearly $2,000 per person each year, for a total of $3,656,000,000 spent statewide. (Find the costs in your state here.)
Studies by the Centers for Disease Control estimate that 34.9 percent of Americans are obese today: one third of adults, 21 percent of adolescents, and 18 percent of children under 11. The numbers for all age groups have been on the rise over the last three decades and they are expected to continue going up.
Diabetes alone cost the global economy nearly $500 billion in 2010, and researchers believe that number could rise to at least $745 billion by 2030.
7. Do you have a money disorder? Seventy-six percent of Americans point to money as a significant source of stress. Whether it's pathological gambling, hoarding, compulsive buying, or denial of financial reality, it looks like we’re becoming more vulnerable to disorders linked to financial strain, or in the language of professionals, “maladaptive patterns of financial beliefs and behaviors that lead to clinically significant distress.” Hoarding, for example, affects 1.4 million people in the U.S. and appears to be on the rise. The disorder, which has even spawned a popular cable show, “Hoarders,” is linked to financial uncertainty and can lead to homelessness, ostracism and cruelty to animals who are compulsively collected by hoarders.
Some experts, like clinical psychologist Joe Lowrance, warn that the cluster of ailments known as “money disorders” have not received enough attention in the mental health field. He calls for an end to the “money taboo” among practitioners. There is a growing list of “financial psychologists” who cater to the worries of the rich (who to leave the Palm Beach house to?) or celebrities like Wynona Judd who have admitted to uncontrollable money compulsions.
What about everybody else? The American Psychological Association has a website providing guidance and suggestions for help, from credit counseling services to therapists. The truth, though, is that many of the money stresses faced by Americans, like unemployment and student debt, will require policy changes and collective action.