Column: The economy may be booming, but nearly half of Americans can’t make ends meet
By virtually any yardstick, the U.S. economy is doing great. Unemployment is near a two-decade low. The stock market is strong. Corporate profits are at record highs.
Yet a report out this week finds that almost half of Americans are having trouble paying for basic needs such as food and housing.
The Urban Institute, a left-leaning Washington think tank, surveyed more than 7,500 adults about their experience making ends meet. It found that about 40% of people ages 18 to 64 faced some sort of hardship last year.
“It’s certainly surprising and disconcerting that so many people are having difficulty meeting their basic needs,” said Michael Karpman, a research associate at the Urban Institute and coauthor of the report.
“What we found is that a lot of people have to devote much of their income to fixed expenses like rent or healthcare,” he told me. “If they’re hit with a large, unexpected expense, they simply can’t cover it.”
The stats become more troubling the deeper you drill down. More than 35% of families with at least one working adult reported difficulty meeting at least one basic need last year.
Almost a quarter of Americans experienced food insecurity, which is to say they didn’t always know if they’d be able to eat if they were hungry.
A staggering 18% faced issues paying medical bills, and nearly as large a percentage reported skipping treatment for an ailment because they couldn’t afford it.
Slightly more than 10% of Americans missed a rental or mortgage payment. Thirteen percent couldn’t pay a utility bill.
While much of these economic woes were concentrated among lower-income households, the Urban Institute found that many middle-class families also struggled to pay their bills.
“About 20% of middle-class people are having trouble, mostly with healthcare,” Karpman said.
That means a family of three making $80,000 a year, or a single person making at least $50,000, may be living paycheck to paycheck — and could be devastated by a single medical bill.
This week’s report is the latest indication that while the gravy train may be chugging through corporate boardrooms and shareholder meetings, many ordinary American workers have been left behind.
All that economic growth isn’t translating into higher wages, which means much of the wealth now being created is landing in the laps of the 1% and not trickling down any further.
Real average hourly earnings were down 0.2% last month compared with a year before. The typical worker is making less while the cost of stuff has grown. Considering that consumer spending accounts for about two-thirds of all U.S. economic activity, this is a very big deal.
“These days, a lot of that spending is being done by the people at the very top because they’re the only ones with money,” said Michael Reich, an economics professor at UC Berkeley.
He said this can boost economic growth as long as the super-rich are constantly trying to outdo one another with ever-larger yachts, “but I don’t consider that the best use of our resources.”
President Trump said his administration would be committed to the “forgotten men and women” of the United States, but that was an empty promise. His economic policies have focused almost exclusively on the well-being of corporations and the wealthy.
Trump pledged his $1.5 trillion in tax cuts would boost average paychecks by as much as $9,000 a year as businesses shared their tax savings with employees.
In reality, corporations received 11 times more in tax cuts than they doled out in one-time bonuses or modest wage hikes, according to the advocacy group Americans for Tax Fairness.
Moreover, companies are spending 101 times as much on stock buybacks as they are on bonuses and wages, enriching shareholders at the expense of workers, the group found.
More than half of Americans say they’ve seen no change to their paychecks, according to a CNBC poll.
If you account for inflation, the typical American worker now has the same purchasing power as he or she did 40 years ago, according to the Pew Research Center.
As if that wasn’t insulting enough, inflation-adjusted weekly wages have risen just 4.3% for workers in the bottom quarter of earners since 2000. For people in the top tenth, real wages are up nearly 16% over the same period.
Benjamin Griffy, an assistant professor of economics at New York’s University at Albany, said the low unemployment rate shows that jobs are being created. However, they’re not very good jobs.
“They aren’t high-paying jobs, and they aren’t jobs that offer particularly stable employment,” he said. “And since those are a large fraction of the jobs that have been added, average wages haven’t risen to the degree that we would expect.”
There are other factors. Technological advances have allowed companies to make do with fewer employees. Organized labor is much less influential than it once was.
And, simply put, conservative lawmakers have placed a policy emphasis on empowering corporate greed rather than economic fairness.
House Speaker Paul D. Ryan (R-Wis.) on corporate tax cuts: “This is without question the single most important thing we can do to once again make America the best place to do business.”
Ryan on raising the minimum wage: “For every wage you raise, you actually end up losing jobs. You end up destroying jobs.”
On Thursday, Trump said he wanted to cancel 2.1% pay raises for hundreds of thousands of federal workers. He said the government didn’t have enough money.
There’s no excuse for millions of working people in the richest country in the history of the world being unable to feed themselves or keep a roof over their heads.
Nor is there a rational explanation for millions being without health coverage, or facing financial ruin in the event of a serious medical problem.
These are signs of a society that has lost its way, in which the comfort of a relative few has become a higher priority than the well-being of the vast majority.
What can be done? Most economists say a higher minimum wage — a living wage — is a key part of the remedy, as is a greater emphasis on education.
They also point to the need for a more progressive tax system that spreads the nation’s wealth more equitably, and for a social safety net that prevents people from falling through the cracks.
No, I’m not making a case for socialism.
I’m making a case for decency.
Although why anybody should have to is beyond me.