Poor Getting Poorer As Wealth Gap Grows
Sunday. 9.3.06 11:47 pm
By Renee D. Turner, BET.com Staff Writer
Posted Aug. 31, 2006 – You’d think that with all the talk about how the economy is booming you’d be bringing home more bacon than when the economy tanked four years ago. But this is not your parents’ recovery, economists say.
Working families have lost ground during this economic recovery, while the big money makers continued to make big gains, a new U.S. Census report shows. In other words, during the economic recovery, the rich really did get richer, while the poor got poorer.
:: AD ::
Some 37 million Americans lived below the poverty line (meaning they earned an annual salary of $19,971 or less for a family of four) in 2005 — that's 4 million people more than at the height of the last recession, in 2001, according to the Census findings released Tuesday.
“For the first time on record, poverty is higher in the fourth year of a recovery than when the recession hit bottom, and median income was no better,” said Robert Greenstein, executive director of the Center on Budget and Policy Priorities. “You have a number of families who are worse off than during the last peak in the economy.”
Tuesday’s Census Report shows that as the economy began to rebound from the bust of 2001:
The poverty rate rose by .9 percent, to 12.7.
The median hourly wage for American workers has declined 2 percent since 2003.
Median income of $46,326 for households headed by someone under 65 was $2,000 (or 3.7 percent) lower in 2005 than in 2001.
The top 1 percent of earners got 11.2 percent of all wage income in 2004, up from 8.7 percent a decade earlier and less than 6 percent three decades ago.
From 1980 to 2004, manufacturing salaries fell 1 percent, while the salaries of the richest 1 percent – people earning more than $277,000 in 2004 – climbed by 135 percent.
In industrial cities, such as Detroit, workers fared even worse.
According to the new U.S. Census, the percentage of poor Blacks (earning less than $20,000 for a family of four) was three times that of Whites in Michigan in 2005 and in many metro Detroit communities.
"Amid this country's strong economic expansion, many Americans simply aren't feeling the benefits," Treasury Secretary Henry Paulson admitted during his first major speech as Treasury secretary, at Columbia University in New York earlier this month.
But another disturbing aspect of Tuesday’s Census report is a record number of workers have lost their health coverage in the last five years, as well as a record number of children.
"It is sobering that 5.4 million more people lacked health insurance in 2005 than in the recession year of 2001, primarily because of the erosion of employer-based insurance," Greenstein said.
What makes the numbers so troubling is that they come four years into an economic recovery that by all other accounts has been booming. From 2001 to 2005, the gross output of the economy increased by about 12 percent above the rate of inflation, worker productivity surged and corporate profits doubled.
“The mantra of economists is that rising productivity creates growth all around. Today’s findings clearly contradict that mantra,” says Jared Bernstein, an economist with the Economic Policy Institute.
And the sad reality, economists note, is that with the economy beginning to slow, there is little chance for improvement. That’s because the two things that pumped up the economy – the brisk housing and spending markets – are also sinking, and jobs creation has gone flat, depleting the middle-class worker’s bargaining power.
While the news is disheartening for most workers, it’s particularly bad for Republicans going into an already tough election season.
“While we still face challenges in addressing poverty in America, the fact that the poverty rate did not increase is a positive indicator when you consider all the areas of economic growth under this administration,” said Tara Wall, a spokeswoman for the Republican National Committee.
Categories: News [t]
Sorry, you do not have permission to comment.
If you are a member, try logging in again or accessing this page here.