Half of all families in the United States are poor, near poor, or face economic insecurity where, “one major setback in income could push them into poverty.” That’s the shocking conclusion of a report released by The Hamilton Project. Released by the left-of-center think tank, housed at the ‘non-partisan’ Brookings Institution, the report is a bombshell for those who believe that the current workings of the economy are both sound and fair.
According to the report titled, “A Dozen Facts About America’s Struggling Lower Middle Class,” families with household incomes under $60,000 a year “live in economically precarious situations.” The earnings of half of all American households fall between $15,000 and $60,000. And it’s barely sufficient for many to keep their head above water.
Sadly, the tough news for workers who face economic insecurity and their children doesn’t end with lower pay. 4 out of 10 kids who live in families earning between $15,000 and $60,000 face hunger, food insecurity, or food-related health challenges such as obesity.
And, on top of it all, working poor and lower-middle class workers pay the highest marginal tax rates of any other group of taxpayers in America, reaching up to 95% of earned income.
For many, The Hamilton Project’s analysis will not come as surprise. These longterm trends are showing up in data from across the U.S. economy, including in the disappointing “Black Friday weekend holiday sales. Given that wages are at a 40-year low and the ongoing impact of a still struggling economy, living on the verge of “economic chaos,” as the report puts it, is now standard fare for most.
This really isn’t that difficult: companies would rather suck away more and more revenue and hide it in offshore accounts rather than pay it in wages. As such, we see increasing profits for companies, but stagnant - and even declining - wages for employees.
This means that people have less money year after year. And - shock of shocks - people who don’t HAVE money don’t SPEND money. This means that either they spend money they don’t have (exacerbating the credit crisis) or they buy less non-essential things. meaning that companies receive less revenue.
But the mindset at the top still has not changed, nor is it likely to, They’ll still suck out more revenues - cutting costs (which usually means layoffs or hiring freezes) and shrinking operation budgets to vacuum those funds into the “profit” window.
And so on, and so on, and so on, until the people at the bottom can’t even afford the essential (which is happening already), and the tax base is stripped to the degree (and the same companies rally to keep THEIR taxes low and roll back benefits and regulations) that the safety net diminishes or even disappears,
I’ve said it before, and I’ll say it again: if you’re going to have an economy that depends on consumption, the people who create the revenues (customers) have to have sufficient income to not only cover the essentials (food, shelter, utilities, healthcare, etc.), but to be able to consume. If there’s no consumption, there’s no revenue. If there’s no revenue, there’s no budgets, wages, taxes, or, yes, profits.
…unless you use the government to subsidize your business, but, again, with the tax base shrinking, that’s likely to dry up soon as well.
And the end result? We have all the revenue in the hands of a shrinking few who flat-out refuse to give any of it up, and everyone else suffers.
This is unsustainable.