The left-out and left-behind economy

By: Alan Maass

Job seekers looking for work in Florida


PREFACE

OBFUSCATE: To make something obscure or unclear, especially by making it unnecessarily complicated; to make something hard to understand.

Paul Krugman writes:

"Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It's time to roll out the obfuscators!

"Anyone who has tracked this issue over time knows what I mean. Whenever growing income disparities threaten to come into focus, a reliable set of defenders tries to bring back the blur. Think tanks put out reports claiming that inequality isn't really rising, or that it doesn't matter. Pundits try to put a more benign face on the phenomenon, claiming that it's not really the wealthy few versus the rest, it's the educated versus the less educated.

"So what you need to know is that all of these claims are basically attempts to obscure the stark reality: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

"The budget office laid out some of that stark reality in a recent report, which documented a sharp decline in the share of total income going to lower- and middle-income Americans. We still like to think of ourselves as a middle-class country. But with the bottom 80 percent of households now receiving less than half of total income, that's a vision increasingly at odds with reality.

"In response, the usual suspects have rolled out some familiar arguments: The data are flawed (they aren't); the rich are an ever-changing group (not so); and so on. The most popular argument right now seems, however, to be the claim that we may not be a middle-class society, but we're still an upper-middle-class society, in which a broad class of highly educated workers, who have the skills to compete in the modern world, is doing very well.

"It's a nice story, and a lot less disturbing than the picture of a nation in which a much smaller group of rich people is becoming increasingly dominant. But it's not true.

"Workers with college degrees have indeed, on average, done better than workers without, and the gap has generally widened over time. But highly educated Americans have by no means been immune to income stagnation and growing economic insecurity. Wage gains for most college-educated workers have been unimpressive (and nonexistent since 2000), while even the well-educated can no longer count on getting jobs with good benefits. In particular, these days workers with a college degree but no further degrees are less likely to get workplace health coverage than workers with only a high-school degree were in 1979.

"So who is getting the big gains? A very small, wealthy minority.

"The budget office report tells us that essentially all of the upward redistribution of income away from the bottom 80 percent has gone to the highest-income 1 percent of Americans. That is, the protesters who portray themselves as representing the interests of the 99 percent have it basically right, and the pundits solemnly assuring them that it's really about education, not the gains of a small elite, have it completely wrong.

"If anything, the protesters are setting the cutoff too low. The recent budget office report doesn't look inside the top 1 percent, but an earlier report, which went only to 2005, found that almost two-thirds of the rising share of the top percentile in income actually went to the top 0.1 percent — the richest thousandth of Americans, who saw their real incomes rise more than 400 percent over the period from 1979 to 2005.

This chart shows that the poorest 90 percent of Americans make an average of $31,244 a year, while the top 1 percent make over $1.1 million. Data suggests that those who constitute the richest segment of American society inherited their wealth; in addition this date indicates that the wealth of this tiny minority is NOT based on any kind of constructive activity, but on financial activity and Wall Street speculation.

"Who's in that top 0.1 percent? Are they heroic entrepreneurs creating jobs? No, for the most part, they're corporate executives who make their money on Wall Street ... Add in lawyers and people in real estate, and we're talking about more than 70 percent of the lucky one-thousandth.

"But why does this growing concentration of income and wealth in a few hands matter? Part of the answer is that rising inequality has meant a nation in which most families don't share fully in economic growth. Another part of the answer is that once you realize just how much richer the rich have become, the argument that higher taxes on high incomes should be part of any long-run budget deal becomes a lot more compelling.

"The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money and that the warping is getting worse as the wealth of a few grows ever larger?

"Some pundits are still trying to dismiss concerns about rising inequality as somehow foolish. But the truth is that the whole nature of our society is at stake."

It is PRECISELY this kind of inequality that must in the end produce a POLICE-STATE in America - a POLICE-STATE that will inevitably have to take the country to war in order to justify its tyrannical rule.

-- Antipas

__________________________________

The plague of unemployment that took hold during the Great Recession isn't going away, causing a jobs crisis that the U.S. hasn't experienced since the 1930s depression era. But Corporate America doesn't mind at all.

Is there any way out? That's the question that starts to haunt people like Carol.

Carol (not her real name) has been out of work for more than a year now, and it's a struggle for her and her husband to make ends meet--where they live in the Pacific Northwest, the cost of living is nearly 25 percent higher than the national average.

She had a good job before: office manager of the local branch of a multinational business. But the business went bust when the crisis hit. Working for a subcontractor, Carol helped oversee the dissolution of her office--and eventually, she was out of a job herself.

That was over a year ago, and it's been one long trek through the jobs desert ever since. Carol has applied for countless positions. She took the advice of the "experts" and attended some retraining classes at the local community college. But as a woman in her late 40s with a lot of work experience, Carol isn't the kind of prospective employee most companies are looking for--when they're hiring at all. Her age and experience would mean higher pay. Why hire Carol when they can get a broke 20- or 30-something to do the job for less?

The stress of long-term joblessness is overwhelming

The stress of long-term joblessness is overwhelming, and it's taken its toll on Carol. She suffered a nervous breakdown, and has been in and out of the hospital for the past month, on and off different medications. She's been diagnosed with bipolar disorder, which the doctors claim she's had all along--but her friends say they didn't see signs of that until unemployment struck.

Is there any relief on the horizon? Carol's husband is still working, but the bills are piling up. The couple declared bankruptcy and fear they will lose their house. They were paying $600 a month for health insurance, but had to downgrade to a $300-a-month plan--which will likely mean huge deductibles for Carol's recent hospitalizations.

And Carol says her unemployment benefits run out next month.

Carol isn't alone, of course. She's one of the 6.2 million people who the federal government classifies as long-term unemployed--out of a job for six months or longer. They account for 44.4 percent of the people officially counted as unemployed by the government. That's barely any change at all from the record level last year: 45.2 percent in May 2010.

NOTE: One must remember that when dealing with government unemployment figures one should DOUBLE the percentages given. [Please see our article, "A Permanent 30% Unemployment Rate for the United States."]


The "official" numbers touted by Washington and the talking heads on television are taken from the government's U3 report. Most mainstream news you watch or read will provide information only on the U3. They stop short of going to the next BLS number, referred to as the U6. The U-6 unemployment rate is the Bureau of Labor Statistics (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

Remember, though, that even the U6 is a government manipulated number, so we need to look a little bit deeper to see what the REAL unemployment rate is in America. John Williams of Shadow Stats runs the numbers each month, and according to his most recent report, we're actually hovering at around 21.5%. According to Williams, this is how the Shadow Stats "SGS Alternative" is calculated: The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

Heidi Shierholz, an economist at the Economic Policy Institute, follows these statistics every day, and her description of the situation people like Carol face is concise: "An absolute disaster. It's just a nightmare as far as job-seeking goes."

You might hear political leaders express their concern about this "absolute disaster." But as far as doing something about it, Washington is marching in the opposite direction. The mantra among Republicans and Democrats alike is cutting the deficit, not cutting the unemployment rate.

Shierholz says she's "stunned" by that. "There's just a massive disconnect," she says, "between where Washington is and what we need to do to get back to economic health in this country."

According to official measures, the Great Recession ended more than two years ago. But the total number of payroll jobs in the U.S. today is 6.8 million lower than the pre-crisis peak, according to the federal government's statistics. Not only that, but keeping up with the growth in the working-age population since that peak would have required an additional 4.3 million jobs.

That means the U.S. is short 11.1 million jobs since the recession started in December 2007.

So how many jobs did the "recovering" U.S. economy create in July? The Labor Department says 117,000--barely enough to keep up with one month's growth in population, much less make a dent in the 11 million. Analysts predict the August jobs statistics will be no better--and probably a little worse--when they're announced on September 2.

NOTE: There were NO additional jobs created in the month of August.

The official unemployment rate is still stuck above 9 percent. That's down from a high point of 10.2 percent a little less than two years ago. But with job creation barely outpacing population growth, the reason for the fall isn't mainly that the unemployed are finding work. The other factor: A lot of people are giving up on employment altogether.

NOTE: Again, one must remember that when dealing with government unemployment figures one should DOUBLE the percentages given. [Please see our article, "A Permanent 30% Unemployment Rate for the United States."]

In addition to the 13.9 million counted as unemployed, the Labor Department classifies 2.8 million people as "marginally attached" to the labor force--meaning they wanted to work and tried to find a job sometime in the past year, but didn't look in the four weeks before the most recent survey.

There's even more "discouraged workers" out there than meets that definition--millions more, according to various estimates--but even so, by the EPI's calculation, if just the "marginally attached" were included, the official unemployment rate would be 10.7 percent, not 9.1 percent.

Then there's the "underemployed"--people who would like to be working full-time, but have been forced to take part-time jobs.

Then there's the "underemployed"--people who would like to be working full-time, but have been forced to take part-time jobs. That applied to 8.4 million people in July, according to the government.

The U.S. government's broadest indicator of unemployment or underemployment was over 16 percent through the summer--about one in every six people considered to be part of the labor force, or more than 25 million people.

And even that indicator can be deceptive, according to Shierholz. The Labor Department's statistics capture a snapshot of joblessness for each four-week period, but miss "a lot of people who might not be unemployed now, but were unemployed last month, and could become unemployed next month," she says. "If you count the people who are unemployed at some point over the year, it's much higher than that. And if you include people who have had a family member affected by unemployment, it really starts to balloon."

What does it add up to? Shierholz says that survey data from the liberal Democracy Corps political strategy firm shows that over 40 percent of people in the U.S. have been out of work themselves, or had a family member who has been.

There's a whole industry devoted to helping people without work find jobs, dispensing advice on everything from what to wear to who to schmooze. But what guidance can it offer about the most basic problem facing the unemployed today--that there's just nothing out there?

Kate graduated in 2009 from a liberal arts college in upstate New York. She says,

"I applied to around 25 or 30 jobs in a four-week period and didn't even get one interview. The general response I received was that they weren't asking me for an interview because they found candidates who had more years of work experience--essentially saying that they weren't going to take someone right out of school."

Millions of the jobless have the same experience of searching endlessly. And no wonder--according to the Labor Department, there are 4.5 unemployed for every job opening in the U.S. economy overall. The ratio has been above 4-to-1 for more than two-and-a-half years. By comparison, the highest ratio of job seekers to jobs in the early 2000s recession was 2.8-to-1.

That's why people like Carol keep looking and looking for work--and finding nothing. In fact, the government's statistics show that layoff announcements have slowed to the pre-recession pace. So if you do have a job now, you're no more likely to lose it than you were before the recession--although all bets are off if the economy slows down any further.

But that's "small solace to unemployed folks," Shierholz points out. "What those folks need is for hiring and job openings to really pick up."

Not everyone thinks folks like Carol have it so bad, though.

Tom Corbett, the Republican governor of Pennsylvania, will tell you that the unemployed -

"... don't want to come back to work while they still have unemployment."

Arizona's Jon Kyl, the second-ranking Republican in the Senate, declared that -

"... continuing to pay people unemployment compensation is a disincentive for them to seek new work."

LEFT: Tom Corbett; RIGHT: Jon Kyl

Too bad Kyl hasn't had to look for a job lately--or he'd learn the hard way that the biggest "disincentive" for the unemployed is that there are four or five more of them than jobs.

And there's certainly not much "incentive" to the meager benefits the jobless receive through the unemployment insurance program. As anyone who ever had to file for unemployment knows, the weekly check is a fraction of the wages from a full-time job. The maximum benefit varies from state to state, but according to federal statistics from a year ago, the average person on unemployment collected $295 a week--while the average weekly salary for the same time period was $865.

For Shane, that wage gap was the least of it. When he lived in Cincinnati, he was a member of International Brotherhood of Electrical Workers Local 212, working as an electrician until he was laid off in September 2009--as the jobs crisis was peaking. "While I was able to receive unemployment benefits, the income was 60 percent of what my take-home pay was previously," he says.

But replacing the benefits from a union job was a much bigger challenge. "I have a special needs child whose medical bills, with union health insurance, averaged $1,500 per month," Shane says. "The most difficult part of being laid off was self-paying for insurance coverage. Not only was this $600 per month, but after 10 months, the insurance company dropped us. A family COBRA plan was $810 per month, and that was minimal coverage at best."

Nancy faced the same dilemma. She's from South Carolina and has been without a job for over two years. She describes getting letters offering insurance under the federal government's COBRA guidelines that allow laid-off workers to keep health care coverage--but at an extremely high cost. "You're either forced into more debt to pay for it, or you avoid it altogether," she says. "Both times I lost my clinical counseling jobs, I couldn't afford COBRA, and therefore was left without any coverage."

On top of this, there's the bureaucracy that the jobless have to negotiate--whether it's keeping health insurance under COBRA, or just qualifying for unemployment--which is a job all by itself.

Shane says the red tape adds insult to injury. "After each tier of state and federal extensions of benefits, you have to reopen your claim," he says. "But there's a waiting period, typically two weeks long. During this period, you have no income, and when your claim finally kicks back in, you only receive payment for one week. After getting only 60 percent of your pay, then missing four or five weeks of pay per year, it's a struggle to pay anything."

Want to bet whether Tom Corbett or Jon Kyl misses any paychecks?

The real "disincentive" is against the jobless applying for unemployment at all--or, for those who do qualify, staying in the program. Rather than a form of "insurance," as the name suggests, unemployment benefits are one more cause for anxiety in a life filled with worries about what will come next.

Nancy says it's hard to even think about doing something nice with friends or for herself since she's been out of a job. She explains,

"For most folks, the income is already spent when it comes in. So even if you do get a little extra, you feel guilty about spending it."

Of course, as Nancy points out, the same could be said about millions and millions of other people--the ones who have jobs in today's left-out and left-behind economy.

__________________________________________

God bless you all!

S.R. Shearer
Antipas Ministries


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