It seems that the rich get richer, the poor get poorer, and the middle class shrinks more with each passing day. Ask any representative from the three predominate economic classes in America and they will each tell you that their class has suffered the most from the protracted recessionary period that beset our economy in 2007 and has yet to fully dissipate for the majority of our citizens. Let’s take a look at the numbers to see which strata of the economy actually fared the worst.
According to a report published by University of California, Berkeley, entitled “Striking it Richer: The Evolution of Top Incomes in the United States," during the Great Recession, from 2007 to 2009, average real income per family declined dramatically by 17.4 percent, the largest two year drop since the Great Depression. Average real income for the top percentile fell even faster at 36.3 percent, which led to a decrease in the top percentile income share from 23.5 to 18.1 percent. Average real income for the bottom 99 percent also fell sharply by 11.6 percent. This drop erases the 6.8 percent income gain from 2002 to 2007 for the bottom 99 percent. In 2010, average real income per family grew by 2.3 percent but the gains were very uneven. The top one percent incomes grew by 11.6 percent while bottom 99 percent incomes grew only 0.2 percent. Hence, the top one percent captured 93 percent of the income gains in the first year of recovery, thereby significantly widening the income gap. To add to the gap, new data from the Economic Policy Institute, reveals that while CEO pay rose 725 percent since 1978, worker pay rose only 5.7 percent during the same period.
Income inequity is but one factor contributing to the wealth gap. Research conducted by the Pew Institute, wealth-gaps-rise-to-record-highs-between-whites-blacks-hispanics/ reveals a significant gap between the median wealth of families based on race and ethnicity. The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households. The bursting of the housing bubble, massive layoffs in the blue collar sector that caused jobs in manufacturing and construction to vanish, and a significant loss of public sector jobs hit black and Latino populations much harder than it hit the white population. White families also appear to be recovering better from their losses than their darker skinned counterparts because many whites benefitted from the rebounding stock market, family inheritance, better property value retention, and their ability to continue to invest in corporate savings accounts.
While nonwhite families were hit the hardest, few middle class families totally avoided the blow of the sucker punch dealt to those in the center of the economic spectrum. The U.S. Census Bureau, shows the number of Americans struggling below the poverty line is at the highest level in 15 years. In 2009, 44 million Americans, one in seven adults and one in five children, were reportedly living below the poverty line. Those numbers would be higher except for the fact that expanded unemployment benefits, increased food stamp allowances, and additional tax credits passed by Congress saved an estimated 6 million Americans from falling out of the shrinking middle class.
Those who managed to remain in the middle class did so by the skin of their teeth, according to the Council on Contemporary Families. By March 2010, one in four people were underwater on their mortgages, owing banks more than the market value. From 2009-2012, 44 percent of American families experienced a job loss, a pay cut, or a reduction in working hours. Nearly half of those who lost their jobs were reportedly out of work for six months or more. Food and gas prices continue to rise and make it even more challenging for average middle class families to keep from sliding down the short and slippery slope into poverty.
In a January 2012 interview, Mitt Romney stated that he was “not concerned about the very poor” because they have a “safety net.” Unfortunately that net appears to have some fairly substantial holes in it that are growing bigger by the day. Food stamps provide $1.44 per meal per person for those who qualify. Cuts in federal HEAP programs mean more impoverished families will lose assistance on their heating bills. Only one in four poor families now qualify for subsidized housing and fewer impoverished children than ever before qualify for Head Start early education programs. The evening news features food pantries across the nation because the shelves are empty and federal jobs training programs have lost their funding.
According to the Boston Globe, on May 11, 2012, the House of Representatives voted to slash another $310 billion dollars from the budget, mostly from programs for the poor. Medicaid, food stamps, children’s health insurance, the federal school lunch program, meals on wheels for seniors, and child abuse prevention are now on the chopping block.
Meanwhile, not a single cent of corporate welfare is being threatened. Oil and farm subsidies, tax breaks on capital gains, and offshore income continues to be held in a sacred trust. Millionaires and billionaires continue to pay taxes at a lower rate than those they employ and the “job creators” who thus far failed to create many jobs at all over the past five years, but our politicians fiercely protect them from proposed tax hikes.
You tell me. Who do you believe feels the most harm by this recession? Which faction in the great wealth divide fared the worst, and who fared the best, those at the top, the middle, or the bottom of the economic ladder?
Consider the question carefully and let me know what you decide by posting a comment.