The drumbeat of "good news" has been steady these past few months: the American economy is in recovery. Consumer confidence is up. Manufacturing is expanding. There are signs the housing market is on the "verge of a rebound." In April, the unemployment rate dropped to 6.3% -- the lowest it's been since President Barack Obama took office.
Break down those unemployment numbers, though, and you get quite a different perspective on the American economy. One reason the unemployment rate fell was because the workforce participation rate -- the number of Americans working or looking for work -- decreased by nearly a million people. Many of them just packed up their hopes and went home to join the ranks of the officially uncounted jobless of this country. Why? Partially because Republicans in Congress refused to renew federal unemployment benefits for the long-term jobless -- those who have been out of work for 27 weeks or more. The government requires unemployed Americans to prove that they are actively searching for work in order to be eligible for unemployment insurance. Once that motivation (and the financial means of transportation to job interviews) disappeared, many discouraged workers simply gave up looking.
At the beginning of 2014, Democrats made a big push to renew those benefits, which average $1,166 a month and kick in after the usual 26 weeks of state unemployment benefits run out. They had been renewed yearly since the beginning of the recession -- until last December, that is. Republicans promptly pushed back, demanding that any further aid for the out-of-work be "offset" by spending cuts elsewhere. In April, the impasse seemed to break when the Senate surprisingly passed a bipartisan bill to extend the emergency benefits. Since the legislation had GOP support, it was expected to pass the Republican-dominated House. House Speaker John Boehner, however, rejected it and the news cycle moved on.
The 3.5 million long-term jobless are still here though, crashing on the couches of family members or friends, struggling to feed their kids, unable to afford gas to get to those job interviews that are seldom to be found anyway. Today, former State Department whistleblower Peter Van Buren, who has been following the fate of the 99% for TomDispatch and whose new book on the subject, Ghosts of Tom Joad, has just been published, takes a look at why it's so hard for the long-term unemployed to get back to work. He also answers questions about why the American economy doesn't work for those at the bottom, no less the sinking middle class. Erika Eichelberger
Why Don't the Unemployed Get Off Their Couches?
And Eight Other Critical Questions for Americans
By Peter Van Buren
Last year eight Americans -- the four Waltons of Walmart fame, the two Koch brothers, Bill Gates, and Warren Buffett -- made more money than 3.6 million American minimum-wage workers combined. The median pay for CEOs at America's large corporations rose to $10 million per year, while a typical chief executive now makes about 257 times the average worker's salary, up sharply from 181 times in 2009. Overall, 1% of Americans own more than a third of the country's wealth.- Advertisement -
As the United States slips from its status as the globe's number one economic power, small numbers of Americans continue to amass staggering amounts of wealth, while simultaneously inequality trends toward historic levels. At what appears to be a critical juncture in our history and the history of inequality in this country, here are nine questions we need to ask about who we are and what will become of us. Let's start with a French economist who has emerged as an important voice on what's happening in America today.
1) What does Thomas Piketty have to do with the 99%?
French economist Thomas Piketty's surprise bestseller, Capital in the Twenty-First Century, is an unlikely beach read, though it's selling like one. A careful parsing of massive amounts of data distilled into "only" 700 pages, it outlines the economic basis for the 1%-99% divide in the United States. (Conservative critics, of course, disagree.)
Just in case you aren't yet rock-bottom certain about the reality of that divide, here are some stats: the top 1% of Americans hold 35% of the nation's net worth; the bottom 80%, only 11% percent. The United States has such an unequal distribution of wealth that, in global rankings, it falls among the planet's kleptocracies, not the developed nations that were once its peers. The mathematical measure of wealth-inequality is called "Gini," and the higher it is, the more extreme a nation's wealth-inequality. The Gini for the U.S. is 85; for Germany, 77; Canada, 72; and Bangladesh, 64. Nations more unequal than the U.S. include Kazakhstan at 86 and the Ukraine at 90. The African continent tips in at just under 85. Odd company for the self-proclaimed "indispensable nation."
Piketty shows that such inequality is driven by two complementary forces. By owning more of everything (capital), rich people have a mechanism for getting ever richer than the rest of us, because the rate of return on investment is higher than the rate of economic growth. In other words, money made from investments grows faster than money made from wages. Piketty claims the wealth of the wealthiest Americans is rising at 6%-7% a year, more than three times as fast as the economy the rest of us live in.
At the same time, wages for middle and lower income Americans are sinking, driven by factors also largely under the control of the wealthy. These include the application of new technology to eliminate human jobs, the crushing of unions, and a decline in the inflation-adjusted minimum wage that more and more Americans depend on for survival.- Advertisement -
The short version: A rising tide lifts all yachts.
2) So why don't the unemployed/underemployed simply find better jobs?
Another way of phrasing this question is: Why don't we just blame the poor for their plight? Mention unemployment or underemployment and someone will inevitably invoke the old "pull yourself up by your bootstraps" line. If workers don't like retail or minimum-wage jobs, or if they can't find good paying jobs in their area, why don't they just move? Quit retail or quit Pittsburgh (Detroit, Cleveland, St. Louis) and...