A long, steep drop for Americans' standard of living
Not since at least 1960 has the US standard of living fallen so fast for so long. The average American has $1,315 less in annual disposable income now than at the onset of the Great Recession.
Think life is not as good as it used to be, at least in terms of your wallet? You'd be right about that. The standard of living for Americans has fallen longer and more steeply over the past three years than at any time since the US government began recording it five decades ago.
Bottom line: The average individual now has $1,315 less in disposable income than he or she did three years ago at the onset of the Great Recession – even though the recession ended, technically speaking, in mid-2009. That means less money to spend at the spa or the movies, less for vacations, new carpeting for the house, or dinner at a restaurant.
In short, it means a less vibrant economy, with more Americans spending primarily on necessities. The diminished standard of living, moreover, is squeezing the middle class, whose restlessness and discontent are evident in grass-roots movements such as the tea party and "Occupy Wall Street" and who may take out their frustrations on incumbent politicians in next year's election.
What has led to the most dramatic drop in the US standard of living since at least 1960? One factor is stagnant incomes: Real median income is down 9.8 percent since the start of the recession through this June, according to Sentier Research in Annapolis, Md., citing census bureau data. Another is falling net worth – think about the value of your home and, if you have one, your retirement portfolio. A third is rising consumer prices, with inflation eroding people's buying power by 3.25 percent since mid-2008.
"In a dynamic economy, one would expect Americans' disposable income to be growing, but it has flattened out at a low level," says economist Bob Brusca of Fact & Opinion Economics in New York.
To be sure, the recession has hit unevenly, with lower-skilled and less-educated Americans feeling the pinch the most, says Mark Zandi, chief economist for Moody's Economy.com based in West Chester, Pa. Many found their jobs gone for good as companies moved production offshore or bought equipment that replaced manpower.
"The pace of change has been incredibly rapid and incredibly tough on the less educated," says Mr. Zandi, who calls this period the most difficult for American households since the 1930s. "If you don't have the education and you don't have the right skills, then you are getting creamed."
Per capita disposal personal income – a key indicator of the standard of living – peaked in the spring of 2008, at $33,794 (measured as after-tax income). As of the second quarter of 2011, it was $32,479 – almost a 4 percent drop. If per capita disposable income had continued to grow at its normal pace, it would have been more than $34,000 a year by now.
The so-called misery index, another measure of economic well-being of American households, echoes the finding on the slipping standard of living. The index, a combination of the unemployment rate and inflation, is now at its highest point since 1983, when the US economy was recovering from a short recession and from the energy price spikes after the Iranian revolution.
Obamacare Will Price Less Skilled Workers Out of Full-Time Jobs
President Obama’s health care law requires employers to offer health benefits to full-time employees. This employer mandate will price many unskilled workers out of full-time employment.
After paying the new health premiums, the minimum wage, payroll taxes, and unemployment insurance taxes, hiring a full-time worker will cost employers at least $10.03 per hour. Full-time workers with family health plans will cost $13.75 per hour. Employers who hire workers with productivity below these rates will lose money. Businesses employing less skilled workers will probably respond by dumping their employees onto the federally subsidized health care exchanges and replacing full-time positions with part-time jobs.
Employers cannot reduce cash pay below the minimum wage. However, employers will not pay workers more than their productivity. No businesses will pay $14 per hour to employ a worker whose labor raises earnings by just $9 per hour. Businesses that pay workers more than their productivity quickly go out of business.
Employers hiring unskilled workers will respond to these higher costs in two ways. Many employers will forgo providing health benefits and dump workers onto the government health care exchanges. Doing so will incur a $2,000 penalty per full-time worker—far less than the cost of health premiums but still a $1 per hour increase in full-time employment costs.
The employer mandate will also encourage employers to replace full-time jobs with part-time positions. Obamacare does not penalize employers for not providing health benefits to part-time employees, so part-time positions will cost much less to fill than full-time positions.
Federal law gives employers a further incentive to hire unskilled workers only part-time. The law requires employers to offer the same health benefits to all full-time employees. If employers dump their less productive full-time employees into the government exchanges, they must dump the rest of their employees as well. However, hiring less skilled workers for part-time jobs does not restrict employers’ ability to offer health benefits to other workers. Many unskilled and inexperienced workers—those who produce less than $10.03 per hour—will find that employers will only offer them part-time jobs.
Obamacare hurts less skilled workers. It raises the minimum productivity required for them to hold a full-time job, particularly workers with families. Workers who cannot produce at least $20,000 per year (single plan) or $27,500 per year (family plan) of value to employers will have serious difficulty finding full-time jobs. Many of these workers will have to either live off reduced income from part-time hours or juggle the schedules of multiple part-time jobs.
Workers with productivity near this minimum will also face challenges. The law forces them to consume a substantial portion of their income as health benefits whether they want to or not. Take a full-time worker in Delaware with a family health plan earning the federal minimum wage. The employee and employer share of health care premiums for that plan will cost an average of $6.41 per hour. After paying the employee share of premiums, that worker will earn $6.56 per hour in cash wages. The law requires unskilled employees who do not get dumped into the exchanges to receive almost half of their compensation as health benefits. Workers who would like higher wages and less expensive health coverage do not get a choice.
Murders, Rapes, Falling Bridges and Phantom Jobs
What are we to think about a president and vice president who blow nearly a trillion dollars in borrowed money, accept no responsibility for it and then traverse the nation trying to convince Americans that if we don't spend half that much again, people will die from dilapidated bridges and women will be raped because we can't afford cops?
What business do these two have lecturing anyone about anything, much less the conditions that might ensue if we were not to spend more printed money to pay for things they failed to finance the first time because they misappropriated the funds?
Last month, Obama, stumping for his misnamed "American Jobs Act," told his AstroTurf audience in Raleigh-Durham that "in North Carolina alone, there are 153 structurally deficient bridges that need to be repaired. Four of them are near here, on or around the Beltline. Why would we wait to act until another bridge falls?"
After attempting to scare those in the crowd into believing they were one pylon away from being crushed by a fallen bridge, Department of Transportation engineers and administrators had to mollify residents about the safety of the area's bridges.
Wally Bowman, DOT's division chief for Wake County and six neighboring counties, said, "The key thing is: We don't have any bridges that are about to fall. We don't have any bridge out there that is structurally inadequate, where it cannot handle the traffic. We make sure those bridges stay in a good state of repair."
Obama obviously hadn't bothered to do his due diligence; he just made a false assertion to gin up support for legislation that a number of high-profile congressmen in his own party even reject.
Where's the outrage? Where are the media? Why don't they ask Obama why he's proposing to spend $447 billion on projects that aren't even necessary and trying to scare the public into supporting them?
Former White House chief of staff Rahm Emanuel famously said that "you never want a serious crisis to go to waste," but Obama has taken the maxim to a new level. The enhanced version is: "When all else fails to convince the electorate, fabricate a phony crisis, and fuel it with fear based on lies. Then re-present your proposal as the only antidote."
Obama has used this tactic with almost every major agenda item -- the stimulus package, Obamacare, the financial regulation bill, cap and trade, the federal takeovers of General Motors and Chrysler, all the debt ceiling skirmishes and his demagogic opposition to entitlement reform. Obama deliberately created a panic atmosphere based on an illusion of urgency so intense that even lawmakers wouldn't have time to read the bill, much less debate it, let alone post the bill online sufficiently in advance of congressional floor debate to allow public comment as he promised in his campaign
. Though the underlying problems he portrayed as crises were rarely urgent, his legislative "solutions" converted serious national financial problems into ones that present an existential threat to the nation.
Obama is not alone. His chief deputy, Vice President Joe Biden, has ratcheted up the administration's jobs bill rhetoric another decibel. In Flint, Mich., Biden intimated that the city will have more rapes and murders unless the jobs bill is passed.
"In 2008, when Flint had 265 sworn officers on their police force, there were 35 murders and 91 rapes in this city," Biden said. "In 2010, when Flint had only 144 police officers, the murder rate climbed to 65, and rapes -- just to pick two categories -- climbed to 229. In 2011, you now only have 125 shields. God only knows what the numbers will be this year for Flint if we don't rectify it."
Do these people have no shame?
Didn't they assure us that Biden would be our national stimulus cop, someone who would make sure that not a dollar of stimulus money would be wasted? And now they have the audacity to invoke the specter of rape and murder unless more federal money is thrown down ratholes, sent to nonexistent locations with phantom ZIP codes, allocated to ostensibly shovel-ready jobs that do not exist, used as slush money for their political benefactors and union cronies, and spent on research to inquire into the mating habits and sexual preferences of the Borneo walking stick?
It's time these two answered some questions themselves about the colossal waste of federal money they've directed toward the stimulus package, Obamacare, Solyndra, other green projects and scores of other boondoggles.
Until they can give us an honest accounting for their recklessness, they have no standing to be demanding more.
Is America Disintegrating?
In Federalist 2, John Jay looks out at a nation of a common blood, faith, language, history, customs and culture.
"Providence," he writes, "has been pleased to give this one connected country to one united people -- a people descended from the same ancestors, speaking the same language, professing the same religion ... very similar in their manners and customs ..."
Are we still that "one united people" today? Or has America become what Klemens von Metternich called Italy: "a mere geographical expression"?
In "Suicide of a Superpower," out this week, I argue that the America we grew up in is disintegrating, breaking apart along the fault lines of politics, race, ethnicity, culture and faith; that the centrifugal forces in society have now become the dominant forces.
Our politics are as poisonous as they have been in our lifetimes.
Sarah Palin was maligned as morally complicit in the murder attempt on Rep. Gabrielle Giffords. Terms like "terrorists" and "hostage-takers" are routinely used on Tea Party members who one congressman said want to see blacks "hanging on a tree."
Half a century after the civil rights revolution triumphed, the terms "racist" and "racism" are in daily use. We remain, said Eric Holder in calling us a "nation of cowards," as socially segregated as ever. "Outside the workplace, the situation is even more bleak in that there is almost no significant interaction between us. On Saturdays and Sundays, America ... does not, in some ways, differ significantly from the country that existed some 50 years ago."
He is not altogether wrong in that. In California's prisons and among her proliferating ethnic gangs, a black-brown civil war has broken out.
Yet, by 2042, there will be 66 million black folks and 135 million Hispanics here, the latter concentrated in the states bordering Mexico. What holds us together, then?
We are not now and will not then be "descended from common ancestors." We will consist of all the races, cultures, tribes and creeds of Earth -- a multiracial, multicultural, multiethnic, multilingual stew of a nation that has never before existed, or survived. The parallels that come to mind are the Habsburg Empire that flew apart after World War I, and the Soviet Union and Yugoslavia that disintegrated after the Cold War.
No more will we all speak the same language. We will be bilingual and bi-national. Spanish radio and TV stations are already the fastest growing. In Los Angeles, half the people speak a language other than English in their own homes.
As for "professing the same religion," where 85 percent of Americans were Christians in 1990, that is down to 75 percent and plummeting. The old Christian churches -- Presbyterian, Methodist, Lutheran and especially Episcopalian -- are splitting, shrinking and dying.
Where three in four Catholics attended Sunday Mass in 1960, it is now one in four. One in three cradle Catholics has lost the faith. The numbers of priests and nuns are plummeting; religious orders are dying; Catholics schools are closing.
The moral consensus and moral code Christianity gave to us has collapsed. Since the great cultural-social revolution of the 1960s, there has occurred what Nietzsche called the "transvaluation of all values." What was morally repellent -- promiscuity, homosexuality, abortion -- is now seen by perhaps half the nation as natural, normal, healthy and progressive.
Socially, too, America is breaking down. Where out-of-wedlock births in the 1950s were rare, today, 41 percent of all American children are born out of wedlock. Among Hispanics, it is 51 percent; among blacks, 71 percent. And the correlation between the illegitimacy rate, the drug rate, the dropout rate, the crime rate and the incarceration rate is absolute.
This helps to explain the four decades of plunging test scores of American children and the quadrupling of the prison population.
And while all this is happening, the state is failing. We cannot control our borders, win our wars or balance our budgets. In three consecutive national elections -- 2006, 2008 and 2010 -- the incumbents have been repudiated. Confidence in politics, politicians and the future of the country has never been so low in our lifetimes.
There was a time not so long ago when the nation was united on a common faith, morality, history, heroes, holidays, holy days, language and literature. Now we fight over them all.
Neocons says not to worry, the Constitution holds us together. Does it? Do we all agree on what the First Amendment says about the freedom to pray in school and celebrate Christmas and Easter? How can we be the "one nation, under God" of the Pledge of Allegiance, or the people "endowed by their Creator" with inalienable rights, if we cannot even identify or discuss or mention that God and that Creator in the schools of America?
Do we agree on what the Ninth Amendment says about right to life? What about what the 14th Amendment says about affirmative action? What the Second Amendment says about the right to carry a concealed gun?
The new secession that is coming, Rick Perry notwithstanding, is not like the secession of 1861. It is a secession of the heart from one another.
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