Economy is Booming but Ordinary People Not Feeling Any Richer

GELFAND’S WORLD--Political purists like to talk about fundamentals that -- more than personalities or policies -- determine electoral outcomes.

The most basic is the state of the economy. It's supposed to work in favor of the president's party when things are up, and work against it when things are down. It's no wonder then that the White House is pushing the argument that the economy is not only booming, it is going to continue to improve. 

Funny, I don't run into a lot of people who are enthusiastic about the state of the economy. People don't seem to feel that their lives are getting better, and they don't seem to be feeling a lot of optimism about what the future will bring. Admittedly, I don't hang around with a lot of Trump supporters, but I sense that even among that group, there is a lot of dissatisfaction about things in general. 

In an economy that demonstrates clear growth, why such grumpiness? I suspect that the explanation is simple, representing a counter-fundamental of its own. In a nutshell, the majority of Americans really are not doing any better. There has been some economic recovery since the disaster of 2008. It presents itself as growth of the GDP as a whole but mainly benefits only a smallish segment of the population. 

The president's representatives like to talk about the percentage the economy rose in the last quarter, and the official job creation figures, but those numbers don't represent what your neighbor is experiencing. 

Luckily for us, Kevin Drum has a knack for summarizing some of the difficult elements of economics in an understandable way. I'd like to refer to two of his recent pieces which tell the real story a lot better than the White House public relations crew: 

The economy is doing well but ordinary people not so much. You can find it here.  

Earnings of the poor are stuck on nuthin. Find it here.  

In the first piece, we get a summary of how we have done over the past 20 years, broken down according to income levels. Economists like to divide the population into fifths, ranging from the top one-fifth to the bottom one-fifth. There is even a word for this -- quintiles. However you slice it, there is a clear showing that only the people in the very top group are doing appreciably better over the past two decades. The next highest fifth of the population have held their own, but have not exactly seen rip-roaring success. 

And in more than half the population, people have, on the average, not done better. In the lower 40%, there has been a net drop. 

The second Drum piece is even more striking because it shows what it has been like for the vast majority of us -- everyone except the top one-tenth -- over the past 15 years. The graph shows that the top earners have made out like bandits, with a cumulative growth in income of nearly 30%. Meanwhile, the other 90% are barely back to 2008 levels. 

Admittedly the graph only runs through 2014, but it represents the long term structural trend in the American economy. 

Compounding the problem is the fact that a substantial fraction of American workers are underemployed, in the sense that they would like to have full time jobs (at the pay scales that such jobs provide) but cannot find them. They subsist on part time work which is often seasonal -- there will be a surge in hiring of part time temporary workers prior to the winter holiday season, and mass layoffs after Christmas. There is also a summertime recreational employment peak. 

The problem with these seasonal industries is that they don't pay their short term employees very well, and the number of hours any worker gets is iffy. When the Trump administration crows about the reduction in unemployment numbers, they aren't telling the whole story, which includes a lot of people who are barely scraping by. 

Put the whole picture together and it demonstrates how tone deaf the Trump administration is. They trumpet the growth in GDP and job creation numbers but don't recognize (or at least admit) that most of the gains are going to the top one percent. There is a reasonable inference we can draw from listening to Trump administration spokesmen: They must think that this division is the right and proper way for things to be. 

It is a view of society that supports a particularly insensitive form of capitalism and is utterly opposed to redistribution of income. There are even inklings of a desire among the Republican leadership to start nibbling back on Social Security and Medicare. 

Our nation would be well served to have a dialog about the rapidly growing inequality of both wealth and income. Besides the human misery, we should take note of the inherent instability of a system where the majority of wealth is concentrated in a small group of people. 

We might also take note that even if the economic boom has some reality, however limited, it may not last. As economists point out, [AP: Where White House touts a boom, most economists see a blip] Trump's trade wars and the huge deficit induced by the tax cuts are the sorts of things that can bring on another recession. 

Curiously, there is a connection with a recent upsurge in a particular message coming from a few Democratic candidates. We are seeing a few races in which the candidate pledges not to take corporate money. This is of course long overdue. I can imagine a day when supporters of these candidates adopt their own slogan: We are more Tea Party than the Tea Partiers

After all, isn't a lot of the current American turmoil based on the fact that ordinary working people are used and manipulated by a small number of wealthy corporations? Working class Democrats and country music fans have more in common ("take this job and shove it") than they may at first recognize.

 

(Bob Gelfand writes on science, culture, and politics for CityWatch. He can be reached at amrep535@sbcglobal.net

-cw