So Much for The Great “Recovery”

A recent news article caught my attention, largely because it confirmed a number of trends that I’ve mentioned over the past few years, that an increasing percentage of U.S. workers experience lagging wages, eroding benefits, and demands to do more for the same or even less pay.

A 2018 General Social Survey (GSS) reported that: (1) a third of U.S. workers found work has become significantly more demanding; (2) 20% of workers reported that they had too much work to do everything well; and (3) 75% had to work extra hours every month, much of it without compensation. All of these were a significant increase from 2006. A Federal Reserve Bank of St. Louis study reported that, over the last 20 years, corporate profits have far outpaced employee compensation.

As I’ve noted before, public universities and corporations are employing greater and greater numbers of part-time employees without benefits and fewer full-time staff, and more and more companies are outsourcing menial jobs to contractors who employ large numbers of low-paid part-timers.

The result of all this, as has been reported from multiple sources, is that the incomes of more than 90% of Americans have been stagnant or decreasing over the last 20 years, despite all the hype. They’re working, when they can, more hours for less, or multiple jobs to make ends meet. Fewer and few young workers, even college graduates and beginning professionals, can afford to buy a house, and may not be able to for years because of massive student loan debt.

There was only one part of the article which was, in my view, erroneous, and that was where it said “public companies have made shareholders their top priority.” That’s not exactly accurate, and it understates the extent of the damage caused by rampant and unchecked capitalism. Actual returns to shareholders, i.e., dividends, are extremely low by historical standards. What the present group of robber-barons and high-level corporate executives have done is to use cheap money and the even lower interest rates to inflate the prices of stock, through stock buybacks and other devices, to incredible multiples of earnings in order to turn their stock options and stock payments into capital gains. That penalizes small investors without the capital to use such tools and is, in effect, a disguised Ponzi scheme preying on those comparatively smaller investors, as well as on mutual funds, pension funds, and individual retirement accounts.

When the next recession hits, those CEOs will already have cashed out many of their holdings at a lower tax rate than paid on earned income, while the majority or smaller investors will find their investments drastically reduced in value, both in terms of nominal cash value and in terms of real purchasing power, given the last twenty years of “hidden” inflation, hidden because the government’s “standard” measures of inflation don’t accurately measure many of the real costs of living.

For example, the latest CPI indicates an inflation rate of 1.8% from July 2018 to July 2019, which includes a 2.0% decrease in the price of energy. Now, I don’t know about the rest of you, but the winter here was warmer than last year and the average summer temperatures so far have averaged 3 degrees below last summer… but my energy costs are up. So are our health and property insurance costs, our communications costs, and our food costs, all by more than two percent. Add to that a roughly 40% increase in property taxes, which is an amusing side note, because most of that occurred because our house was reassessed and its value increased by 32%. So while we’re living in the same house, and the tax rate only increased 2.2%, the actual increase in taxes amounted to 40%. This sort of thing happens to homeowners everywhere, and we’re far more fortunate than most, because our overall property tax levels are much lower than the national averages, but there’s no way that our basic cost of living increased only 1.8% over this past year, and for people living in urban areas, the annual cost of living has to be increasing by far more than 1.8%.

So… go ahead and tell me how great the recovery has been for most Americans.

1 thought on “So Much for The Great “Recovery””

  1. Kath says:

    You are so right.

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