It is the last day of the year. I feel I should say something to my fellow Americans about the only thing most of them care about, namely, the economy. It is the holiday season, so the recent Bloomberg article Americans on Wrong Side of Pay Gap Run Out of Means to Cope went largely unnoticed (December 30, 2013). But that article deserves our attention.
Rising income inequality is starting to hit home for many American households as they run short of places to reach for a few extra bucks.
As the gap between the rich and poor widened over the last three decades, families at the bottom found ways to deal with the squeeze on earnings.
Housewives joined the workforce. Husbands took second jobs and labored longer hours. Homeowners tapped into the rising value of their properties to borrow money to spend.
Those strategies finally may have run their course as women’s participation in the labor force has peaked and the bursting of the house-price bubble has left many Americans underwater on their mortgages.
“We’ve exhausted our coping mechanisms,” said Alan Krueger, an economics professor at Princeton University in New Jersey and former chairman of President Barack Obama’s Council of Economic Advisers. “They weren’t sustainable.”
Most Americans have reached the end of the line. The desperate measures our fellow citizens took to cope with flat inflation-adjusted wages over these last 30 years have reached the end of their effectiveness.
As we always do, we will hear lots about GDP growth and jobs in 2014. We will hear much, much less about the fact that these new opportunities are mostly shitty, low-paying or part-time jobs. But I don't have to tell most people that, they already know that because they're living the nightmare.
When push comes to shove, Americans will be told that merely having a job — any job, even shoveling shit — is better than not having one. For example, here's an exchange between economists Dave Rosenberg and Rich Yamarone I heard recently on Yahoo Finance's The Daily Ticker. They were talking about the probability of a recession in 2014. (I don't think a recession is likely next year.)
Rosenberg — ...income growth is not going to be super-strong, but here's the deal, I think its going to get better and I'll tell you why its going to get better, because the labor market, at the margin, is tightening. The point is this, the unemployment rate is going down, job creation has been picking up, that's not an opinion, that's a fact.
Yamarone — ...job creation is picking up because people have two and three jobs, OK?
So, no, it doesn't matter ... in your opinion ... what the composition [is] of these jobs that are being created, these low wage, low income jobs, and it's showing up in the data ... I read 250, 300 quarterly earnings transcripts, I talk to CEOs, I do the grass-roots investigation, I go to Macys.
[I say] "Hey, I'm thinking of working here, what do you think about working here?"
[And they reply] "it used to be a great place, ... I used to get 40-45 hours a week, great overtime ... that's all gone." In fact, people will tell you "now, I get about 12 hours a week, I only get 15 hours a week, I have to get another job, I'm working at Kohls, I'm working at Applebees," people working three jobs just for the same [pay they used to have], I'm not saying that this is everything, but it is the middle to lower-income class which, again, is the driver of the economy...
OK, here it comes, from the formerly bearish Rosenberg.
Rosenberg — I understand all that, but ... so what are you telling me? ... so [it's] better not to have a job at all? ... than to have what you call a low-wage job?
You move from zero income to, even say a low income, but the bottom line is this ... [ talks about whether we are creating manufacturing jobs, where wage growth is basically non-existent ]
It always comes to down to what Dave Rosenberg said—having a shitty low-paying, part-time job is better than having no job at all. That's the bottom, folks. Your expectations can't get any lower than that unless you're expecting to starve or freeze to death. Back to Bloomberg.
The result has been a downsizing of expectations. By almost two to one — 64 percent to 33 percent — Americans say the U.S. no longer offers everyone an equal chance to get ahead, according to the latest Bloomberg National Poll. The lack of faith is especially pronounced among those making less than $50,000 a year, with close to three-quarters in the Dec. 6-9 survey saying the economy is unfair.
The American economy is unfair. That's a word we don't hear often enough.
The diminished expectations have implications for the economy. Workers are clinging to their jobs as prospects fade for higher-paying employment. Households are socking away more money and charging less on credit cards. And young adults are living with their parents longer rather than venturing out on their own.
In the meantime, record-high stock prices are enriching wealthier Americans, exacerbating polarization and bringing income inequality to the political forefront. Even independent government agencies like the Securities and Exchange Commission and the Federal Reserve have been dragged into the debate.
“The basic bargain at the heart of our economy has frayed,” Obama said in a Dec. 4 speech in Washington. “This is the defining challenge of our time: Making sure our economy works for every working American.”
Frayed? How about unraveled? There's more Bad News in that Bloomberg piece if you care to read it.
Don't be so naive as to think that the Powers That Be are going to bend over backwards to "make sure the economy works for every working American." The current economy works just fine for them, and it does so on the backs of the working poor and most "middle" income earners. I am referring to those making less than $50,000 a year, the ones who "lack faith" in the idea that those running this corrupt mess have their best interests at heart.
What I call the Bamboozle will continue unabated in 2014. Politicians and those in the media will continue to cheer each time the Bureau of Labor Statistics says that one or two hundred thousand lousy jobs were created last month. They will cheer when the Bureau of Economic Analysis tells us that Gross Domestic Product grew at an annual rate of 2-4% last quarter. (All these numbers will be subsequently revised, but who cares?)
And nothing will have changed for the nearly 150 million Americans who live within 200% of the Census Bureau's official poverty line (as of 2011).
Or the 47,300,000 people receiving food stamps.
Or the 32,753,000 children who lived in families with incomes within 200% of official poverty in 2012, which was 45% of all the children in the United States.
The economy will grow, jobs will be added, and it will hardly make any difference in the quality of these people's lives. And it will make no difference whatsoever to their future prospects.
If I have a prediction for 2014, it is this—the Bamboozle will be accomplished. The unfairness of the American economy will once again be a done deal, as it was before the crash in 2008. By next year's end you won't hear any more talk about income & wealth inequality, which is a hot topic right now, even in the mainstream media, because Obama paid the issue some lip service recently.
At some point the Powers That Be, at least on the Democratic side of our political nightmare, will announce more or less officially that the "recovery" has been achieved, not least because there will be "off-year" elections next year, a fact which abso-fucking-lutely guarantees that nothing good can happen in 2014.
That will be a sad day for many of you, and a sad day for America, but remember, we live in the Age of Downsized Expectations. Below, George talks about the Bamboozle. Rest in Peace, George.
From my position in a crumpled heap at the bottom of the cliff of downsized ambition, I wish you and your readers a rational new year - and sufficient means to at least distract the wolf baying and scratching at the door.
Thanks for the company this year.
Posted by: Oliver | 12/31/2013 at 01:15 PM