The middle class has been seriously hampered by Bush's economic policies. Between the loss of high-paying jobs, health insurance taking a larger and larger percentage of stagnating wages and college tuition rises making higher education payments impossible without massive levels of debt, the middle class is at best treading economic water. While there are numerous issues that Democrats can use in the 2006 mid-term elections,
we must remember we are the party that represents the middle class' interests. We must firmly address these issues in order to help people better their lives.
I have posted some of this information before. Some of this information is new. However, it's all relevant to explain the middle class' dire economic position in the US economy.
Weak Job Growth and Lower Paying Jobs
First of all, compared to other economic expansions, Bush's job growth is dead last in total number of jobs created:
The expansion of 2/61 - 12/69 created 17,684 total jobs and 6,244 at 49 months.
The expansion of 3/75 - 7/80 created 13,183 total jobs and 12,831 at 49 months.
The expansion of 11/82 - 7/90 created 21,003 total jobs and 11,510 at 49 months.
The expansion of 3/91 - 3/01 created 23,969 total jobs and 8,266 at 49 months.
The current expansion which started in November 2001 has created a total of 3,410 jobs.
Bush' economy would have to triple the total number of jobs created in order to get to 4th place on this list.
But there is another disturbing trend at work: the quality of job creation as measured by annual earnings has dropped during this expansion.
The United States Conference of Mayors commissioned Global Insight to study this expansion's job creation record. The study is titled "The Role of Metro Areas in the U.S. Economy."
In 2003, Global Insight and the U.S. Conference of Mayors examined the quality of jobs lost from the beginning of the recession through the end of 2003, and those that were projected to be added back to the economy during 2004 and 2005. We projected that the average annual wage of $43,629 in the top ten sectors that lost jobs during the 2001-02 period would not be marched by the average wage of $35,855 in those sectors adding jobs through 2005. Job gains would come in sectors where wages average only 18% of those in the sectors hit hardest by the recession. This projected 18% gap reflected, in part, the higher-than-average wages paid in the declining manufacturing sectors. Many of those manufacturing jobs and others lost in the information sector had been send overseas due to outsourcing, or were lost due to firm and plant closings because of over-supply as demand waned. We now, with data through 2005, can assess those projections. Indeed, the measured wage gap given the composition of the actual jobs gains in 2004 and 2005 is substantially higher than our earlier projection. The average wage, measured in 2003, of those added jobs in the leading expanding sectors has been just $34,378, 4.1% lower than anticipated in the recovery. The wage gap created between jobs lost and jobs gained is 21%.
Over 2001-2003, the US lost 2 million durable goods manufacturing jobs that paid an average annual salary of $46,800. Over the same period, the US lost 800,000 non-durables manufacturing jobs with and annual salary of $40,700 and 500,000 information service jobs with an average annual salary of $57,300. These are the top three areas of job loss over the 2001-2003 period.
From 2003-2005, the top three areas of job growth occurred in administrative and support services (+680,000 jobs created), health care and social assistance (+620,000 jobs created) and leisure and entertainment (+546,000 jobs created). Respectively, each of these pays an average annual salary of $26,178, $37,410 and $14,750.
In other words, the US economy is creating lower-quality jobs that pay less than the jobs lost.
This history of weak job growth explains the 4-year stagnation in median national income or the 4 year increase in the poverty rate. It also explains why inflation adjusted non-supervisory wages have increased a total of 2.62% over 5 years.
The poor creation of high-paying jobs is a recipe for economic disaster. As more-established areas of high-wage paying jobs are eliminated, the middle class is faced with large pay-cuts. These lower-paying jobs provide insufficient wages to finance a middle-class standard of living. In addition, when an employee is forced out of a higher-paying job, he has a standard of living associated with that job. For example, a durable goods manufacturing employee who made the average salary of $46,800 has a lifestyle based on that salary. After he takes a lower-paying job, he still has the expense of the higher salary lifestyle. This creates an unacceptable stress to the middle class.
Health Care
Yes, Virginia, there is still a health care crisis in the United States. Remember the stagnant wages from above? Over the last 4 years, health insurance premiums have taken an ever-increasing percentage of stagnating wages. According to Kaisar Health, health spending in the US for the years 2000-2003 increased 6%, 7.8%, 8.2% and 6.6%, respectively. This spending is between 2 and 4 times the respective annual increases in inflation.
Health insurance premiums are actually increasing faster. For the years 2000-2004, the respective annual increases in insurance premiums were 8.2%, 10.9%, 12.9%, 13.9% and 11.2%. In 2004, average annual single payer insurance premiums were $3,695 and average annual family premiums were $9,950. The three-year national median income for the years 2002-2004 was 44,473, meaning the average health insurance coverage for a single adult is 8.3% of income and average health insurance coverage for an adult is 22% of median national income. Employers and employees typically share health insurance payments, giving the middle class some breathing room. But not much. And considering the percentage increase in insurance premiums, stagnating wages, and the increased use of high-deductible policies, the middle class income doesn't stand much of a chance.
College Tuition
College used to be the primary way to climb the socio-economic ladder. Now, it has become debt trap, where graduation means a heavy debt load that hinders upward mobility.
According to the Congressional Budget Office:
The cost of four years of undergraduate education, including living expenses, now averages nearly $80,000 at public colleges and over $100,000 at many private institutions. Tuition and fees have risen steadily since 1980, fueling concern that college is becoming prohibitively expensive for many families. In two decades, tuition and fees at public universities more than doubled, from $1,883 (in 2001 dollars) in 1980 to $4,281 in 2001.
According to the same CBO study, students must finance almost 70% of their college education.
To pay for college, 58% of public college students and 69% of private school students use some form of loan. The respective median amount of debt for public and private school 4-year bachelor's degree recipients is $14,700 and $17,100. Because this is a median amount, half of the students in this analysis had an amount larger than the median number. The numbers increase for a master's degree, where 49.1% of public university students have to use loans. The median outstanding loan amount at graduation for public university master's degree graduates is $26,100. 72.9% of private master's degree students have to use loans to pay for their education, and their median amount of loans outstanding is $29,000. In short, college graduates are faced with a heavy debt load when they graduate. This hinders their ability to move up the socio-economic scale, as larger and larger percentages of their respective income goes to paying off loans rather than improving their standard of living.
Conclusion
Good-paying jobs that support a higher standard of living are being replaced by lower-paying jobs. Health care expenses are taking an increasingly larger share of declining income. And cost of higher education makes college the beginning of a life on indentured servitude rather than the ticket to a better lifestyle.
It's time to help the middle class better their position.