Meet the typical American Family:
It has about $3,800 in the bank. No one has a retirement account, and the neighbors who do only have about $35,000 in theirs. Mutual funds? Stocks? Bonds? Nope. The house is worth $160,000, but the family owes $95,000 on it to the bank. The breadwinners make more than $43,000 a year but can't manage to pay off a $2,200 credit card balance.
Despite the cries from the RWNM about the "liberal press" not reporting good economic numbers, the reality of the situation is simple: this economy is killing the middle class.
Let's start with wages. According to a recent Federal Reserve Report
The survey shows that, over the 2001-2004 period, the median value of real family income before taxes continued to trend up, rising 1.6%, whereas the mean value fell 2.3%. Patterns of change were mixed across demographic groups. These results stand in contrast to the strong and broad gains seen for the period between 1998 and 2001 surveys and to the smaller but similarly broad gains between the 1995 and 19989 surveys.
In addition, overall wealth has showed a similar slowing of overall growth over the same period:
In contrast, the growth in wealth between 1998-2001 surveys and between the 1995-1998 surveys was stronger both in the mean and in the median [compared to the 2001-2004 survey], and the growth was shared by most demographic groups.
So why is this happening? The US is losing boatloads of high-paying jobs. According to the Bureau of Labor Statistics, the US economy has lost 2,877,000 manufacturing jobs and 635,000 information service jobs since January 2001. These jobs are high-paying jobs. They have been replaced with lower paying service jobs that place the typical middle class family in a tougher financial position. Necessary expenses as a percentage of income have risen from a 20-year range to 44% - 48% to 54% in 2005. The American family has increased their debt load to record levels to maintain their standard of living.
On top of all that, necessary expenditures are eating people alive. Health insurance payments alone are increasing 2-4 times the rate of inflation. Tuition payments are leaving college graduates with massive amounts of debt the prevent them from moving up the socio-economic ladder. No wonder people can't save. They're too busy paying off all the damn money they owe.
As we move into the 2006 election cycle, let's remember these people. And let's do something to help them.
