By John Peterson
Alan Greenspan and the officers of the Federal Reserve Bank would have us believe that "the fundamentals of the economy are very strong." US GDP is still growing - albeit at its slowest pace in over a year - and corporate profits are up 18 percent from a year earlier, at an annual $898 billion. Although the stock market has its ups and downs, it has recovered a substantial amount of the ground lost when the IT boom collapsed in 2000. Generally speaking, all is rosy in the best of all possible worlds - recent data suggesting the recovery is faltering reflects nothing but a "soft patch" in Mr. Greenspan’s opinion. This may be the view from the heights of corporate and financial power, but what’s the reality for millions of workers down here on planet earth?
The real state of the economy is reflected in the following figures from the U.S. Census Bureau:
The number of impoverished Americans grew by 1.3 million from 2002 to 2003 to 35.9 million. The number of Americans living in poverty now stands at 12.5 percent, up from 21.1 percent in 2002. The poverty line is set at an annual income of $9,573 or less for an individual, or $18,660 for a family of four with two children. These official thresholds are unrealistic, and in reality, the poverty rate is much higher.
The rate of child poverty rose to 17.6 percent from 16.7 percent in 2002 - boosting the number of poor children to 12.9 million.
The poverty rate of African Americans remained nearly twice the national rate, with 24.4 percent of blacks living below the poverty line in 2003, up from 24.1 percent a year earlier.
The number of Americans without health insurance increased by 1.4 million to 45 million, which represents 15.6 percent of the population. Most of those who do have insurance have to pay exorbitant premiums and co-pays, and often have to go to court to receive health services covered by their plans.
In 1973, the wealthiest 20 percent of households accounted for 44 percent of total U.S. income. Their share jumped to 50 percent in 2002, while everyone else’s fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent.
The above figures make it clear the income gap between rich and poor is expanding rapidly. This is graphically illustrated by booming sales of luxury items. Porsche Cars North America Inc. says sales are up 17 percent for the year. Strong sales at higher-end department stores Neiman
Marcus, Nordstrom and Saks Fifth Avenue overshadow lackluster sales at
stores frequented by working people such as Wal-Mart, Sears and Payless Shoes.
The truth is, most American workers are scratching their heads and asking themselves the
following question: "what economic recovery?" The numbers that affect our
day-to-day lives are not so rosy. Inflation has risen over 3 percent in each of the first
two quarters of 2004, with the rise in food and energy costs taking a further bite out of
stagnant or shrinking real wages. The cost of health care, tuition, and housing has also
soared. The consumer debt burden is unbearable, quality jobs are hard to find, and as
single mother Annie Clark recently put it, millions of Americans live in a "perpetual
state of panic financially."
According to Clark: "I barely make $10 an hour, and I get no health insurance. I can’t get through the week without an empty bank account. I make generally between 10 and 11 grand a year - I make nothing. I can’t afford to be given a car. I won’t have the money to register it, to get the insurance, to do repairs; inflation is just eating up my paycheck. There’s no safety net, and there are so many people who are so worse off than me." (Reported on Yahoo! News)
Ms. Clark’s words are an eloquent and tragic summing up of the situation facing millions of employed Americans, and for those out of work the situation is often worse. Finding a low-paying "McJob" is often seen as a bit of good fortune, and homelessness is a very real fear for many who were lead to believe that a comfortable and affordable home, 2 car garage, and white picket fence were a given in America. Debbie Reames of Raytown, Missouri, whose bank job of 24 years was sent overseas in February, said the following in a recent interview: "We’re just trying to get ahead. But it seems like we climb a few rungs and then we fall back again."
As we have explained in the past, the key to any real improvement in the situation is job creation. But the capitalists are not in the business of creating jobs; they are in the business of making money. If they can increase profits with fewer workers by making their existing employees work longer and squeezing more out of them in the same amount of time, they will do that rather than invest in productive capacity or new job positions. It’s true that more than a million jobs have been added back to the nearly 3 million lost since Bush took office, but they pay less, are less secure, and offer fewer benefits, such as health insurance. Most new jobs are concentrated in health care, food services, and temporary employment firms, all lower-paying industries. Temp agencies alone account for about a fifth of all new jobs. Three in five pay below the national median hourly wage of $13.53. On a weekly basis, the average wage of $525.84 is at the lowest level since October 2001.
This situation has little to do with which big-business political party is in power, but rather with the organically dysfunctional nature of the capitalist system itself. According to Sung Won Sohn, chief economist of Wells Fargo Bank, "This really has nothing to do with Bush or Kerry, but more to do with the longer-term shift in the structure of the economy."
The capitalist system always has its ups and downs, but in the current period, the overall trend is downward – the booms are weak and uneven and don’t make up for the losses suffered during the slumps. Working people have it nearly as bad during the "booms" as during the slumps. If this is a "soft patch", what will happen to millions of workers when the economy inevitably sinks back into a full-blown recession at some point in the future?
American workers are very pragmatic, energetic, and creative when looking for ways to get things done. Annie Clark proposes some very basic and reasonable solutions to the crisis facing millions like her: "What could help me get out of this is universal health care. What could get me out of this is fairness in the taxing situation." However, these apparently simple solutions cannot be implemented without the most ferocious resistance on behalf of the ruling class. The profit-based capitalist system cannot significantly improve our living standards. On the contrary, the bosses have launched an all-out offensive against the gains we have struggled for in the past. Workers make up the vast majority of American society. We need to build a real alternative that can truly address our class interests and solve the dire crisis confronting us. That alternative is socialism.