Thursday, May 20, 2004

How the concentration of wealth is affecting middle class Americans

Title: Though Far From Poor, a Family Struggles Daily
Source: LA Times
Date: May 18, 2004

The article discusses an increasingly common scenario for middle-class Americans. Although they make far more than minimum wage and are well above the official "poverty line", it is increasingly difficult to live a middle class life in America because of the concentration of wealth. Especially in any large city. Wages simply do not keep up with inflation. The article talks about it this way:
    Policymakers still measure progress in the war on poverty using the federal poverty level, despite decades of quarrels over its shortcomings. Developed in the 1960s, the poverty level is based on a food survey from 1955.

    It tells only how much is too little to live on, not how much is enough to get by on.

    "What it means is there are a lot more people without an adequate income in California than the federal poverty level would indicate," said Diana Pearce, director of the Center for Women's Welfare at the University of Washington and a pioneer in calculating self-sufficiency.

    By the federal benchmark, 13% of Californians are poor, according to the Census Bureau (news - web sites). By the self-sufficiency standard, 30% don't make enough to get by.

    In California, the definition of "enough" varies widely. A family of four with young children could get by on $39,318 in Fresno County. In the Bay Area, the same family would need $69,000, according to a report by Pearce and the National Economic Development and Law Center. The center is an advocacy group based in Oakland that is lobbying to reorient social policy along lines of affordability, not poverty.

    One reason why the wage-earning middle class increasingly can't afford California is that wages, adjusted for inflation, have been stagnant for two decades. In the same time, the percentage of income needed to pay for rent, healthcare and child care has spiraled.

    Economists call this "alligator economics," because wages are a horizontal or falling line, while costs rise like an alligator's upper jaw.

    The Basurtos, and many thousands of others, live in that jaw.
Wages for most Americans have been stagnant for two decades, but (as described in many of the posts in this blog) wages for executives have skyrocketed. See this article for details. Instead of being spread out to everyone, the wealth from productivity gains is now concentrating in a small percentage of wealthy Americans. What this means is that the majority of Americans get poorer every year.


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