An article in my local paper offered some stark statistics about the long-term economic impact of neoliberalism and the financial crisis it wrought upon working class Americans' standard of living:
Liz Weston (February 22, 2017). How to put more into pockets of working-class Americans. The Arizona Republic, 14A-15A.
The working class- defined as households earning between $23,000 and $40,500 in 2013 - lost more than half of its wealth between 1998 and 2013, according to Federal Reserve statistics. The whopping 52.7 percent drop in this group's median net worth compares with a 19.1 percent drop for middle-income households, and a 20.7 percent decline overall.
Working-class debt levels rose 47.9 percent during this period, while their financial assets - primarily money in bank and retirement accounts - shriveled by 56 percent.
In my book, Crisis Communication, Liberal Democracy and Ecological Sustainability I describe how growing inequality was accelerated during and in the immediate aftermath of the financial crisis:
The financial crisis led to a collapse in the value of assets for average Americans, widespread job losses, and increased the trends of wealth and income consolidation that began with neoliberal reforms in the late 1970s and early 1980s.
Americans saw their personal wealth plummet 40 percent from 2007 to 2010, according to the Federal Reserve.[i] In dollar terms, the median net worth of U.S. households dropped from $126,400 in 2007 to $77,300 in 2010, mostly because of a decline in home equity.
The loss in household wealth was accompanied by significant job losses and cuts in public services, including education and social services, offered by states and localities as their financial balance sheets suffered crisis related losses.
U.S. citizens were arguably subject to the “orchestrated raids on the public sphere in the wake of catastrophic events” Naomi Klein has described as “disaster capitalism”[ii] as U.S. states, counties and cities shed social services and cut education spending as a result of significant declines in sales, corporate, and income tax revenues from 2008 through 2010.[iii]
Corporations and small businesses slashed jobs in 2007, 2008, and 2009, embracing lean production by reducing payrolls during the recession and by failing to create new jobs in the post-recession environment. The Pew Research Center reported in 2010 that 55 percent of Americans’ wages were affected in the forms of job layoffs, wage and hour cut backs, and unpaid furloughs. 32 percent of Americans reported unemployment during the recession.[iv]
The U.S. Commerce Department reported that transnational corporations, which account for 20 percent of U.S. jobs, reduced U.S. employment by 875,000 jobs from 1999 to 2012 in response to pressures from financial markets and shareholders.[v]
Labor utilization shrank, according to a report by Andrew Sum, Ishwar Khatiwada, and Sheila Palma of the Center for Labor Market Studies at Northeastern University, describing the contraction of the labor market at the height of the recession, between November 2007 and December 2009.[vi]
Middle-aged job seekers were often forced to accept jobs paying far less than they previously earned.[vii] The Federal mandate passed in 2012 requiring U.S. corporations to offer health care to full time employees encouraged employers to replace full time jobs with part time ones by cutting hours and eliminating full time positions.[viii]
Employment for young people ages 21 to 25 dropped from 84 percent to 72 percent from 2000 to 2012.[ix] New college graduates in the post-recession environment faced the worst job market since the 1930s. By 2015, unemployment had not recovered in 96 percent of county economies to pre-recession levels.[x]
Jobs that paid well with benefits were particularly likely to disappear during the recession. Most jobs created in the post-recession environment are part-time and low-income.[xi] The Center for Economic and Policy Research explains that the problems of poor wages, unemployment and underemployment stem from the loss of “good jobs” that pay living wages and provide health insurance:
By our definition of a good job – one that pays at least $37,000 per year, has employer-provided health insurance, and an employer-sponsored retirement plan – the share of workers with a “good job” fell from 27.4 percent in 1979 to 24.6 percent in 2010. The total share of good jobs had declined even before the Great Recession; in 2007, for example, only 25.0 percent of workers had a good job by our definition. Our estimates, which control for increases in age and education of the population, suggest that relative to 1979 the economy has lost about one-third (28 to 38 percent) of its capacity to generate good jobs.[xii]The Stanford Center on Poverty and Inequality noted in its 2014 that the U.S/ economy failed to produce enough jobs beyond the 60th month after the recession and that “full recovery from the latest recession will likely not occur absent major labor market reform and intervention.”[xiii]
Social instability has accompanied the loss of availability of stable income and benefits. Instabilities in income resulted in increased U.S. food insecurity. In 2012, one in seven Americans relied on food stamps.[xiv] By 2013, one in five Americans relied on food stamps.[xv] Food banks faced record demand. Eligibility and demand for free lunches in public schools grew, straining school lunch programs nationally.[xvi]
American children suffered from loss of parental income, growing homelessness, stressed schools, and food insecurity. The Annie E. Case Foundation reported an increase of 18 percent in child poverty from 2000 to 2009.[xvii] The Stanford Center on Poverty and Inequality observed in 2014 that the poverty rate for U.S. children was the highest in a 13 year period, beginning in 2000.[xviii] Services in many states for poor children were strained by budget cuts.
[i] Ylan Q. Mui, “Americans Saw Wealth Plummet 40 Percent from 2007 to 2010, Federal Reserve Says,” The Washington Post, June 11, 2012, accessed June 12, 2012, http://www.washingtonpost.com/business/economy/fed-americans-wealth-dropped-40-percent/2012/06/11/gJQAlIsCVV_story.html?wpisrc=nl_headlines_Tue.
[ii] Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (New York: Metropolitan Books, 2007), 4.
[iii] Paul Krugman “America Goes Dark,” The New York Times, August 8, 2010, http://www.nytimes.com/2010/08/09/opinion/09krugman.html?th&emc=th; and Rich Miller and Anthony Feld, “Economy in U.S. Slows as States Lose Federal Stimulus Funds,” Bloomberg.com, June 13, 2010, http://www.businessweek.com/news/2010-06-13/economy-in-u-s-slows-as-states-lose-federal-stimulus-funds.html.
[iv] "The Great Recession at 30 Months," Pew Research Center, June 30, 2010, accessed July 2, 2010, http://pewresearch.org/pubs/1643/recession-reactions-at-30-months-extensive-job-loss-new-frugality-lower-expectations.
[v] Howard R. Gold, "Multinationals Don’t Add US Jobs," The Arizona Republic/USA Today, September 26, 2014, B6.
[vi] Andrew Sum, Ishwar Khatiwada and Shela Palma, "Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent," Center for Labor Market Studies, Northeastern University, February 2010, 2, http://www.clms.neu.edu/publication/documents/Labor_Underutilization_Problems_of_U.pdf.
[vii] Ben Casselman, "For Middle-Aged Job Seekers, a Long Road Back," The Wall Street Journal, June 23-24, 2012, A1, A10.
[viii] Julie Jargon, Louise Radnofsky and Alexandra Berzon, "Health Law Spurs Shift in Hours," The Wall Street Journal, November 5, 2012, B1, B2.
[ix] Caroline Porter, "Millennials Face Uphill Climb," The Wall Street Journal, September 30, 2013, A8.
[x] Niraj Chokshi, “The Country Economic Recovery in 5 Maps and Charts,” The Washington Post, January 1, 2015, accessed January 2, 2015, http://www.washingtonpost.com/blogs/govbeat/wp/2015/01/12/the-county-economic-recovery-in-5-maps-and-charts/.
[xi] Ben Casselman, "Job Gap Widens in Uneven Recovery," The Wall Street Journal, November 12, 2013, A1, A2.
[xii] John Schmitt and Janelle Jones, "Where Have All the Good Jobs Gone?," Center for Economic and Policy Research, July 2012, accessed August 9, 2012, http://www.cepr.net/documents/publications/good-jobs-2012-07.pdf.
[xiii] "State of the Union: The poverty and Inequality Report 2014," Stanford Center on Poverty and Inequality, 2014, 5, http://web.stanford.edu/group/scspi/sotu/SOTU_2014_CPI.pdf.
[xiv] Jim Abrams, "Ag Dept Unveils New Steps to Stop Food Stamp Fraud," Lake Country News Sun, August 13, 2012, accessed, August 14, 2012, http://newssun.suntimes.com/news/14448564-418/ag-dept-unveils-new-steps-to-stop-food-stamp-fraud.html.
[xv] Ali Meyer, "Record 20% of Households on Food Stamps in 2013," CNS news, January 21, 2014, accessed January 22, 2014, http://cnsnews.com/news/article/ali-meyer/record-20-households-food-stamps-2013.
[xvi] Alan. Bjerga, "School Lunches Strained by Recession, Farm Panel Told, Bloomberg. com, March 4, 2010, http://www.bloomberg.com/apps/news?pid=20601103&sid=aPCZteEfTvaw&refer=u.
[xvii] Monica Davey, "Families Feel Sharp Edge of State Budget Cuts," The New York Times, September 6, 2011, accessed September 10, 2011, http://www.nytimes.com/2011/09/07/us/07states.html?_r=1&nl=todaysheadlines&emc=tha23.
[xviii] "State of the Union," Stanford Center on Poverty and Inequality.