“What we are witnessing,” says Bill Gross of the bond manager Pimco, “is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August.”
The percentage of poor Americans who are living in severe poverty has reached a 32-year high, millions of working Americans are falling closer to the poverty line and the gulf between the nation's "haves" and "have-nots" continues to widen.A McClatchy Newspapers analysis of 2005 census figures, the latest available, found that nearly 16 million Americans are living in deep or severe poverty. A family of four with two children and an annual income of less than $9,903 - half the federal poverty line - was considered severely poor in 2005. So were individuals who made less than $5,080 a year.
The McClatchy analysis found that the number of severely poor Americans grew by 26 percent from 2000 to 2005. That's 56 percent faster than the overall poverty population grew in the same period. McClatchy's review also found statistically significant increases in the percentage of the population in severe poverty in 65 of 215 large U.S. counties, and similar increases in 28 states. The review also suggested that the rise in severely poor residents isn't confined to large urban counties but extends to suburban and rural areas.
The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years.
These and other factors have helped push 43 percent of the nation's 37 million poor people into deep poverty - the highest rate since at least 1975.
The share of poor Americans in deep poverty has climbed slowly but steadily over the last three decades. But since 2000, the number of severely poor has grown "more than any other segment of the population," according to a recent study in the American Journal of Preventive Medicine.
"There is a balance that must be struck,” Caterpillar group president Douglas Oberhelman told The New York Times, “between being competitive and being middle class.”That is from a February 26, 2006 story in the New York Times (I blogged it here and here).
Bush is touting Peoria-based Caterpillar as an example of how his administration's trade agreements and tax breaks can boost global sales and create jobs for U.S. workers.What he is really saying is that by selling out real middle-class supporting jobs, Caterpillar can:
... net about $9 billion in sales outside of North America in 2006, when revenues of about $41.5 billion netted profits that topped $3.5 billion -- both company records.Where is the extra profit coming from?
Highly profitable Caterpillar Tractor, for instance, now offers its new hires just $22 an hour in wages and benefits, half what it pays its more senior employees.and:
After more than a decade of failed strikes and job actions — mainly in Illinois, where Caterpillar has its biggest factories — the U.A.W. reluctantly accepted a two-tier contract that provides for significantly lower wages and benefits for newly hired employees. The new second tier is as much as $20 an hour below the cost of employing Mr. Doty, 50, and a dwindling band of other veterans.Bush is in Peoria today... Celebrating that community winning the race to the bottom, and the end of the American Middle Class.
Greg Baise, president and CEO of the Illinois Manufacturers Association, disagreed, calling Caterpillar the perfect stop ahead of Bush's economic address.
“Cat has had a very strong run the last few years. If there was a symbol of industrial might in America, I think they represent that as much as anyone,” Baise said.
