Yes, the Economy is Growing, But Mostly Just for the Wealthy
A new analysis by the Associated Press shows that rich Americans aren’t just taking home more money than regular people — they’re also vastly less likely to be unemployed than the poorest families. While people making $150,000 or more a year have an unemployment rate of only 3.2%, families earning less than $20,000 a year have unemployment rates of over 21%. To get a sense of historical perspective, that’s the same level of unemployment Americans last saw during the Great Depression.
Part of the problem is that middle-income workers have been pushed into lower-wage jobs due to the poor economy, forcing some lower-income workers with fewer skills out of the workforce entirely. As a result, 15% of the U.S. population is stuck in poverty with little hope of improvement: 46.2 million people.
A recent report from the Economic Policy Institute found that middle income jobs were the majority of the positions cut during the recession at 60%, but that equivalent jobs have failed to reappear now that the economy is in recovery. In fact, new middle income jobs only account for a measly 22% of recent growth. Low wage jobs, on the other hand, have made up 58% of recovery growth.
Employment isn’t the only area where the rich are far ahead of middle and lower-income Americans. They’re also making far more money than ever before, while everyone else is making less. The EPI study found that the majority of new jobs added to the economy following the recession pay less than $13.83 an hour. Meanwhile, the top 10% of earners took home a full half of all income generated in 2012 — the highest amount ever recorded since the data was first collected a century ago.
Unfortunately, matters probably won’t improve any time soon — as Harvard economist Richard Freeman told the AP, “If the economy were growing enough or unions were stronger, it would be possible for the less educated to do better and for the lower income to improve. But in our current world, where we are still adjusting to globalization, that is not very likely to happen.”
Photo credit: Thinkstock