Over three-quarters of Americans are living paycheck to paycheck, and about half of this group has reported “material hardship” (running out of food [or worrying about running out of food], not being able to afford a place to live or medical treatment, or having utilities turned off). Worse yet, they don’t have savings to handle the future or crises that arise, whether plumbing, car repairs, or retirement. And a Princeton study concluded that a stunning 94 percent of the nine million new jobs created in the past decade were temporary or contract-based, rather than traditional full-time positions.
By Paul Buchheit on Common Dreams, 16 Oct 2017
The Definitions of Poverty are Way out of Date
The poverty threshold is still based on a formula from the 1960s, when food expenses were a much greater part of the family budget. It hasn’t kept up with other major expenses. Since 1980, food costs have gone up by 100%, housing 250%, health care 500%, and college tuition 1,000%.
The Congressional Research Service (CRS) says, “If the same basic methodology developed in the early 1960s was applied today, the poverty thresholds would be over three times higher than the current thresholds.” Three times higher!
The median household income in the U.S. in 2016 was $59,039. The Economic Policy Institute’s 2015 Family Budget Calculator determined that the median budget for a two-parent, two-child family is $63,741. As CRS concluded, that’s about three times higher than the current poverty threshold.
In 2014, according to Bureau of Labor Statistics data, median household expenses were $36,800, against income of about $54,000. But that includes very little for wealth-building investments, such as short- and long-term savings, college education, and life insurance. After accounting for annual outlays for these essential and/or typical family expenses, the median household in the lower third was $2,300 in debt. For the middle third of households, which reaches well into the “middle class,” only $6,000 remained for wealth-building and other discretionary expenses. That $6,000 dissipates quickly. Says Pew Research: “Because income is measured before taxes, some families will have had even less slack in their budgets than this figure implies.”
Expenses Beyond the Essentials: Getting Higher & Higher
In the past 20 years median household expenses increased by 25 to 30 percent, while wages have stagnated. As a result, 3 out of 5 Americans spend more than they earn, not on frivolous extras, but on essential needs.
Housing, in particular, is crushing Americans. Nearly HALF of renters are cost-burdened, paying 30 or more of their income to their landlords. Renters in the poorest third of American households spend nearly HALF OF THEIR INCOME on housing.
Child care is another essential but overwhelming cost. The median American household in most states would have to spend over 10 percent of its income just to send a 4-year-old to full-time preschool. Children bear the brunt of a breakdown in society. The Center for Children in Poverty confirms that nearly half of our nation’s children live “dangerously” close to the poverty line.
Numerous other expenses are conveniently overlooked by the poverty skeptics: taxes; medical emergencies; car repairs; plumbing problems; appliance breakdowns; phone costs; work expenses, especially for members of the gig economy. As economist Constantin Gurdgiev puts it: “Quite frankly, it is idiotic to assume that gross median income matters to anyone. What matters is after-tax income net of the cost of necessities required to earn that income.”
Americans Are Working Hard…Just to Survive
People are working more hours for decreasing wages and benefits. A Princeton study concluded that a stunning 94 percent of the nine million new jobs created in the past decade were temporary or contract-based, rather than traditional full-time positions.
It’s estimated that over three-quarters of Americans are living paycheck to paycheck, and about half of this group has reported “material hardship” (running out of food [or worrying about running out of food], not being able to afford a place to live or medical treatment, or having utilities turned off). Worse yet, most people who survive paycheck to paycheck are ill-prepared for the future. Only a third of workers are putting money into a 401(k). The median working-age couple has saved only $5,000 for retirement, and almost 70 percent of Americans have less than $1,000 saved.
The American Dream, Fading Away for Half of America
We still have our houses and cars, right? Maybe not. The poorest 50% of American adults had an average net worth (home and financial assets minus debt) of just $7,500 in 2016. A year earlier it was $9,000, but the richest 1% took it away, gaining an average of $1.5 million in that single year.
A revolution has to come. A peaceful revolution, ideally, toward a Guaranteed Income for everyone, paid for by a financial transaction tax and the removal of outlandish tax subsidies for the wealthy. Too many Americans have been cheated out of opportunities to share in our nation’s prosperity. Too many remain in poverty, or have fallen into poverty, or are beginning to experience its frightening symptoms.
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License
Paul Buchheit is a college teacher, an active member of US Uncut Chicago. His latest book is, Disposable Americans: Extreme Capitalism and the Case for a Guaranteed Income. He is also founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of “American Wars: Illusions and Realities” (Clarity Press). He can be reached at paul [at] UsAgainstGreed [dot] org.
With the GOP’s safety net-shredding budget blueprint headed for a crucial vote in the Senate this week, Sen. Bernie Sanders (I-Vt.) blasted his Republican colleagues’ proposals in a Guardian op-ed Monday as little more than a “gift to billionaires” made possible by doing “incalculable harm to tens of millions of working families, our kids, the sick, the elderly, and the poor.”
“We have a corrupt campaign finance system that enables multi-billionaires, along with some of the most powerful CEOs in America, to contribute many hundreds of millions of dollars to elect Republican candidates to represent their views.”
—Sen. Bernie Sanders“The Republican budget, which will likely be debated on the floor of the Senate this week, is the Robin Hood principle in reverse,” Sanders writes. “It takes from those in need and gives to those who are already living in incredible opulence.”
As Common Dreams has reported, despite the GOP’s and the Trump administration’s best efforts to portray their budget and tax plan as pro-middle class, non-partisan analyses have laid bare the fact that their proposals amount to an enormous boon to the wealthiest Americans.
The independent Tax Policy Center found last month that by 2027, 80 percent of the Trump-GOP tax cuts will be enjoyed by the top one percent.
To clear up budget space for this reward to the rich, Republicans are preparing to inflict “massive cuts [to] programs that working class Americans desperately need,” Sanders notes.
“This budget cuts Medicaid by more than $1 trillion over 10 years—which would throw some 15 million Americans off of the health insurance they currently have,” Sanders adds. “Further, this budget does what the Republicans have not yet attempted to do in their previous healthcare legislation and that is to make a $473 billion cut to Medicare, despite Trump’s campaign promises not to cut these programs.”
To the question of why the GOP would so severely slash crucial safety net programs and deliver massive tax cuts to the wealthy—moves recent polls have found are extremely unpopular among vast majority of the American public—Sanders responds: “follow the money.”
“Today, we have a corrupt campaign finance system that enables multi-billionaires, along with some of the most powerful CEOs in America, to contribute many hundreds of millions of dollars to elect Republican candidates to represent their views,” Sanders writes. “As a result, the top one percent has been able to rig the political system to favor them at the expense of virtually everyone else.”
Thanks to this system, Sanders argues, most Americans are subjected to devastating austerity while the rich and politically influential—like the Koch brothers and the Walton family—continue to get richer, decade after decade.
“At a time when the middle class is shrinking and over 40 million Americans are living in poverty, this budget must be defeated and replaced with a plan that reflects the needs of the working families of our country,” Sanders concluded, “not just the wealthy, the powerful and large campaign contributors.”
House Republicans approved their own budget blueprint, which largely reflects the priorities of their Senate allies, earlier this month.
If the Senate version—which allows for $1.5 trillion in tax cuts and over $5 trillion in spending cuts—is approved later this week, the path will be paved for Republicans to “fast-track” their tax legislation without needing any Democratic support.
This budget says that if you are the second-wealthiest family in America, the Koch brothers, you will see a tax break of up to $33bn. But if you are a working-class student trying to figure out how you could possibly afford college, your dream of a college education could evaporate along with 8 million other students because of more than $100bn in cuts to Pell Grants and other student financial assistance programs.
This budget gives members of the Trump family a tax cut of up to $4bn, but if you are a low-income pregnant woman you and over 1.2 million new moms, babies, and toddlers may not be able to get the nutrition you need thanks to a $6.5bn cut to the Women, Infants, and Children (WIC) program.
What is alarming is that despite this incredible giveaway for the billionaire class, the Koch Brothers and their network say that it’s not enough.
When David Koch ran for vice-president under the Libertarian party in 1980, he advocated not just to cut Medicare and Medicaid, he wanted to abolish these programs. He didn’t just want to cut taxes for the wealthy he wanted to eliminate all forms of taxation.
At a time when the middle class is shrinking and over 40 million Americans are living in poverty, this budget must be defeated and replaced with a plan that reflects the needs of the working families of our country, not just the wealthy, the powerful and large campaign contributors.