New Year in America: A portrait of social misery
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By Tom Eley
WSWS
Sunday, Jan 10, 2010
The new decade finds the US working class suffering a level of
social misery not seen since the Great Depression. Unemployment,
poverty, hunger, utility cutoffs, homelessness, foreclosures and
bankruptcies have become common experiences for millions.
But
unlike in the Great Depression, when limited reforms were put in place
in response to the crisis, the Obama administration, Congress, and
state and local governments are taking no serious measures to provide
relief. On the contrary, the two parties of big business are
exacerbating the crisis through budget cuts at the state and local
level and the federal government is preparing new austerity measures.
Unemployment: At
over 10 percent, the official US jobless rate reached in October and
November was the highest since June of 1983. A broader measure of
unemployment, taking into account those who have fallen out of the
official workforce, reveals that something approaching one in five
workers is unemployed or underemployed.
The
economy has not added jobs since December 2007, and in that same time
span has lost 7.2 million jobs overall. Coupling these losses with
population growth—the economy must add about 150,000 jobs per month to
break even—the net jobs deficit in the period is well over 10.5 million.
It
is widely acknowledged that most of the jobs lost will not return for
years, if ever. Even by the optimistic forecast of the Federal Reserve
Board, the jobless rate will remain above 7 percent through 2011. Those
without jobs face long periods of unemployment, the most recent figures
showing that 38.3 percent of the unemployed have been without work for
27 weeks or longer.
Data for November show
that all 50 states have witnessed an increase in unemployment since the
end of 2008. Michigan continued to have the highest official jobless
rate at 14.7 percent. Detroit, its principal city and the longtime hub
of US auto production, had an official unemployment rate of 27 percent.
The real rate approaches 50 percent, a number in line with the worst
levels of big city unemployment during the Great Depression.
In
California, 12.3 percent of the official workforce was unemployed in
November. The most populous US state had by itself shed 617,000 jobs
over the previous year.
What remains of the US social
safety net is woefully unprepared to meet this crisis, with jobless
benefits reaching well under half of unemployed workers. In December
nearly ten million workers in the US were receiving jobless benefits,
not quite half of these in the form of extended or emergency relief.
There were some 5.6 million workers who had both exhausted their
unemployment benefits and given up looking up for work.
Those
fortunate enough to keep their jobs in 2009 saw their hours, wages and
benefits cut, even as employers drove up their productivity. In real
terms, average weekly wages fell by 1 percent last year, while worker
productivity was ratcheted up by 8.1 percent in the third quarter and
6.4 percent in the second.
Foreclosures and bankruptcies:
Increasing numbers of unemployed and financially stressed workers have
been unable to meet their mortgage payments. During the third quarter,
the number of US homes in foreclosure surpassed one million. In
October, a survey by the Mortgage Bankers Association found that about
one in ten mortgages was at least one payment behind, while 4.47
percent were in the process of foreclosure.
Most
of the recent increase in foreclosures has occurred outside of the
subprime loan market, among households that had previously qualified
for loans based on stable employment and income.
The Wall Street Journal
reported on Monday that filings for personal bankruptcy rose to 1.41
million in 2009, up by almost one third. The newspaper called the
increase “a surge largely driven by foreclosures and job losses.”
Poverty and hunger: Poverty and hunger, already on the rise in 2008 before the brunt of the economic crisis hit, have intensified.
Analysis
of the 2008 US census using criteria favored by the National Academy of
Sciences shows that 47.4 million Americans, 15.8 percent of the
population, were living below the official poverty line. The official
government tally recorded 39.8 million people in poverty in 2008, or
13.2 percent of the population. One in five US children was living in
poverty in 2008, according to the official data.
The
real poverty rate is far higher, since the income threshold set by the
government—$22,000 for a family of four—is absurdly low.
Judy Putnam, a spokesperson for the Michigan League for Human Services, discussed with the World Socialist Web Site her organization’s new study “Michigan by the Numbers: Hard Times Continue.”
According to Putnam, 22 percent of the state’s children under five are
growing up in poverty. For African American children, the figure is 45
percent, with half the children in Detroit growing up poor.
“Many
of those who would have received cash assistance in past recessions are
not getting it now,” Putnam said. “Only a third are getting cash
assistance compared with two-thirds before ‘welfare reform’ in 1996.
All of these folks who need assistance have been squeezed off the
safety net. People in Michigan are heavily dependent on food stamps
and, if they qualify, for unemployment benefits. But unlike previous
recessions only the very, very poor qualify for cash assistance.”
The
evidence of widespread hunger in the US is unmistakable. In December,
the National Conference of Mayors released a study of 27 major cities
conducted between October 2008 and September 2009. The report revealed
the largest increase in those seeking food assistance since 1991.
In
November, the United States Department of Agriculture reported that a
record 49.1 million Americans, one sixth of the population, lacked
dependable access to adequate food in 2008.
Also
in November, Feeding America, a national food assistance organization,
released details of an economic impact survey of some of its 63,000
member food charities. It found that between summer 2008 and summer
2009, demand for food charity rose by over 30 percent nationally.
Many of those reliant on food assistance have no other source of income, a new analysis of state data by the New York Times
reveals. Six million Americans, or 1 in 50, report no income beyond
what they receive in food stamps through the joint federal-state
Supplemental Nutrition Assistance Program (SNAP).
According to a recent study published in the Archives of Pediatrics and Adolescent Medicine,
about half of US children will rely on food stamps at some point during
their childhood. The figure is 90 percent for black children.
Homelessness and utility cutoffs:
With a bitter cold snap settling over much of the nation last week,
those suffering homelessness and utility cutoffs found themselves in
dangerous conditions.
The caseload of the
government’s Low-Income Home Energy Assistance Program (LIHEAP)
increased by 25 percent in 2009, and is projected to increase by
another 20 percent in 2010.
Among the 27 major cities surveyed
by the US Conference of Mayors report, 19 reported an increase in
family homelessness between the autumns of 2008 and 2009. The largest
increases were in Dallas (20 percent), Boston and Kansas City (22
percent each), and Charleston (41 percent).
Across
the US, shantytowns reminiscent of the “Hoovervilles” of the 1930s have
emerged. People in these encampments live in tents or shacks built of
old wood, scrap metal, cardboard and other waste, with no running
water, electricity, plumbing, or garbage removal.
An
indelible scene took place in Detroit on October 5, when an estimated
50,000 city residents formed a long line stretching around the Cobo
Hall convention center after hearing rumors that the city was
dispensing assistance for utility bills and housing payments. City
officials said only a tiny fraction of those seeking assistance would
receive help.
Conditions of the youth:
The economic crisis has exacted perhaps its greatest toll on the youth.
All of the data related to hunger, homelessness and unemployment show
that young people are disproportionately affected.
A
study by the Pew Research Center published in November shows that one
in ten adults under the age of 35 has moved back to his parents’ home
as a result of the recession. Overall, half of those aged 18 to 24 now
live with their parents. Only about half of young people have jobs, the
lowest figure on record dating back to 1948.
A
recent study showed that less than half of students graduate on
schedule after signing up for a two- or four-year college program, and
that most who quit or delay their studies do so on account of economic
hardship.
Those who do graduate enter the
worst market for degree holders in 30 years, and with record levels of
student debt. The average college graduate in 2008 carried a burden of
$23,000 in student loan debt, while the unemployment rate for college
graduates aged 20 to 24 reached 10.6 percent in the third quarter.
Meanwhile,
one in ten male high school dropouts, ages 16 to 24, is currently
either in prison or juvenile detention. Among black male high school
dropouts, more than a fifth are incarcerated, a study by researchers at
Northeastern University shows. For the population as a whole, the
Justice Department recently reported that 1 in 31 US adults is behind
bars or on probation or parole.
The response of the government:
The response of state and local governments to this social catastrophe
is drastic reductions in social services and job cuts, under conditions
where the Obama administration refuses to provide emergency aid to help
cover budget deficits.
The total deficit of
the states from 2009 to 2012 is now estimated at $460 billion, a figure
that is likely to grow as more state capitals adjust estimates for
rapidly declining tax revenue.
”Anything and
everything’s on the table,” said Todd Haggerty, a policy associate with
the National Conference of State Legislators. States have “cut the fat,
cut the muscle and are now cutting bone. The easy decisions have
already been made.”
The fiscal situation
confronting the states is expected to deteriorate sharply next year
when funds from the federal economic stimulus package, the American
Recovery and Reinvestment Act, are exhausted.
Like the
states, the federal government faces a fiscal catastrophe, with
cumulative US budget deficits expected to top $10 trillion by the end
of the new decade, according to the Obama administration’s rather
optimistic forecast. Cuts in spending must be put in place, in part, to
convince creditors, especially China, that the US “can get its finances
back in order,” the Wall Street Journal wrote Monday in a feature on the annual gathering of the American Economic Association.
The
response of the Obama administration is to call for an unprecedented
program of fiscal austerity and sharp cuts in social spending, to be
announced in his State of the Union address early next month and
outlined in the new federal budget proposal shortly thereafter. Obama’s
repeated insistence on the need for Americans to reduce their
consumption—even as trillions more are allocated for the banks and for
ever-expanding wars in Central Asia and the Middle East—is code
language for a deepening of the assault on the working class.
The
discussion of possible deficit reduction measures includes regressive
taxes such as a national sales tax and sweeping cuts in entitlement
programs on which millions of people rely, such as Medicare and Social
Security.
Such measures are on top of the administration’s
health care overhaul, which will reduce costs for corporations and the
government while slashing benefits and increasing out-of-pocket
expenses for millions of working people.
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