America is at the Tipping Point
America is at the Tipping Point
When Change to Win’s first American Dream survey was released in September 2006 and showed that the vast majority of workers in America believe that their children will be no better off or worse off than they are some questioned our findings – citing a growing economy as evidence that our numbers could not be right.
Since that time other surveys have reflected our findings and new data from the IRS is now available to tell us why. The bottom line, as the New York Times reports today, is that our generation is the first generation since World War II to experience a five year decline in average incomes.
The average income is 2005 was $55,238, still nearly 1 percent less than the $55,714 in 2000, after adjusting for inflation.
These numbers are startling when you consider that the economy has grown for most of that period. In only one other year since 1945 did average income decline – this despite the fact that we faced major recessions in the mid-1970s and the early 1980s.
These numbers are even more startling when you consider they are averages – means – not medians. In fact,
Nearly half of Americans reported incomes of less than $30,000, and two thirds make less than $50,000.
The growth in total incomes was concentrated among those making more than $1 million. The number of such taxpayers grew by more than 26 percent, to 303,817 in 2005, from 239,685 in 2000.
These individuals, who constituted less than a quarter of 1 percent of all taxpayers reaped almost 47 percent of the total income gains in 2005, compared with 2000.
Two thirds of the American economy is based on consumer spending. The economy has grown as real wages have were still below levels achieved in the mid-1970s on the basis of increased working hours per household. Now that families and households are maxed out in terms of working hours, the reality of declining real wages is showing up in declining real household income. For the last five years, the driving force of consumer spending has been the housing bubble created by an avalanche of lending that has now come home to roost.
America is in a new place. As neighbors are thrown out of their homes and into the streets on a level not seen since the depression, and as the reality of the new economy sets in and hardens, we are entering a new era. Tepid policy prescriptions or minor rejiggering of interest rates by the federal reserve will not turn the economy or the outlook of America’s workers around. The American people are ready for radical change.
Greg Tarpinian is the Executive Director of Change to Win.
Link to article at Change To Win