The ‘New Poor’ May Never Return to Middle-Class Lives
February 21, 2010
(ChattahBox)—An excellent piece by Peter Goodman in The New York Times explores the plight of millions of Americans ripped from their middle-class lives into joblessness and poverty. And according to all available economic indicators, many of the unemployed may remain jobless for many years, as the slow recovery from the deep recession is producing very few new jobs. Combine this dire prediction with a crumbling safety net and and a changed economy that actually produces very little, with major companies more concerned about maintaining shareholder value, American is facing a “crisis of historic proportions.”
With the enactment of welfare reform in the 1990s severely curtailing cash payments, there are less social services available to people than there were in the last big recession in the 1980s. And many unemployed are about to lose their unemployment checks: “Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.”
What’s even more alarming is the ongoing trend of a reduction of job growth in our country:
“During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan said. “There is no indication that this pattern is about to change.”
And the tightening credit for small businesses; the weakening of the automobile and home-building industry makes this recession even worse, as those industries traditionally boost job recovery:
“Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn. At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.”
The millions of “new poor” are here to stay for many years. The “new poor” are “people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.”
American is certainly facing a grim future, unless investments are made in our future.
See The New York Times for more.