The Progress Report:

SEPTEMBER 14, 2007

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Ali Frick, and Jeremy Richmond Contact Us | Tell-a-Friend | Archives | Permalink

ECONOMY

A Smaller Slice of the Pie

In August, the American economy suffered a loss of 4,000 jobs, the first employment decline since 2003. Despite President Bush's continued determination to paint a rosy picture of the economy over the past year, real Americans are feeling the pain of an economic downturn. The employed share of the population as a whole is now at 68.2 percent, the lowest employment figure since Dec. 2005. The August jolt shows that the summer's economic downturn may have increased the chances of sliding into a recession sometime next year. Whatever small economic gains have been seen over the last few years remain elusive to the average American worker. The job market is poor, wages remain low, and the costs of housing and health care continue to put a strain on the middle and working classes. Conservatives have tried to spin the census data, arguing that weak employment proves the need for even more tax cuts. The majority of Americans, however, know they are "baking a bigger, better pie" -- working more hours at a more productive rate -- "but ending up with smaller slices."

STAGNANT INCOME FROM FEWER JOBS: June and July witnessed a stagnant job market, and August saw the first job decline since 2003, "bringing average monthly job growth for the past three months to less than a third of what's needed simply to absorb new people entering the job market." Manufacturing employment suffered the largest monthly loss since 2003, shedding 46,000 jobs, and construction employment fell by 22,000 jobs. Even those Americans who are employed have suffered meager wages, with middle-class incomes barely rising over the last 30 years. During the same period, however, "households in the top income quintile gained 84 percent and those in the top 1 percent gained 450 percent." As one economist noted, "This is a recipe for an unjust economy. It's the reason why many of us remain unconvinced when policy elites offer us their cheerleading routine about how great the economy is doing." The inequality extends over racial lines as well. The median household income for white families was nearly 64 percent higher than that for black families in 2006, the most recent year for which data is available.

AMERICANS HIT IN THE HOUSING CRUNCH: The housing market is one of the most direct ways average Americans have felt the repercussions of the U.S. economy downturn. The summer's subprime mortgage crisis left many poorer homeowners, minorities in particular, facing foreclosure. According to the Mortgage Bankers Association, foreclosure rates on subprime loans rose to 5.52 percent in the quarter ending in June, a four-year high. At the end of August, Bush finally agreed to adopt measures Congressional leaders had been advocating to ease the housing crisis, including raising the ceiling on the amount of mortgage insurance available to those refinancing their homes. Though Democrats have pressed for much more aggressive measures to combat predatory lending schemes, such as eliminating prepayment penalties, Bush has kept his distance. "The government has a role to play, but it is limited," he said. "It's not the government's job to bail out speculators, or those who made the decision to buy a home they knew they could never afford." Minorities have been particularly hard-hit by the home loan collapse. Blacks consistently receive high-cost loans when they refinance their homes and are about twice as likely as whites to be denied credit.

'OUTRAGEOUS AND OFFENSIVE': The cost of employer-provided health insurance jumped 6.1 percent this year, well above the increase in wages and consumer prices. Premiums have risen 78 percent since 2001, more than four times the 19 percent increase in employee pay over the same period, and the number of Americans covered by employer-provided health insurance dropped almost 5 percent from 2000 to 2006. As Drew Altman, the president of the Kaiser Family Foundation, said, "Every year health insurance becomes less affordable for families and businesses." As the number of uninsured adults jumped to 47 million in 2006, the number of uninsured children rose to 8.7 million, over one in 10. Despite this sobering fact, Bush has threatened to veto the proposed renewal of the State Children's Health Insurance Program (SCHIP), which would cover five million children in addition to the seven million already in the program. The expansion would be paid for by an increase in the tobacco tax, a proposal Bush's own Cancer Panel recommends. Even conservatives are frustrated by Bush's stance on the SCHIP renewal, arguing that his actions "will reverse longstanding agreements with the states and reduce the number of children who receive health care." As Sen. Hillary Clinton (D-NY) put it, "I just think it's outrageous and offensive that this President would threaten to veto this legislation." It is hardly surprising that 64 percent of Americans disapprove of the way Bush is handling the economy.