Macomb Daily - June 9, 2019
Much has been made lately of the hot economy, a narrative driven largely by a long run of strong jobs numbers. But this enthusiastic story line is ignoring a few disturbing structural problems that suggest that the economy is not as strong as those numbers suggest. Underneath the hood, problems persist, including earnings below what families need to get by, stark inequalities in wealth and income, an increasingly jittery stock market, an affordable housing shortage, damaged fiscal accounts and slower growth on the horizon.
Wages trend up but still too low:
The tight labor market is no doubt lifting workers' wages, particularly at the bottom of the wage scale as less-advantaged workers see their bargaining position improved. However, a few good years of rising wages doesn't make up for the decades of real wage stagnation faced by many middle- and low-wage workers. The result is that for many working families, their paychecks fail to meet their basic needs.
Consider a single parent with a couple of kids who is earning the 20th-percentile wage (20 percent earn less; 80 percent earn more) and whose pay could rise to $13 per hour by the end of this year, or about $26,000 per year, pretax. Subtracting payroll taxes and adding tax credits for working parents could get her up to about $30,000. That clears the poverty line, but it doesn't pay for decent housing, child care, health care and transportation, at least not in most cities. Family budget calculators show that child care for two kids costs about $11,000 per year in Ohio, and more than twice that in New York. Add housing and health-care costs, and even middle-wage earners with children have trouble squaring their budgets with their salaries.
This too-tight breathing room between what many families earn and what it costs them to live has created a widespread sense of economic insecurity, which shows up clearly in recent analysis of economic well-being by the Federal Reserve. One-fifth of white households and a third of black and Hispanic households grade their financial conditions "just getting by" or worse. And just under half of rural households grade their local economies to be "only fair" or "poor." ...
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