Oct. 2, 2006 – Government data suggests that for most Americans, there has been no economic recovery, and financial security is fast becoming a fantasy, according to recent analyses by public-interest groups.
In a study released last week, economists with the liberal Center for American Progress (CAP) and the Service Employees International Union (SEIU) reported that pay for middle-income Americans has stagnated over the past fifteen years â€“ a period during which the cost of necessary goods and services has risen. This combination has led to a decrease in savings that puts an ever-growing chunk of US workers at risk of falling into poverty should medical or other emergencies arise.
In inflation-adjusted dollars, between 2000 and 2005, family income for the middle fifth of households fell over 3 percentage points, or about $1,570, while the lowest-income tier of households saw declines of 7.5 percentage points. Meanwhile, the cost of food, housing, transportation and health care have grown, according to Labor Department statistics studied in the report.
Most middle-income families, defined in the study as those making between $18,500 and $88,030 in 2004 dollars, are in fact unable to afford emergencies of any type. Fewer than one in five such families have even three monthsâ€™ worth of savings to handle economic calamities. That proportion is down more than 10 percentage points since 2001.
More specifically, the study found, just over 22 percent of the storied American "middle class" is financially capable of paying for medical emergencies, a drop of 12.5 percentage points from 2001. Similarly, only 29 percent of such families are able to weather an unemployment bout, down by a tenth since the recession began.
In response to growing expenses and slipping incomes, families have turned to credit. According to the CAP-SEIU report, in the first quarter of 2006, the average family incurred debt that was 26 percent above their income.
For those who find they are unable to keep up, the alternative has meanwhile grown grim.
There are nearly 40 million impoverished people in the nation, according to federal definitions, and the number has been rising, according to Census Bureau statistics reviewed by The NewStandard. The poverty rate has climbed from a recent low of 11.3 percent in 2000 to 12.6 percent in 2005.
Of the poorest US residents, over 40 percent have incomes below half the official poverty line of $15,577 for a three-person family. Their access to health insurance continues to decline, and the gap in wealth between the countryâ€™s best- and least-well-off is widening, the progressive Center for Budget and Policy Priorities reported in August.