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Income Inequality — Why Workers Aren’t Getting Ahead

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By Windriven

Recovery from the Great Recession has been slow and uneven. Six years in and U3 unemployment is finally down to 5.4%, U6 has dipped below 11%. Why are there so few voices claiming victory and why do their claims ring a bit hollow?

This chart from the Federal Reserve provides a clue. It plots labor’s share – salary and wages – of Gross Domestic Product.

wages vs GDP

In the postwar years, the American economy was doing well. As the chart above shows, American workers’ share of GDP taken as wages and salaries was about 50% in those years. That began to change in the early 70s and today the share of GDP taken as wages and salaries is less than 43%. Productivity continued to rise. GDP continued to grow. But workers were getting a progressively smaller piece of [Read more…] about Income Inequality — Why Workers Aren’t Getting Ahead

One in Seven in Poverty

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September 2010

The Census Bureau reported,  in its annual report for 2009 that the overall poverty rate climbed to 14.3 percent or 43.6 million people. The poverty rate climbed from 13.2 percent, or 39.8 million, in 2008. Another way to look at this is one out of every seven working-age Americans (18 – 65) is now classified as being in poverty. This is the highest level for this rating since the 1960s.

What exactly is the poverty level for the US? According to an official government calculation that includes only cash income before tax deductions, the poverty level in 2009 stood at $21,954. This amount excludes capital gains or accumulated wealth such as home ownership. Although this figure takes into account the effects of some of the stimulus programs such as unemployment benefits or jobs created or saved by government spending, it does not factor in non-cash government aid such as tax credits and food stamps.

Beginning next year the US government plans to publish new supplemental poverty figures that are expected to show even higher numbers of people in poverty than previously known.

The new figures will include the rising costs of medical care, transportation and child care.

Another figure that has risen dramatically is the number of uninsured. Americans without health coverage rose from 15.4 percent to 16.7 percent, or 50.7 million people.