The United States in the World: Making Sense of the Past Forty Years (1981-2023)-Part 4

The United States in the World:  Making Sense of the Past Forty Years (1981-2023)-Part 4

— Kim Scipes

 

NOTE TO READER:  This is the fourth part of a five-part article.  It follows the first section on “Neo-liberal Economics,” and is part of explaining essential concepts of this study plus elaborating on how they interact.

 

NEO-LIBERAL ECONOMICS (continued from preceding section)

What has been presented so far, regarding changes in income distribution, has been at the group level within the US social order; in this case, quintile by quintile.  It is time now to see how this has affected society overall.

Sociologists and economists use a number called the Gini index to measure inequality.  Family income data has been used so far, and we will continue using it.  A Gini index is fairly simple to use.  It measures inequality in a society.  A Gini index is generally reported in a range between 0.000 and 1.000, and is usually written in thousandths, just like a winning percentage mark:  three digits after the decimal.  And the higher the Gini score, the greater the inequality.

Looking at the Gini index, we can see two periods since 1947, when the US Government began computing the Gini index for the country.  From 1947-1968, with yearly change greater or smaller, the trend is downward, indicating reduced inequality:  from .376 in 1947 to .378 in 1950, but then downward to .348 in 1968.  So, again, over the first period, the trend is downward.

What has happened since then?  From the low point in 1968 of .348, the trend has been upward (rising inequality).  In 1982, the Gini index hit .380, which was higher than any single year between 1947-1968, and the US has never gone below .380 since then.  By 1992, it hit .403, and we’ve never gone back below .400.  In 2001, the US hit .435.  But the score for 2005 has only recently been published:  .440.[1] So, the trend is getting worse, and with the policies established under George W. Bush, I see them only continuing to increase in the forthcoming period.  [And by the way, this increasing trend has continued under both the Republicans and the Democrats, but since the Republicans have controlled the presidency for 18 of the last 26 years (since 1981), they get most of the credit—but let’s not forget that the Democrats have controlled Congress across many of those years, so they, too, have been an equal opportunity destroyer!]

However, one more question must be asked:  how does this income inequality in the US compare to other countries around the world?  Is the level of income inequality comparable to other “developed” societies, or is it comparable to “developing” countries?

We must turn to the US Central Intelligence Agency (CIA) for our data.  The CIA computes Gini scores for family income on most of the countries around the world, and the last time checked in 2007 (August 1), they had data on 122 countries on their web page and these numbers had last been updated on July 19, 2007 (US Central Intelligence Agency, 2007, “The World Factbook.  Field Listing—Distribution of Family Income-Gini index.”  Updated as of July 19, 2007.  No longer available on-line.)  With each country listed, there is a Gini score provided.  Now, the CIA doesn’t compute Gini scores yearly, but they give the last year it was computed, so these are not exactly equivalent, but they are suggestive enough to use.  However, when they do assemble these Gini scores in one place, they list them alphabetically, which is not of much comparative use (US Central Intelligence Agency, 2007).

However, the World Bank categorizes countries, which means they can be compared within category and across categories.  The World Bank, which does not provide Gini scores, puts 208 countries into one of four categories based on Gross National Income per capita—that’s total value of goods and services sold in the market in a year, divided by population size.  This is a useful statistic, because it allows us to compare societies with economies of vastly different sizes:  per capita income removes the size differences between countries.

The World Bank locates each country into one of four categories:  lower income, lower middle income, upper middle income, and high income (World Bank, 2007a, “Country Classification.”  No longer available on-line.)  Basically, those in the lower three categories are “developing” or what we used to call “third world” countries, while the high income countries are all of the so-called developed countries.

The countries listed by the CIA with their respective Gini scores were placed into the specific World Bank categories in which the World Bank had previously located them (World Bank, 2007b, 2007b.  “Country Groups.”  No longer available on-line.)  Once grouped in their categories, median Gini scores were computed for each group.   When trying to get one number to represent a group of numbers, median is considered more accurate than an average, so the median was used, which means half of the scores are higher, half are lower—in other words, the data is at the 50^th percentile for each category.

The Gini score for countries, by Gross National Income per capita, categorized by the World Bank: 

 

Figure 8:  Median Gini Scores by World Bank income categories (countries selected by US Central Intelligence Agency were placed in categories developed by the World Bank) and compared to 2004 US Gini score as calculated by US Central Intelligence Agency (CIA)

 

Income category	Median Gini score	Gini score, US (2004)
Low income countries (less than $875/person/year)	.406	.450
Lower-middle income countries (between $876-3,465/person/year)	.414	.450
Upper-middle income countries (between $3,466-10,725/person/year	.370	.450
Upper-income countries (over $10,726/person/year	.316	.450

 

As can be seen, with the (CIA-calculated) Gini score of .450, the US family income is more unequal than the medians for each category, and is more unequal than some of the poorest countries on earth, such as Bangladesh (.318—calculated in 2000), Cambodia (.400, 2004 est.), Laos (.370-1997), Mozambique (.396, 1996-97), Uganda (.430-1999) and Vietnam (.361, 1998).  This same finding also holds true using the more conservative Census Bureau-calculated Gini score of .440.[2]

Thus, the US has not only become more unequal over the 40 years, as has been demonstrated above, but has attained a level of inequality that is much more comparable to those of developing countries in general and, in fact, is more unequal today than some of the poorest countries on Earth!  There is nothing suggesting that this increasing inequality will lessen anytime soon.  And since this increasing income inequality has taken place under the leadership of both major political parties, there is nothing on the horizon that suggests either will resolutely address this issue in the foreseeable future regardless of campaign promises made.

 However, to move beyond discussion of whether the Democrats or Republicans are likely to address these and related issues, some consideration of governmental economic policies is required.  Thus, any president will be constrained by decisions made by previous administrations, as well as by the ideological blinders worn by those chosen to serve at the top levels of an administration.[3]

In short, for about 30 years (1982-2011), there was not a great deal of visible protest in the United States, as implementation of the neo-liberal program along with creation of an individualist culture had a debilitating effect on social movements and other political projects, as they were meant to do.

The economic situation in the United States has been bad and it has taken a long time for working people’s economic situation to improve even to the extent it has.  Obviously, the 2008-09 Great Recession was a disaster for most working people in this country.

We can see this by examining the economic situation circa 2013.[4]  The US economy for workers was in bad shape by 2007, prior to the onset of the Great Recession (see above for details; see also Greenhouse, 2008, The Big Squeeze: Tough Times for the American Worker. New
York: Alfred A. Knopf.). Subsequently, over 8.7 million jobs were lost since the Great Recession, between late 2007-mid 2009 (Stephanie Hugie Barello, 2014, “US Employment from 2007-2009 Recession Through 2022.” Monthly Labor Review, October.  On-line at https://www.jstor.org/stable/10.2.307/monthlylaborrev.2014.10.025), and American median income tumbled down 8.9% since 1999, the peak year since World War II; and median income for men and women de­clined 2.5% from 2010 to 2011 (Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, 2012, “Income, Poverty and Health Insurance Coverage in the United States: 2011.” US Census Bureau, Current Population Reports, P60-143, September: 5.  Washington, DC: US Government Printing Office.  Original article no longer available on–line, but for press release and summary, https://www.census.gov/newsroom/releases/archives/income_wealth/cb12-172.html.

Writing in late 2010, David Leonhardt of the New York Times wrote:

Right now, the estimate is that 9.4 million jobs would need to be added imme­diately to get the jobless rate down to 6%, which some economists are calling “full employment.” That used to be around 4%, so these are skewed estimates. Nonetheless, the estimates are this: if the economy provided 300,000 jobs a month, we wouldn’t end the job shortfall until the middle of 2014. (In other words, that would get us down to 6% unemployment.) If the economy grew at 250,000 jobs a month, which was the pace of the mid-1990s during the longest expansion of the economy since World War II, we wouldn’t end the job shortfall under early 2016. And if the economy provided 200,000 jobs a month, the job shortfall wouldn’t end until early 2020. (Leonhardt, 2010 “In the Rearview, A Year that Fizzled.” New York Times, December 29: B-1.  On-line at https://www.nytimes.com/2010/12/29/business/economy/29leonhardt.html.)

 

How were we actually doing? The title of a front page New York Times article on January 8, 2011, by Michael Powell and Sewell Chan suggested the answer: “Slow Job Growth Dims Expectation of Early Revival: Unemploy­ment rate is 9.4%—Recovery Could Require Another 4 or 5 Years, Fed’s Chief Says.” These reporters noted that in December 2010, only 103,000 jobs were added, unemployment was expected to remain over eight percent throughout the rest of Obama’s first term, and the so-called “real” unemploy­ment rate—which includes workers who are discouraged and have given looking for work, or who are working only part time when they seek full-time work—stood at 16.7 percent. Further, they quoted one analyst saying, “We are seeing evidence of structural employment among those in the prime, higher-earning 35- to 44-year old demographic where unemployment actually increased in December,” and they reported an estimate that it would take until 2037 to regain the number of jobs lost during the great recession, which is what they’re calling this crisis since 2007 (Powell and Chan, 2011, “Slow Job Growth Dims Expectations of Early Revival: Unemployment rate is 9.4%–Recovery Could Require Another 4 or 5 Years, Fed’s Chief Says.” New York Times, January 18: A-1. On-line at https://www.nytimes.com/2011/01/08/business/economy/08jobs.html).

So far—as I wrote in mid-2013—things have worked out somewhat better than this, although not by much. Only 165,000 jobs were added in July 2013, and the unemployment rate was at 7.4 percent, only a little below the 7.8 per­cent level at which it had been between September and December 2012, and the lowest it’s been since 2008. A number of Americans had simply dropped out of the labor market, making things look better than they really were: “For every 100 American adults, 63 had jobs before the recession; now, only 59 do.”

The unemployment rate is falling nonetheless because it only counts people actively seeking work. And since the recession, a growing number of Americans are not even trying to find jobs. Some have given up; others appear to be avoid­ing the labor market by staying in school or at home (New York Times, 2013, “Highlights of the July Unemployment Report.” August 3: A-3).

 

Along with the jobs situation, poverty was increasing. The national pov­erty rate—at a terribly insufficient level that is approximately half of what is needed for long-term survival[5]—jumped from 13.2 percent in 2008 to 15 percent in 2011, while the numbers of people increased across the same years from 39.6 million to 46.2 million, the highest since the government began gathering data in 1959 (DeNavas-Walt, Proctor, and Smith, 2012: 13).

Poverty had increased when we examined the experiences of the different racial and ethnic groupings, too. Poverty among whites grew from 8.6 percent in 2008 to 9.8 percent in 2011, while the Black impoverishment rate jumped from 24.7 percent to 27.6 percent; Latino impoverishment increased from 23.2 percent to 25.3 percent in 2011; while Asian impoverishment remained ap­proximately stable around 12.5 percent.[6] 

Poverty for children under 18 also worsened: from 19 percent in 2008 to 21.9 percent in 2011 (DeNavas-Walt, Proctor, and Smith, 2012: 13). This is not surprising, as a 2010 report by researchers at the National Center for Children in Poverty stated, “Children represent 25 percent of the population. Yet, they comprise 36 percent of all the people in poverty. Among children, 42 percent live in low-income families [defined as below 200 percent of the poverty line-KS], and of those, 25 percent live in poor families [below the poverty line-KS]” (Michelle Chau, Kalyani Thampi, and Vanessa R. Wight, 2010. “Basic Facts about Low-income Children, 2009.” National Center for Children in Poverty, Mailman School of Public Health, Columbia University, New York: October.  On-line at https://www.nccp.org/publications/pub_975.html.)

  Writing in the New York Times, Charles M. Blow noted, “The number of children living in poverty has risen 33 percent since 2000,” while the child population only increased about three percent during the same time. Further, he reports that, “according to a 2007 UNICEF report on child poverty, the US ranked last among 24 wealthy nations” (Charles Blow, 2010, “Suffer the Little Children.” New York Times, December 24.  On-line at https://www.nytimes.com/2010/12/25/opinion/25blow.html). As Paul Krugman wrote in the New York Times, “neuroscientists have found that ‘many children growing up in very poor families with low social status experience unhealthy levels of stress hormones, which impair their neural development.’ The effect is to impair language development and memory for the rest of a child’s life” (Paul Krugman, 2008, “Poverty is Poison.” New York Times, February 18.  On-line at https://www.nytimes.com/2008/02/18/opinion/18krugman.html). In plain language: poverty poisons children’s brains.

Tragically, of those living below the poverty line, 44 percent of all people in poverty lived at half of the official poverty line or lower; that was 6.6 percent of the national population, increasing from 17.1 million in 2008 to 20.4 mil­lion in 2011. Altogether, 34.3 percent of all Americans lived below 200 per­cent of the poverty threshold (DeNavas-Walt, Proctor, and Smith, 2012: 17).[7]

 What was causing this social devastation?  With the adoption of a neo-liberal economic program in desperate response to this intensifying global competition and threat to the US Empire, Reagan and his successors accelerated their attacks on the unions and working people in general. Corporations that employed many workers (i.e., were “labor intensive”) closed their operations at home and moved overseas, especially to places such as Mexico and China, where workers were controlled, and wages were limited. Corporations that relied on high-cost machinery (“capital intensive”) stayed in the US, but subsequent developments of their required machinery required fewer and fewer workers.[8]  On top of that, taxes were cut for the wealthy and corporations, allowing cases to be made to cut social services, despite many people increasingly needing them.

Steve Fraser discusses the impact:

During the 1970s alone, between 32 and 38 million jobs were lost due to …
disinvestment, which was common practice in old (New England textile factories)
and new industries alike (New England aircraft manufacturers). Manufacturing,
which after the Second World War accounted for nearly 30 percent of the
economy, by 2011 had dropped to a bit more than 10 percent. Since the turn of
the millennium alone, 3.5 million manufacturing jobs have vanished and 42,000
manufacturing plants closed. On average between the years 2000 and 2011,
seventeen American manufacturers closed each day (Fraser, 2015, The Age of Acquiescence: The Life and Death of American Resistance to
Organized Wealth and Power. New York: Little, Brown and Company: 235).[9]

            Although things were bad before the 2008-09 Great Recession, the Recession ripped the scab off Americans’ unwillingness understand the impact of these economic changes on their neighbors and co-workers. Sarah Jaffe (2016, Necessary Trouble:  Americans in Revolt. New York:  Nation Books: 20) reports that approximately 8.7 million jobs were lost between December 2007 and early 2010.[10]

Economic and social conditions for many workers across the country plummeted, as Steve Fraser (2015: 223-263) brilliantly, but tragically, illuminates.

The fact is that capitalism can no longer provide jobs and economic opportunity for nearly as many people as it provided for in the past. And this will become limited to fewer and fewer people as time passes.

This job loss is going to continue if not actually escalate. Although much rhetoric has been expended on blaming foreigners and “unfair trade competition” for US job losses, research by Michael Hicks and Srikant Devaraj (2015, “The Myth and Reality of Manufacturing in
America.” Muncie, IN: Ball State University, Center for Business and Economic
Research. On-line at http://projects.cberdata.org/reports/MfgReality.pdf) of Ball State University in Indiana has shown that between 2000-2010, automation was responsible for 88 percent of all job losses in this period, while trade was responsible for 13 percent of the job losses. Already, according to McKinsey and Company, 45 percent of all jobs being done in early 2016 could be automated (Claire Cain Miller, 2016. “The Long-term Jobs Killer is Not China, It’s Automation.” New York Times, December 21. On-line at https://www.nytimes.com/2016/12/21/upshot/the-long-term-jobs-killer-is-not-china-its-automation.html.)

But what about those declining unemployment figures? According to Lawrence B. Katz of Harvard and Alan B. Krueger of Princeton, both members of the National Bureau of Economic Research, all of the jobs created from 2005 to 2015 were of sub-standard conditions, meaning they were temporary help agency workers, on-call workers, contract company workers, and independent contractors or freelancers (Katz and Krueger, 2016, “The Rise and Nature of Alternative Work
Arrangements in the United States, 1995-2015.” March 29. On-line at http://scholar.harvard.edu/files/lkatz/files/katz_krueger_cws_v3.pdf?m=1459369766), and which generally resulted in lower pay, fewer benefits, and less economic security overall.

In short, things are bad, and all indications are that they will only get worse for increasing
numbers of working people. Between 1999 and 2014, people making less than $42,000 for a family of three lost ten percent of their income; for those between $42,000 and $125,000, their incomes declined by six percent; and for those making more than $125,000, their income fell by seven percent over this period. Overall, “Nationwide, the median income for US households in 2014 stood at 8 percent less than in 1999” with “median incomes falling in 190 of 229 metropolitan areas examined” (Pew, 2016, “America’s Shrinking Middle Class: A Close Look at Changes Within Metropolitan
Areas.” Pew Research Center, May 11: 10. On-line at https://www.pewresearch.org/social-trends/2016/05/11/americas-shrinking-middle-class-a-close-look-at-changes-within-metropolitan-areas/)

Things had not changed dramatically by 2021.  With a poverty threshold of $27,740 for a family of four, 11.6 percent of all Americans were in poverty, numbering 37.9 million people.  Poverty rates for racial/ethnic groups that year were 10.0 percent for whites, 19.5 percent for Blacks, 8.3 percent for Asians, 24.3 percent for American Indians and Alaskan Natives, 14.2 percent for Two or More Races, and 17.1 percent for Hispanics (US Bureau of Census, 2022, “Poverty in the United States: 2021.” On-line at https://www.census.gov/library/publications/2022/demo/p60-277.html).

I have presented extensive data and supporting analysis in the first four parts of this article.  In Part 5, I draw out major ramifications from this analysis.