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Tuesday, October 25, 2016

Weekend Reader: Down The Up Escalator: How The 99% Live In The Great Recession

Weekend Reader: Down The Up Escalator: How The 99% Live In The Great Recession

This week, Weekend Reader brings you Down The Up Escalator, by Barbara Garson. which will be released on April 2. Drawing on Garson’s interviews with a wide range of Americans who have felt the brutal consequences of the recession, she couples criticism of Washington’s economic policy with the personal stories of average citizens across the country. You can purchase it here.

Economists describe recessions as either V shaped, meaning sharp down, then sharp back up; U shaped, where the economy muddles around at the bottom for a while; or W shaped— that’s the dreaded double dip. The Great Recession was experienced as a classic V by my three investors, but it morphed into an L for the Pink Slip Club Four, who live on wages.

That may sound like the way the world works. “There’s nothing surer,” as the old song says, “the rich get rich and the poor get poorer.” But oddly enough, that eternal verity is usually suspended during recessions.

During normal-shaped recessions, companies tend to maintain their plants and retain their core workers while they wait for business to pick up. In the meantime (in between time), they compete on price and take less profit.

As a result, the share of national income that went to investors used to decline during a recession, while the share that went to employees increased. I’m not trying to tell you that workers got rich during previous recessions or that the rich became penniless like Richard Bey. But their shares of the total income took a temporary Robin Hood turn.

This time it’s been different. Corporate profits were 25–30 percent higher at the official end of the Great Recession than before its onset. Meanwhile, wages as a share of national income fell to 58 percent. That’s the lowest the wage share of income had been since it began to be recorded after World War II. The Financial Times (my source for these statistics) calculated that “if wages were at their postwar average share of 63 percent, U.S. workers would earn an extra $740bn this year [2012] or about $5,000 per worker.”

Investors not only took a bigger share of the current national income during the recession years; they also found themselves in possession of more of the accumulated national wealth.

According to the U.S. Federal Reserve Bank, the middle class (the middle 60 percent of us) lost a greater percent of its wealth during the Great Recession than either the poor or the rich. By 2010 the wealth of the median American family was lower than it had been in the 1990s. The Federal Reserve calculates that about three quarters of the recession wealth loss was due to the housing bust. That makes sense since homes are where working Americans store the bulk of their wealth and their children’s inheritance. And during the recession, homeowners lost equity and entire houses while investors, like it or not, took possession.

To understand how this wealth shift plays out over the generations, I got back to my GI coffeehouse friend Duane, or rather to his family.

Duane’s children walked away from their inheritance because it was underwater. Whatever money their father put into the Arizona house was washed away when the bubble burst. I asked Duane’s son about the history of home ownership in his family.

He knew that his grandparents owned their home in Cleveland and that Duane’s sister moved in after both grandparents died. But he didn’t know much about the financial details, so he put me in contact with his aunt Claire.

I was surprised and touched by the things Claire remembered hearing from her brother about the GI coffeehouse. “That was forty years ago,” I demurred. But Duane had talked about the place so much, his sister responded, that “you’d think he got his honorable discharge from the Shelter Half [the name of the coffeehouse] instead of the army.” That made me feel bad once more about how I’d let our contact drop.

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  • RobertCHastings

    What is most disturbing, at least to me, is that among those most adversely affected by what this article claims to be economic truths is the majority of Republcan voters, middle-class wage earnerslike most Democrats. And they don’t have a clue! It isn’t like all of those middle-classfolks that the news talks about are only Democratic voters, folks. As the statistics show (from pretty much any reliable source), the transfer of wealth from the middle-class and lower-class to the wealthy class is affecting Democrat AND Republican alike.We peons in the lower 80% includes voters from both ends of the political specturm, even the extremists. And, over the years from Reagan until today, the transfer of wealth from middle and lower class to the wealthy has been in the neighborhood of $30T (as in trillion). So why do folks on the right STILL support policies that basically rob them of their wealth? Damned good question!

    • Independent1

      It is puzzling isn’t it? How so many can support a party that’s hellbent on robbing them blind and can’t see it. I’ve encountered a number of foreign posters on Yahoo News that have asked that same question: Why is it that virtually everyone in Europe and other countries in the world can see that the GOP is focused on doing nothing but passing legislation and starting wars that succeed in doing nothing but transfering more money from the pockets of middleclass taxpayers to the already wealthy. My sense is that it’s all about misguided notions: millions have the notions that the GOP is truely conservative which means that the party is doing what’s right, obviously since evangelicals overwhelming support the GOP, you’d think that’s the notion they have. Unfortunately, they are very misguided. Not only does the GOP not do what’s right religiously speaking (the GOP is America’s largest anti-Christian organization), proven clearly by its obsession with MONEY; something that Jesus made quite clear is not something we should worship. And the GOP has clearly proven itself to be non-Conservative by the fact that every president/GOP admiministration since Eisenhower has governed with drunken sailor spending, resulting in the GOP being totally responsible for more than 90% of our current debts; something clearly not conservative. So my question is, how far are clueless GOP worshippers going to let the GOP drive our country into financial and infrastructure ruin before they wake up? and start throwing all the bums out that are doing the destruction.

      • As soon as President Obama is out of office! Bigots!!

      • RobertCHastings

        There are very few issues that the Republican Party can control conservatives with. These are the hot button issues like abortion, gun control, LGBT equality, stem-cell research, etc. These are issues that speak to the heart of the evangelical movement- the literal interpretation of the Bible. Unfortunately, all too many evangelicals are like the fundamentalist Muslims, many of whom cannot read their Koran, and are told by their mullahs what it says. The problem with the Bible is that1)The Old Testament was written in a language that no one speaks today and thus suffers in the translation, 2) the various New Testament texts were not written by people who knew Christ personally (thus the first four gospels differ from each other in depicting the key events of the life of Christ), 3) many ancient texts that could quite easily have been written by those who knew Christ were excluded from the Bible, 4)the Christian church, from the early Catholic church on, is one of the most political institutions on the planet and is jealous of its power and authority.

        • Independent1

          Sorry, but I don’t share your apparent skepticism about the new testament. If one tries to realize the difficulties that writers must have had back in Jesus time trying to record events without our modern day technical marvels, I think it’s amazing that the four gospels record many events as closely as they do. And two of the Gospels were written by men that walked with Jesus, and even those that weren’t written by men who personally knew him, these men had the apostles at their disposal to aid them in writing their gospels (the apostles were still alive)
          And with regard to the old testament, given that what God said through Paul in Hebrews 8:13 “By calling this covenant new,” he has made the first one obsolete; and what is obsolete and aging will soon disappear. With these words, God made it clear that we should be looking very little to the old testament. Christians who choose to refer back to the Old Testament and grasp commandments from it, do so by mistake; even the 10 Commandments have been superseded by the many commandments that Jesus brought us as recorded in Matthew 5 through 7; and by the many parables Jesus related to us to clarify those commandments. Therefore, aside from inspirational portions of the Old Testament, the majority of it we need to take very cautiously – as the Pharisees discovered when they criticized the deciples to Jesus because they felt they were working on the Saabath (back in Exodus there are versus that say if one does not keep the Saabath, one shall surely die). But Jesus dispelled that and said it was okay to do good on the Saabath . And those who believe that we can worship God any which way we want by any church, also are misguided. They totally forget Jesus words to the effect: Narrow is the way to Heaven and few there be that find it; While broad is the way to damnation and many there be that find it.

          • RobertCHastings

            Looks like you have found all the passages from the Bible you need to argue YOUR point successfully. Paul merely attempted to cement his standing with the Christian community by claiming to have heard directly from God. In today’s world, were Jesus to come to us, he would last no more than a month. Robert Heinlein published a wonderful novel in 1961 entitled “Stranger In A Strange Land” about just that issue, one of the most celebratory books of the life of Jesus I have read, and all of it eminently reasonable. The current incarnation of the Holy Texts is no more than an attempt by Mother Church to enslave the masses. The discovery of the Dead Sea Scrolls and the research into them clearly demonstrates that the fashioners of the Bible as it is today had political motives, as did the writers of the various texts. To accept the Bible as a literal depiction of history is a useless exercise in revisionism.

          • Independent1

            I can’t disagree with your comment: “Were Jesus to come to us today, he would last no more than a month.” Many of the mainline churches of today have so distorted the image and purpose of Jesus’s coming and God’s eternal message, that sadly, as you point out for political and financial gain, that like the Pharisees of 2000 years ago, the vast majority of today’s faux Christians would be in total disbelief – just as the majority of pharisees 2000 years ago were. And one reason for that is: God would see just what’s in many of the hearts of today’s supposed Christians, that being a Christian is nothing but a show for so many of them, that like the pharisees, he would harden their hearts so they would be blinded to the true wonder of Jesus’ return. What’s really sad though, is that there are millions upon millions of hopefull Christians around the world that are being led to possible damnation by the blind leading the blind – Only God can decide.

          • RobertCHastings

            God has blessed you, my friend, and through those like you will His new church be built. Have you been watching “The Bible”? It seems to be a reasonably true presentation of what it was like 2,000 years ago, and serves to make Jesus human. I once heard from a man who is proud of his Christian faith that if someone has to tell you he is a good Christian, he probably isn’t – at the time, it seemed sort of contradictory, coming from him. I have seen TOO many churches that are beautiful edifices, but that is all they are, for they have forgotten that God’s temple is in every man’s heart.

    • progressiveandproud

      Blame the churches. Anytime the churches become powerful, the people suffer and the churches and wealthy thrive.

      • The churches will NEVER suffer! People are too afraid of evelasting damnation if they don’t support their church! They will give their last dime to the church!

        • progressiveandproud

          You are absolutely correct, my friend. I have literally seen unemployed parents donate their last dime to their church while their utilities were turned off for nonpayment. Sad really.

  • howdidisraelget200nukes

    Economists generally deal with systems that have not been compromised. They do not deal with rigged systems like ours has become.

    Just because the market has recovered means nothing to most Americans. Once someone explains how we pay to rebuild our destroyed infrastructure, they will wake up to the fact that America is just like those “welfare queens” the republiCONs love to talk about.

    Broke but driving caddillacs.

    Face the facts America, gas prices, banks, health care, corruption are all going along unchecked.

    But gun control and immigration are much more important.

    I cant wait to hear the economists explanation of why the markets tanked in the near future because its coming.

    After the next crisis, America will be a third world country, with nukes.

  • angelsinca

    Based on the title, I was hoping to gain knowledge on how the 99% live in the Great Recession. I’ve been living it myself for 5 years and was hoping to compare notes. I find one story about one family’s real estate trappings. That wa diappointing. So, I wander through the comments expecting useful information on how my life as a 99%-er is getting along compared with others. I discover the I am mostly responsible for the Great Recession because I am republican and christian. Sorry for causing your historic economic losses and downfall of the middle class. I’ll try not to collapse the world’s economy next time I sneeze.