The economy: You’re right to be skeptical

Working people don’t buy the rosy economic picture from Biden and pundits. With good reason! Government statistics draw happy faces rather than deliver facts.

Low wage jobs are on a collision course with high inflation, especially in essentials such as food, housing, childcare, fuel and transportation. PHOTO: Daveblog on Flickr
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Democrats in office and their media apologists push the story that the economy is doing great — look at low unemployment and improving inflation. Everything’s fine! Why isn’t the public getting it, they ask?

Simple. Their numbers don’t reflect people’s everyday reality. And that’s not by accident.

Employment and inflation fictions

Let’s take job figures. Logically, unemployment numbers should include all the people who want to work but can’t find a job. But no. The most quoted unemployment statistic only counts those people who are completely unemployed and have looked for work in the previous four weeks (or are on an employer’s recall list).

The data disappears workers who have been jobless for a long time and have given up searching. That’s a lot of people, as reflected in the labor force participation rate, which has been dropping for years. This rate measures the proportion of the working-age population that is either working or actively looking for work. As of May 2023, the rate for people 16 years and older was only 62.6%.

Furthermore, anyone who has worked even one hour in a week is counted as “employed,” regardless of whether or not they’re making a living. Liberal economist Eugene Ludwig combines unemployment, underemployment and wages below the poverty line, even for full-time workers, to derive a more meaningful figure. For March 2024, compare the “headline” unemployment rate of 3.8% to Ludwig’s “functional unemployment” rate of 24.2%.

What about the cost of living? Ludwig’s take on the Consumer Price Index (CPI) is a revelation. He shows how the CPI understates the impact of inflation on low- and middle-income people. It’s based on price changes of a large number of goods and services over time. But it includes luxury items, which mean little to workers who can’t afford them.

And CPI is a national average even though the cost of living varies significantly by region. Ludwig calculates a True Living Cost index based on essential items and taking regional variations into account. That turns out to rise 1.4 times faster than the CPI!

Another feel-good statistic is Median Weekly Earnings. The Bureau of Labor Statistics only measures the wages of full-time workers, coming up with $1,139 for the first quarter of 2024. Ludwig looks at the earnings of the whole workforce, including part-time and unemployed workers, to get a more realistic $951.

The other side of the story

In 2023, a survey found that 78% of Americans live paycheck to paycheck, meaning that most of their income — or even more than they earn — is needed for essentials. Many are forced to rely on credit cards just to pay rent and buy groceries.

By the end of 2023, total U.S. credit card debt reached $1.13 trillion. And 49% of credit card holders were carrying a balance over from month to month — at over 21% average interest!

This kind of financial torture hits hardest at people of color, women, seniors, youth, LGBTQ+ folks, and disabled people. Just a few examples:

As of 2023, Black Americans were more likely to lack shelter, representing 37% of unhoused people despite being only 13% of the overall population. According to the Eviction Lab, as of Jan 2024, 59% of people facing eviction were women, and disproportionately more were Black and Latinx.

Moreover, according to the Economic Policy Institute, at the end of 2023, Black workers were twice as likely to be unemployed as their white counterparts, and Latinx workers 1.6 times as likely. And, for every dollar a white person earns in America, a Black person earns $0.84, and a Latinx person earns just $0.76.

Besides the official statistics, which are flawed to the point of dishonesty, politicians and media popularize lying narratives to create scapegoats who can be routinely blamed for financial and social problems. Scapegoating is so much more helpful to them than having informed people look hard at the system that is stacked against the majority.

Immigrants are major scapegoats for both capitalist parties. You almost never hear the facts about their positive impact on job creation and the economy! Case in point: The current low unemployment rate is partly due to economic expansion caused by the increased population of immigrants. They also provide the workforce for many jobs that are hard to fill, like farm labor and service industries.

From time to time, a bourgeois source will acknowledge that the economy is on shaky ground, and even that low-income people suffer most from things like inflation. The Citibank CEO did this in May. But this is largely irrelevant to the people experiencing that pain, because answers will have to come from the bottom up. And the good news is that growing numbers of workers, from retail stores and campuses to hotels and hospitals, are fast coming to that conclusion and acting on it, with strikes, organizing drives — and militancy.

The housing crisis by the numbers

Housing costs, evictions, and homelessness disproportionately affect Black and Latinx people, who tend to have lower incomes.

49% of renters are cost-burdened, paying more than 30% of their income on housing. And 26.4% of renters spend more than half their income.

$3,000/mo. was the estimated monthly payment for mortgage, insurance and property tax to buy a median-priced home in March 2023. This priced out 2.4 million renters.

653,104 people were estimated to be unhoused in 2023, roughly 1 in every 5,000 people. Black Americans make up 37%, despite being only 13% of the total population.

 Rise in grocery store food prices, 2020–2023

2020 +3.5%
2021 +3.9%
2022 +11.4%
2023 +5.0%

TOTAL +23.8%

Source: USDA Economic Research Service

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