Some political conservatives believe that the economic crash of 2008 is more-or-less behind us now; and that, while recovery has been slow, no one should be upset with how the economy is doing at this point. They further maintain that it would be irrational to be anxious, upset, or angry about the matter. This paper will draw upon some recent research in order to argue against the conservative claim. The thesis of the paper is that there is indeed reason to be concerned about the economy, so long as one is not a millionaire or billionaire.
It is well-known that the United States has an enormous—and ever widening—gap between the top 1% of personal incomes, and the remaining 99%. Indeed, as of 4 years ago, the “400 richest Americans [had] more wealth than the entire bottom half of earners—150 million Americans—put together” (Reich 2012, xiii). This is an astounding, and profoundly troubling, fact.
More recent figures released in a Census Bureau study indicate that the gap is not being closed. It shows that median household income was not significantly higher in 2013 than in 2014 (DeNavas-Walt and Proctor 2015). Two aspects of this fact are noteworthy. First, the study is forced to use median income, as opposed to mean income, precisely because of the enormous gap in incomes between the top 1% and everyone else in the country. In other words, if the study used the mean, the figures would be too distorted by the exorbitant incomes at the very top to be useful in understanding the economic situation of average Americans. Second, the statistically insignificant rise in median income from 2013 to 2014 is not adjusted for inflation. This means that median incomes effectively declined over the relevant period. This suggests that it is incorrect to hold that the economy is doing just fine.
Concerning income inequality, the picture is equally bleak. Since 1993 the Gini index—which is a method of measuring income inequality—has increased by 5.9%. Furthermore, there was no significant change in the index score from 2013 to 2014. Similarly, the number of people at the official poverty level has not changed materially in 4 years (DeNavas-Walt and Proctor 2015). Each of these facts seems to be incompatible with holding that there is no significant problem with the economy.
A second study supports these claims. It shows that the so-called ‘American middle class’ is being diminished in urban regions across the entire country (PRC 2016). The study further suggests that the shrinking of the middle class across the nation may now have passed the point beyond which the middle class is no longer the majority in the United States. Furthermore, “With relatively few Americans in the middle-income tier, the economic tiers above and below have grown in significance over time” (ibid.).
Now it is possible that the conservative thesis mentioned at the outset is not intended to be incompatible with the facts cited here. There are different ways of measuring how the economy is doing. However, insofar as the thesis is intended to point toward any real significance for American lives, it seems to be incompatible with the facts mentioned here, and detailed in the two studies referred to. To see this, consider the following hypothetical situation: It is possible that if income inequality continues to rise in this country, we may eventually arrive at a point where only a very small group of people—say the 400 that Reich mentions—live above the poverty line. If these people were, as they would presumably have to be, phenomenally wealthy, then there might be measures of the economy that indicate that it is doing fine. The GDP might be increasing every year, for example. However, it is surely obvious that in the pitiable situation envisaged, there would be no meaningful sense in which the economy is doing fine. Measures of economic performance which abstract entirely from the standards of living of average Americans hold limited interest or importance.
- DeNavas-Walt, Carmen, and Proctor, Bernadette. “Income and Poverty in the United States: 2014.” United States Census Bureau, September 2015. Online. http://www.census.gov/library/publications/2015/demo/p60-252.html.
- PRC. “America’s Shrinking Middle Class: A Close Look at Changes within Metropolitan Areas.” Pew Research Center: Social and Demographic Trends, May 11, 2016. Online. http://www.pewsocialtrends.org/2016/05/11/americas-shrinking-middle-class-a-close-look-at-changes-within-metropolitan-areas/.
- Reich, Robert B. Beyond outrage: What has gone wrong with our economy and our democracy, and how to fix it. Vintage, 2012.