"We have to figure out what kind of people are we going to be and what policies will help us be our best selves."
The low- and middle-income families hurt most by the Great Recession are continuing to receive the least benefit from our recovering economy.
By Larry Checco
To hear many politicians, pundits and financial analysts tell it, it’s morning again in America.
The stock market is at record highs. Corporations are sitting on trillions of dollars in cash, with Apple alone holding $178 billion.Employers are adding workers to their payrolls at an average of well over 200,000 jobs a month.
For the period ending December 2014, even workers’ salaries increased by 2.2 percent, according to the U.S. Bureau of Labor Statistics. And inflation remains low.
In short, the catfish are jumping, and the cotton is rising high in the morning sun.
But for millions of working-class American families the damage caused by the Great Recession has been done, and will take decades, if not generations to undo. These folks don’t know from morning in America. They’re still living a nightmare.
The typical American household, the Russell Sage Foundation calculates, has seen its wealth cut nearly in half as a result of the Great Recession. From 2007 to 2013, median household wealth, adjusted for inflation, decreased 43 percent, from $98,872 to $56,335.
Desperate to stay afloat, countless working-class Americans have gone through, or are still spending down, their life savings, including their retirement funds. Some are sitting just another job loss or major illness away from total financial ruin.
Many boomers approaching retirement age are staying in the workforce longer. When they do retire, many — because of their depleted savings — will be forced to rely on Social Security as their only means of support.[pullquote]Countless Americans have gone through or are still spending down their life savings.[/pullquote]
Millennials, meanwhile, are finding it hard to find good paying jobs, and the unemployment rate for young African American males remains at nearly 25 percent.
Perhaps the worst Great Recession tragedy of all: The greatest vehicle for transferring wealth to future generations — namely, the family home — is no longer running for the estimated eight million families who have lost, or may still lose, their residences to foreclosure, according to Moody’s Analytics’ chief economist, Mark Zandi.
Foreclosure rates have abated, but one out of ten homeowners, or 5.1 million homes, remain underwater, worth less than the mortgages owed on them. That total has dropped down from a high of 12.1 million homes underwater as recently as the fourth quarter of 2011, according to MarketWatch.
Credit irresponsible lending — and borrowing — as well as trash subprime mortgage products foisted on unsuspecting folks for a lot of the wrack and ruin in both the housing industry and general economy. Some financial analysts are predicting that 2015 will be a good year for U.S. equities. Some are even rosily predicting good news for the next five years. But the low- and middle-income families hurt most by the Great Recession will receive the least benefit from a recovering economy.
The sad fact: America’s richest 10 percent hold nearly 85 percent of the nation’s financial assets, the dollars in everything from savings and checking accounts to stocks and cash-value life insurance policies.
So, yes, millions of Americans are back working — but at a fraction of what they were making in the past and with fewer benefits. Some have even had their pensions reduced.[pullquote]What will it take for us as a nation to ensure this never happens again?[/pullquote]
How long will it take for these folks to return to pre-recession levels of savings and wealth formation? For most, decades, if not longer. Some, perhaps, never.
More importantly, what will it take for us as a nation to ensure this never happens again?
That’s the $16 trillion question, the amount of wealth this last financial debacle cost us.
But here’s a thought. We might want to start by creating policies that offer more opportunities for all throughout our system — including access to good, affordable education, healthcare, housing and living-wage jobs. We need more transparency in our markets, more oversight of and accountability from our financial institutions, greater consequences for those who prey on others unethically or illegally, and, oh yeah, tax reform that creates far less trickling up of wealth and far more trickling down.
That would be a start.
Larry Checco is the president of Checco Communications and a columnist for Accountability Central, where he writes on economics, politics, and income inequality. He holds a degree in Economics from Syracuse University and an MA in Journalism and Public Affairs from American University.