The Middle Class is Getting Left Behind

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Income Inequality in Oregon

Just last month, Oregon economists released a report showing that the only job growth occurring in the state is among low-paying and high-paying jobs–with no return of the middle-income jobs that are the backbone of our economy.

The new national jobs numbers echo these same findings, on a larger scale. The takeaway is unmistakeable: The middle class is getting left behind as the very rich get richer and corporations are gaining profits by slashing wages and hours.

Middle- Class Jobs are Vanishing…

The latest jobs report shows what most people already feel in their daily lives: The so-called economic recovery has been fantastic for large corporations and the very wealthy—and terrible for everyone else.

First, the good news: The unemployment rate fell to 7.3 percent. But, and here’s the bad news, that’s largely because many people stopped looking for work, taking themselves out of the labor market.

From the Associated Press:

All told, Friday’s report from the Labor Department pointed to a lukewarm job market: Hiring is steady but subpar. Much of the growth is in lower-paying occupations. And many people are giving up on their job searches in frustration. The proportion of Americans working or looking for work reached its lowest point in 35 years.

Worse: The jobs that are available are at the bottom of the pay scale, with few hours and few or no benefits.

Dean Baker, co-director of the Center for Economic and Policy Research, says lower-wage industries have been generating a disproportionate role in hiring because many unemployed people have become desperate enough to take such jobs.

Aside from their low pay, many of those workers are being limited to fewer hours than they’d like.

“In a weak labor market, workers can’t find anything better,” Baker said.

Phillip Bailey, 39, took a job three months ago in kitchen prep at a McDonald’s in Detroit after his unemployment benefits ran out. But his new job pays just $7.40 an hour, and he’s usually scheduled for only about 15 to 20 hours a week.

He’s working many fewer hours than he did in previous jobs. Bailey used to conduct home energy audits, which found ways for people to reduce utility bills.

“This is a lot less than I’m used to making,” he said of his current job. “It’s impossible to get by.”

…Leaving Families with Few Places to Turn

That’s what’s happening nationally—and the story is the same here in Oregon. The Oregonian ran an article over the weekend highlighting the near-record high demand for public assistance in Oregon. The economic recovery has completely bypassed much of the state. In some ways, things have gotten worse since the so-called end of the recession; unemployment benefits are running out, but living-wage jobs haven’t returned. Employers are still slashing wages, hours, and benefits, and shipping jobs overseas.

That’s left hundreds of thousands of Oregonians with nowhere to turn but public assistance. Even for many of those who are able to find a job, the hours and pay are so low that they still need food stamps or cash assistance just to scrape by.

Think about this: 44 percent—nearly half—of all children in Oregon are living in poor or low-income households, according to Children First for Oregon. In 2011, 197,346 children were living at or below the poverty line. Another 382,542 were in low-income families.

The economic trend shows that things will only continue to be bad for these families, even while corporate profits and the stock market have fully rebounded above pre-recession levels. From the O:

While we are seeing improvement in the overall economy and we are seeing some job gains, the improvement has been real slow among our long-term unemployed and people who have been out of work for six or more months,” said Mark McMullen, the state economist. “Until we start seeing the economic recovery shared across the whole state and across all of our industries, need will remain relatively high.”

Jobs are being added but not at a fast enough rate to produce significant progress, said Josh Lehner, senior economist. Low- and high-wage jobs tend to be returning, not middle-wage jobs such as teaching and construction work. That could mean former workers are taking lower-paying jobs — and workers in those jobs may need food stamps.

“My greatest fear, Lehner said, “is that we won’t see strong enough growth in the next couple of years to really bring these numbers down.”

Corporate Profits are Soaring

Meanwhile, corporate profits are at all-time high. As a share of the economy, corporate profits are now higher than the previous record, set in 1929. And by the same measure, wages and salary income are tied with 2010 for the lowest since 1929.

From the New York Times:

With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.

“So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.”

The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.

When even the co-head of global economics at Bank of America Merrill Lynch can see that this is a major problem, you know that this crisis is very, very real.

But wages aren’t down for everyone. A new study was just released showing that the top 1% of earners took a record share of all U.S. income in 2012. Those few at the very top of the scale took a record 19.3% of all income in the nation. That’s higher than at any point in the last century.

The problem is that large corporations have been able to grab a disproportionate amount of power, and their CEOs are handed gigantic bonuses for cutting expenses at any cost—that means slashing hours, wages, and benefits, which often times means these workers have to turn to the state for assistance.

And through groups like ALEC, Americans for Prosperity, and billionaires like the Koch Brothers, these large corporations are rewriting laws across the country that give them greater power to cut wages and ship jobs overseas. In Oregon, they’re pushing Bill Sizemore’s bad ideas to the 2014 ballot that would limit the ability of working people to come together and fight for the middle class.

That’s why now, more than ever, workers need to be able to come together to fight for the middle class and for better standards for everyone.

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