The economic numbers are cheery, but don't believe the hype

Published on Wednesday, 6 June 2018 18:48

President Donald Trump was so delighted by the May jobs report that he tipped off investors by tweeting while the information was still embargoed. The news - more than 220,000 new jobs, unemployment down to 3.8 percent, the lowest in 18 years - was undoubtedly strong. The Economic Policy Institute hailed “the economy’s steady march towards full employment,” noting that most of the drop in unemployment came from workers finding new jobs and only about one-third from workers leaving the workforce. Wages are finally beginning to budge, though the growth rates still don’t keep up with the rising cost of basics such as health care and education. The last time the U.S. economy enjoyed across the board wage growth was in 2000, when the economy also neared full employment levels.

The cheery numbers, however, should not blind us to the harsh reality facing most Americans. The United States is one of the richest nations in the world, yet many of its citizens live in misery. Consider: “About 40 million live in poverty, 18.5 million in extreme poverty, and 5.3 million live in Third World conditions of absolute poverty. It has the highest youth poverty rate in the [industrialized world] and the highest infant mortality rates. . . . Its citizens live shorter and sicker lives compared to those living in all other rich democracies, . . . and it has the world’s highest incarceration rate, one of the lowest levels of voter registrations in among [Organization for Economic Cooperation and Development] countries and the highest obesity levels in the developed world. The United States has the highest rate of income inequality among Western countries.”

The quotes come from the official “Report of the Special Rapporteur on extreme poverty and human rights on his mission to the United States of America,” on behalf of the U.N. Human Rights Council. Special Rapporteur Philip Alston notes that for the poorest Americans the situation is getting worse. “For almost five decades the overall policy response has been neglectful at best, but the policies pursued over the past year seem deliberately designed to remove basic protections from the poorest, punish those who are not in employment and make even basic health care into a privilege to be earned rather than a right of citizenship.”

Although Alston’s report is rigorously documented, many will ignore its findings and scorn the U.N. for messing in our affairs. Consider then the recent “Report on Economic Well-Being of U.S. Households” from the authoritative Board of Governors of the Federal Reserve, a bastion of the financial establishment.

The report concludes that while surveys show Americans are feeling increasingly okay about their financial situation, 4 in 10 adults don’t have savings to cover an unexpected expense of $400. More than 1 in 5 are not able to pay their monthly expenses. More than 1 in 4 skipped necessary medical care because they could not afford the cost.

A detailed study by the United Way found that 43 out of 100 households cannot afford the basics to live. They aren’t earning enough to pay for the combined costs of housing, food, child care, health care, transportation and a cellphone.

The harsh reality is that America is a wealthy country with millions of struggling people. Compared with their peers in other industrialized nations, Americans live shorter, more stressful, less healthy lives while working longer hours with fewer vacations. Our stunning decline in life expectancy is largely because of diseases of despair - addiction, suicide and depression.

Extreme inequality not only immiserates Americans, it corrupts and undermines our democracy. Overt and covert disenfranchisement has disproportionately hurt the impoverished and people of color. “It is thus unsurprising,” the U.N. special rapporteur writes, “that the United States has one of the lowest turnout rates in elections among developed countries.”

Similarly, the International Monetary Fund warns that the extreme inequality is bad not only for the poor and the middle class but also for society as a whole with high poverty levels “creating disparities in the education system, hampering human capital formation and eating into future productivity.”

Trump promised to end the “carnage.” His policies, however, only contribute to the decline. His signature achievement - the tax cuts - will add to inequality.

Katrina vanden Heuvel, editor and publisher of the Nation magazine, writes a weekly online column for The Washington Post.

Posted in The Bristol Press, Column on Wednesday, 6 June 2018 18:48. Updated: Wednesday, 6 June 2018 19:02.