Why 4 in 5 Americans Will Face Horrible Financial Problems in Their Lifetime
Despite being the most affluent nation in the world, the U.S. has consistently faced problems on a micro-economic level and now it's been reported by the AP that 4 in every 5 Americans encounter near-poverty at some point in their life. The report labels this measurement as "economic insecurity," which they consequently define as a year or more of periodic joblessness, reliance on government financial aid, or an income lower than 150% of the poverty line. The article goes on to show that minorities are not the only races affected by poverty, as over 41% of citizens under the line are in fact white.
So what exactly is the reason behind the frequent financial insecurity in America? Obviously there isn't one primary cause pushing the entire process, but as USA Today has noted, the global market, the widening gap between rich and poor, the loss of manufacturing jobs, and unemployment are the most likely factors at the heart of the problem.
In recent years, a common trend among large corporations has been to ship out jobs overseas. Globalization is beginning to take its toll on the U.S. and as we've seen more and more, the work force is shrinking in the U.S. due to the fact that many firms can simply hire abroad. This causes a sharp increase in global competition for work, which is partly the reason why many Americans feel so intimidated by foreign opposition, on par with the amount of perceived job insecurity caused by economic recessions.
Another major concern linked to job insecurity is the shift from manufacturing-based jobs towards more service-based industries. For many U.S. citizens who fail to receive college degrees (such as certain counties in the Midwest where up to 90% of the population is not university-educated), manufacturing and labor positions are the only available options. When these are taken away, the possibilities for employment decrease dramatically. In a very frank op-ed for the Huffington Post, Zack Exley admitted that virtually all governments, ranging from democracies to republics to even dictatorships, tackled the issue of poverty and eliminated it through the creation of readily-acceptable jobs by building factories, railroads, etc. Through rapid creation of these projects, more jobs can be distributed to a larger range of citizens, decreasing both unemployment and poverty levels.
As Paul Krugman noted in one of his many op-eds for the New York Times, unemployment still remains the greatest long-term threat to our economy and we haven't been able to properly manage it. Granted, even in the best of circumstances, the U.S. will hover around 5% unemployment, but Krugman showed that workers who have been previously unemployed are incredibly unlikely to receive callbacks for job offers, leading to a perpetual unemployment, so to speak. What's worse is that even when further job openings are created, the men and women who have been laid off in the past are still denied opportunities, as if these citizens have been "tainted" by their previous unemployment for the rest of their lives.
The final major trend contributing heavily to poverty and economic insecurity is the obvious pick that economists have been off about for years now: economic inequality. Simply put, the median income today is 5% lower than it was in 2009, while the average CEO makes around 40% more. Combine this with the colossal gap in education as the test score gap between rich and poor has now doubled the gap between blacks and whites, where opportunity is hard enough to come by and even harder to sustain.
These are the major points that the government needs to target if they plan on restoring an economic security to the nation. President Obama may currently be trying to bolster the middle class particularly, but as the 4 in 5 statistic suggests, we need to fix all of America, not take it class by class.