The hemorrhaging of jobs during the current Great Recession — reaching as high as 800,000 some months — has finally slowed to a relative trickle, with “only” 11,000 jobs lost in October.
The unemployment rate dropped from 10.2% to 10% last month, but that should provide little comfort since unemployment statistics fail to record the considerable numbers who have given up on the search for work. This is no time for complacency or ambivalence on job creation, regardless of the Blue Dogs’ increasingly loud howling about the $1.4 trillion federal deficit.
Elizabeth Warren, the Harvard law professor now serving as Chair of the Congressional Oversight Panel on economic recovery, laid out the current situation starkly in a piece called “America Without a Middle Class”:
Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can’t make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.
Moreover, Warren could have added, wages are being cut faster than at any time since the Depression, and only 43% of the jobless get unemployment compensation, far lower than during post Depression downturns.
This economic and social train wreck should have been foreseen a long time ago. The hollowing out of America’s productive core, as investment shifted away from renewing America’s factories to high finance, along with the outsourcing of millions of jobs, has de-stabilized the lives of tens of millions of American families. Meanwhile, the social safety net was shredded under Reagan, the two Bushes, and yes, Bill Clinton, with welfare “reform.”
Wages for males have been stagnating since the early 1970s. Even the entrance of females (and children) has not been sufficient to keep families’ heads above rising economic waters. Warren describes families’ plight:
Today’s families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.
Without savings, families turned to their credit cards and their home equity to keep themselves afloat. This desperation provided a huge opportunity for financial institutions to put them in deeper financial trouble, as Warren explains:
Consumer banking — selling debt to middle class families— has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.
To curb these practices, the Obama Administration has been promoting the Consumer Financial Protection Agency (CFPA) to put a halt to all the tricks and gimmickry to which financial institutions have subjected American families.
But the banks and the ever-proliferating brands of financial institutions are intent on strangling the CFPA in its cradle. They are pulling out all the stops to shield themselves from any regulation with campaign contributions and non-stop lobbying, just as the insurers and Big Pharma have done to distort healthcare reform.
Meanwhile, unlike the big banks, working Americans can’t rely on government institutions to quickly bail them out, as occurred with the financial institutions a year ago. This situation has forced working people to recognize the brutal fact that “no American family is ‘too big to fail.’” as Warren puts it.
The looming question, then, is: At what point will American families — through their unions and grassroots organizations — finally decide that the time has come for them to rise up and claim their share of the bailout?
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