Lucky Among 95 Million Losers:  Yep! That’s me.

As I left for a quick morning errand, I saw one of my long-termer fellow guests pushing a cart full of belongings. His teen daughter, with a long face and very red eyes, walked right behind him. I saw them again a half hour later as I pulled back into the lot; he, pushing the cart, she, still crying. I didn’t want to look away and seem uncaring or unfriendly. But I didn’t want to look ahead and embarrass him. I stayed in the car an extra few minutes so I’d have to do neither. I took one load in with me and put them away in the kitchenette pantry. I went back out to get the last of the things in my trunk. As I closed it and turned, there he was, cart stopped in the middle of the lot’s driveway. “They’re kicking us out today. Happy effing new year!” As I blurted out “I’m really sorry,” the man went on to say that the hotel rules, as published on their website, state that children under 18 are allowed and all he could afford was a King room for his family. Management apparently disagreed on the meaning of its own rules and the man and his family were being evicted.

Like the other four hotels we’ve stayed at these two years, two weeks, two days and counting, half the clientele is long term and homeless. Some families have been here for over two years. They’re all working families. Most either lost their homes or moved from counties in which work has dried up. They are white. They are African American. They are Latino. Yes, there are some who are Asian. They are mostly former professionals, though there are also many whose family businesses in the suburbs failed. What binds them all together is the final free fall into failure, in the time that has elapsed since the end of 2014.

“Then there’s the geographical dimension to all of this. According to recent research by the Economic Innovation Group (I co-chair their advisory board), business and job growth have been a lot more concentrated in big cities than in non-urban areas. L.A., Miami and Brooklyn have been crushing it, both in terms of business formation and job growth; counties with less than 100,000 people were actually losing businesses, at least through 2014.”

The few families with whom I’ve had an open talk about why we’re all here shared the same emotions I’ve seen everywhere else: shame at their present diminished economic condition, fear of a future of uncertainty, loss of a way of life and social identity, and distress at not being recognized as the hapless victims of a recession that has yet to end; most of all, however, grief over having been written off as losers.

Why 2014? Long-term unemployment was ended that year and assistance to families was greatly reduced. In a new post, Jared Bernstein published a chart that graphically illustrates the drop in assistance:

Bernstein writes:

“What’s that? You’re skeptical that block grants would truly undermine the effectiveness of our anti-poverty programs. Well, observe this next figure, showing the growing failure of cash assistance to reach needy families since it was turned into a block grant back in the mid-1990s.”

What Bernstein terms effectiveness, I see completely differently. If the steep drop in cash assistance to needy families signifies to him that there are fewer poor people in need of assistance, to me, and many others like me, that drop only means that fewer of us are eligible for help under current rules. We are not doing any better, by any stretch of the imagination.

In a world where real jobs are scarce, the gig economy yields net pay that is far below the minimum after taxes and expenses, rents have skyrocketed, life on the median wage is difficult at best. Life on that same wage, for those who suffered catastrophic economic failure, is near impossible, especially without safety-net assistance.

“We must accept finite disappointment, but never lose infinite hope.”

Martin Luther King, Jr.

There is no joy here – only haggard faces and slumped shoulders from the weight of the sadness that comes with losing a lifetime of progress, and knowing that was was will not only most likely never come back, but their children are unlikely to achieve what they once had. Their disappointment is infinite and their hope nonexistent.

As I wrote in a recent post on the November jobs report, there are 95 million Americans who live precariously. While a large portion of those 95 million are more concentrated in particular geographical areas, they can be found everywhere in our nation.  They are older, in their late forties to mid-fifties. These are people who were once middle class. Contrary to the narrative pushed by the Clinton and Trump campaigns and (over) amplified by the media over the past year, they are of all creeds and ethnicities. They are a new class of American, members of the precariat.

My local paper, the OC Register, recently published “As rents soar, so do Southern California evictions.”

“About 6,600 Orange County renters and their families were evicted in 2014, equivalent to one eviction for every 63 tenant households in the county, online real estate broker Redfin reported Monday.

That’s the 17th-highest eviction rate among 32 large metro areas for which data was available.”

From the same article, for comparison:

“In Los Angeles County, one out of every 80 renters lost their home in 2014, the 20th highest eviction rate, with 21,700 tenants evicted.”

This is one way the increasing concentration of wealth in particular cities now manifests itself. Orange County is immediately to the south of Los Angeles, and has been the home to a lot of wealth. It is now far more unequal than, say, at the start of the Great Recession. The rates of eviction have gone way up in most other areas for which there is data. As the OC Register article points out, there is data for only 19 states.

“U.S. rents have risen 66 percent since 2000, while household incomes were up 35 percent in that time.

More than 20 million U.S. renters – almost half – were cost-burdened in 2015. That’s up from 14.8 million in 2001.

Evictions are more common in areas with higher percentages of immigrants.

Solutions include building more rental housing, expanding rent subsidies and providing more legal assistance to renters facing eviction, the study said.”

These eviction statistics are in line with a new social trends study that was covered by Michelle Chen in The Nation:

“Social-inequality trends over the past half century indicate that class divisions are growing more rigid, most are getting worse off, and those at the bottom are falling further, faster by the day. It’s the momentum of change that is causing much of the pain and anxiety, as many self-identified “middle-class Americans” are realizing the truth only now: They were never as well-off as they thought they were.

“Overall, if you look back 30 years, most of the distribution [of wealth] is lower than where it was in the ’80s. So…the typical American family today has less wealth than the typical American family in the ’80s,” says University of Michigan sociologist Fabian Pfeffer, who co-published a new research collection on trends in inequality. And yet, Pfeffer observes, higher on the economic hierarchy, affluent households experienced “the mirror image,” accruing riches and power at others’ expense.

For households losing wealth, Pfeffer found that social insecurity hurts from many different angles: not just in the evaporation of housing and retirement wealth but also through declining health, diminished prospects for their kids, and ensuing despair and anger.”

The article goes on to make additional observations in what is a rare find in today’s media, in terms of the way certain voters have been portrayed over the past year:

“But white anxiety about middle-class precarity is only part of the picture because the middle-class was always built on structural inequality and social exclusion. The anxiety Trump manipulated so deftly on the campaign trail expresses real agony that working people are feeling. Yet the people who aren’t represented in Trump’s support base are in many ways suffering the most from long-term economic polarization.

Compared to whites, the downward trajectory has been steeper in communities of color. A typical low-income black kid has even dimmer college prospects, having been deprived of early education and decent housing and health care from birth. She grows up with greater exposure to traumas like mass incarceration or foreclosure. Racial discrimination limits her career opportunities and she moves from teenage poverty into inescapable, lifelong debt after getting hit by predatory lenders. While her parents were also poor, they benefited from public welfare and education programs, and retired with modest savings instead of an underwater mortgage.”

It is a rarity to find economic reporting on minorities across the board. In a 2014 post, I reported on what happened to the Black middle class as a consequence of the Great Recession. If inequality grew sharply and whites lost ground, one can say that the Black middle class was decimated. Real unemployment, today, stands at just over 9%. Unemployment for African Americans is always double that of whites. If Americans who fell out of the middle class are now in a class called precariat, there is, within that new class, a ‘Black precariat.”

https://www.rimaregas.com/2015/04/13/mlk-died-warning-us-about-inequality-back-in-the-60s/

But even within what remains of a diminished middle class, there are sharp divisions that are seldom described in the popular press. In a piece that is rare for its frankness, Neil Gabler wrote about the precarity of those we think of as relatively well-off:

“The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?”

Indeed! There have been many times when New York Times commenters made a point of criticizing my views because I wrote them from Mission Viejo, California. Mission Viejo is a small incorporated city. The median income in Mission Viejo is just over $98,000.

What are rents like in Mission Viejo?

A two-bedroom unit runs an average of $2,200 in Orange and Los Angeles Counties, and not just Mission Viejo. In California, with rare exceptions, utilities are not included.

For a family of three, a month’s worth of living expenses might look like:

Rent: $2200 + Utilities: $350 (incl water, sewage and waste disposal) + Food: $600 + Auto Insurance: $120 + EPO Health Insurance: $500 Student Debt: $240 per spouse

To meet only these basic obligations, a family of three would have to earn a median income of at least $50,600. Most families have many more obligations than these and their expenditures exceed the draconian examples listed above.

Which brings me back to Neil Gabler and the $400 most middle class Americans would have such a hard time obtaining in an emergency:

“A 2014 Bankrate survey, echoing the Fed’s data, found that only 38 percent of Americans would cover a $1,000 emergency-room visit or $500 car repair with money they’d saved. Two reports published last year by the Pew Charitable Trusts found, respectively, that 55 percent of households didn’t have enough liquid savings to replace a month’s worth of lost income, and that of the 56 percent of people who said they’d worried about their finances in the previous year, 71 percent were concerned about having enough money to cover everyday expenses. A similar study conducted by Annamaria Lusardi of George Washington University, Peter Tufano of Oxford, and Daniel Schneider, then of Princeton, asked individuals whether they could “come up with” $2,000 within 30 days for an unanticipated expense. They found that slightly more than one-quarter could not, and another 19 percent could do so only if they pawned possessions or took out payday loans. The conclusion: Nearly half of American adults are “financially fragile” and “living very close to the financial edge.””

This brings us to an article Jared Bernstein published on the Washington Post’s Post-Everything blog:

“The bottom line in the next figure shows actual pretax income for adults in the bottom half of the income scale. The top line asks how these folks would have done if their income had grown at the average rate from the earlier, faster-growth period. The middle line asks how they would have done if they experienced the slower, average growth of the post-1980 period.

Source: Piketty et al, see text. My calculations.

When the researchers simulated what would happen had growth not slowed, they found that 62 percent (instead of 50 percent) of kids surpassed their parents. But then they asked: What if growth had, in fact, slowed as it did but inequality did not grow? In that case, the share of 1980 kids who later earned more than their parents jumped to 80 percent (again, from 50 percent). Slower growth lowered their “surpass” probability by 12 points; greater inequality, by 30 points.”

Bernstein showed us, in the first chart reproduced above, how much smaller the safety net is now, compared to the 1990s. In his WaPo piece, Bernstein discusses the incoming Trump administration’s plan to accelerate growth through the implementation of aggressive tax cuts. But as Bernstein rightly points out:

“At the same time, the incoming team is likely to go after the safety net programs that Piketty et al show have been extremely important to offset the failure of market incomes to rise much since 1980s for low and middle-income adults. When pretax income was stagnant for the bottom half from 1980 to 2014, after taxes and transfers, bottom-half income grew 21 percent. That is still less than 1 percent per year, but it’s a lot better than nothing, which is what they got pretax.”

What isn’t mentioned here is that the safety net already suffered from Republican cuts that were agreed to by Democrats and took effect in 2014, in the budget that was passed and signed at the end of 2013. Those cuts ended long-term unemployment and reduced eligibility and benefits under TANF. The negative impact of those cuts was felt that same year, with homelessness rates beginning to rise so sharply that two years later, many large metropolitan areas declared states of emergency due to new housing crises. While the rate at which the economy has added new jobs has accelerated in that time period, there are still 95 million underemployed and unemployed according to the BLS’ last published jobs report for the year 2016.

The Maddening Variance Between Economists & MSM Reporting on November #Jobs | Blog#42

The media continues to portray the economy in ways that will hinder those who are intent on improving the lot of former middle and working class workers who have yet to see relief from the effects of the Great Recession. As reported in the post immediately above, since the publication of the November 2016 jobs report, economic journalists like Kai Ryssdal have, for the most part, been reporting President Obama will be handing over a fully-recovered economy to the incoming Trump administration. In a discussion of Fed Chair Yellen’s statement following a raise of the interest rate, Catherine Rampell of the Washington Post warned of the risks of inflation in an economy that is at full employment, when discussing the Trump administration’s plan to implement stimulatory policies via an infrastructure bill.

As a reminder, here is where Paul Krugman thinks we are with respect to inflation:

“What I mean is that because interest rates are still near zero, a bout of economic weakness can’t be met with strong monetary expansion; and discretionary fiscal stimulus is politically hard, especially given who’ll be running things. This strongly suggests that you want to build up some momentum, get further away from a lee shore, pick your metaphor; that means letting the economy build strength, inflation rise modestly. So as I said, I believe the Fed made a mistake, and would welcome a modest (1 or 2 point? maybe more?) rise in budget deficits, especially if it involved infrastructure spending.

But what if we are about to get significant fiscal stimulus from Trump? Well, it won’t be well-targeted, in terms of either demand or supply; that infrastructure build looks ever less likely, so we’re talking high-end tax cuts with low multipliers and little supply-side payoff. Such a policy might vindicate the Fed’s rate hike, but it should still wait and see.”

There is a total of 95 million Americans who are unable to earn a living. Full employment is far more complicated than hitting a target number. There are also the qualitative aspects of those jobs to consider, and that is where the problems begin. In this new gig economy, wages are much lower than they need to be, without the benefits of a formal employment arrangement.

Why there is such a disconnect between what economists say about the economy and how reporters write about it most likely is due to a combination of factors that includes the way wealth is now concentrated, who owns the media, and where the media is based out of: mostly large metropolitan areas. That same combination of factors has affected our politics, with the yuuge amounts of cash that can legally be thrown at politicians and their campaigns, and the portions of that money that go to advertising. Add to that access to politicians, and what transpired in the emails published by WikiLeaks gives readers a pretty clear idea of the lines that are crossed by journalists in order to gain and retain access to the politicians they cover. Add to that the contraction the media has seen over the last few years in the number of publications that are still standing, where they are based, and how many fewer staff they employ. The economy has certainly had as huge an impact on the size of our media’s workforce as it did on the overall labor market. Then, there is the revolutionary impact of the internet and migration to digital media on how news is gathered, vetted, and published.

There is no doubt in my mind that a reversal in the way labor news and statistics are reported is indicated now, or that such a change would have some impact on what policies the Trump administration will hesitate to implement right off the bat. With economic news being reported in a way that is more descriptive of the real suffering so many millions of Americans continue to experience, there is more of a chance that the Trump team will be weary of implementing the more hard core cuts to the safety net Speaker Paul Ryan has been promoting for years. As Paul Krugman wrote in “Will Fiscal Policy Really Be Expansionary?”

“It’s now generally accepted that Trumpism will finally involve the kind of fiscal stimulus progressive economists have been pleading for ever since the financial crisis. After all, Republicans are deeply worried about budget deficits when a Democrat is in the White House, but suddenly become fiscal doves when in control. And there really is no question that the deficit will go up.

But will this actually amount to fiscal stimulus? Right now it looks as if Republicans are going to ram through their whole agenda, including an end to Obamacare, privatizing Medicare and block-granting Medicaid, sharp cuts to food stamps, and so on. These are spending cuts, which will reduce the disposable income of lower- and middle-class Americans even as tax cuts raise the income of the wealthy. Given the sharp distributional changes, looking just at the budget deficit may be a poor guide to the macroeconomic impact.”

Krugman goes on to posit that between the stimulus and the tax cuts, the net effect is doubtful. That is only looking at the math from these policy departures. There is a very big difference between the post-recession situation today and previous recessions: the portion of Americans who haven’t yet recovered and are still living in a recession is far larger than any other time except for the Great Depression. Donald J. Trump campaigned on his understanding of the devastation the Wall Street crash inflicted on tens of millions of Americans. Whether or not this was a ruse to get elected and Trump will ignore all of his campaign speeches remains to be seen. It will also remain to be seen whether or not Trump understands the effect the social safety net has on the economy. One could deduce, from the list of cabinet nominees, that Trump will be amenable to cutting benefits from those who so desperately need them. One could deduce just as easily that Trump’s experience in his particular niche of businesses will make him acutely aware of the need to increase the flow of money back to the middle class so that expansionary policies have a multiplier effect, rather than a neutralizing effect.

How will Trumpian economics affect millions of middle aged Americans who’ve fallen out of the middle class who lost everything in 2008 and have been languishing without good jobs ever since? How will his policies affect the flow of corporate profits back from the overseas accounts they’ve been parked in for years and back into the U.S. economy without the kinds of fiscal policy changes that either make them desirable or even mandatory? Will what is sure to be the mass-reversal of industry reforms, particularly banking, take us to the next bigger and badder financial bubble? The difference, next time, will be how much less wealth the bottom 50% has at its disposal and that has the potential to make it far worse than the Great Recession.

In order for my now former hotel guest-mate, his family, the dozens of others who are current guests at the establishment my family has been living in to climb back to anywhere near the social status they once had, Trumpism will have to include policies that put white collar workers back in jobs that pay a middle class wage. In order for the vast majority of now young Americans who will be displaced by the coming robot armies of 2040, the Trumpism of two and three years from now will have to include plans for a universal basic income – something that is so much anathema to the likes of Trump and his former presidential opponent, Hillary Clinton. Those armies are coming. First, they will displace millions of truck and taxi drivers. Next, they will displace millions of blue collar workers and, eventually, start taking big bites out of the white collar workforce.

Society is changing and the incoming leadership is one that is averse to the kind of social order we will need in the future. Without a media that exercises a great degree of ethics and a freedom from corporate influence, we are unlikely to embark upon the kinds of national conversations that will lead us towards the preparations for the next stage in our industrial evolution. If the Great Recession’s “lost generation” was written off and out of the national narrative at the start of the 2016 electoral cycle, that same fate awaits their children, the millennial generation and dooms them to a life of deprivation and hardship.

There are 95 millions of Americans who have anywhere between 15 and 30 years of work ahead of them. They need to be the nation’s top priority. They won’t be the nation’s top priority unless the upper middle class is told their story and the extent of the ravage of the Great Recession. They won’t be the nation’s top priority without the mass-mobilization of liberals, progressives, and left-leaning independents. Nothing will change unless and until the political balance of power is recalibrated. In order for that to happen, there needs to be a catalyst for the disaffected and disillusioned to re-engage in American politics and take control.

So, yes. There are 95 million losers and, at least for now, I am one of them. Starting over at 54 has never been harder. For my husband, with an uninterrupted career until the Great Recession, starting over has never been more impossible. For my 19 year old who will graduate from university in 18 months, the future has never looked bleaker. We’ve barely survived these last two years. I often wonder how those we’ve met on our journey are faring, from the single older ladies we met at our first hotel, to the visiting nurse on a three-month contract from Kentucky, to the 50-year old engineer who has a contract job one week out of each month, to all the families in the Rust Belt who were abandoned by greedy captains of industry, to the family from India who came here 15 years ago to realize the American dream, only to be trapped with us at Hotel California.

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Related:

https://www.rimaregas.com/2016/06/03/profiling-the-angry-american-in-this-new-political-and-economic-era-blog42/