October 28, 2011 4:29 PM
Has the United States become a country in which living well has become a contest best described as survival of the fittest?This is America
Editor’s note: The content of this edition of the Watch is different than any in the past. It represents my point of view on a single subject. It does not include the usual data blocks or restaurant reviews. The next issue of the Watch will be in the regular format.
James Richard Verone worked for major soft drink bottling company for 17 years as a product delivery man. That job ended a little over three years ago. He was in his mid-50s. He found another job as a truck driver, but it did not last. He lived off savings and a part-time job. He became a convenience store clerk, but because of a variety of physical ailments, he could not handle the work, which required considerable standing and lifting.
He had problems with his left foot, arthritis in his hands, and carpel tunnel syndrome. Then he noticed a protrusion in his chest. His pain became unbearable. He looked into filing for disability and applied for early Social Security. It turned out that the only program for which he qualified was food stamps. He refused to turn to his family for help.
He considered a homeless shelter and seeking medical care from a charitable organization, but rejected that course. And then at the age of 59, he had an idea about how he could get a place to stay, food, and necessary medical attention.
As he ran out of money, he closed his bank account, sold and donated his furniture, gave notice on his apartment, paid his last month’s rent, and moved into a Hampton Inn with the intent of staying there for a couple of days.
Then in June 9th of this year he got up, took a shower, ironed his shirt, and hailed a cab. He headed down the road and stopped at a bank.
He walked into the bank, handed the teller a note “demanding one dollar and medical attention.” He then told the teller that he planned to sit in the lobby and wait for the police.
On that same day, he mailed a letter to the “gaston gazette”, a newspaper that covers Gaston County, North Carolina. He listed as his return address the Gaston County Jail. “When you receive this, a bank robbery will have been committed by me. This robbery is being committed by me for one dollar...I am of sound mind, but not so much sound body.”
Verone wanted to be charged with bank robbery. However, because he only demanded $1, he was “charged with larceny from a person.” While that is still a felony, the potential sentence is not as long as for bank robbery.
He intends to represent himself at trial, make a statement, and then take whatever sentence is handed down. He has suggested that, if the penalty is not great enough, he will commit another crime. He hopes that while incarcerated he will get back and foot surgery, and treatment for whatever is causing the protrusion in his chest. His bail was reduced from $100,000 to $2,000, but he does not plan to pay it.
By June 16th, when this story appeared in the “gazette”, Verone had seen several nurses and had an appointment with a doctor. It is his view, that if the United States had socialized medical care, he would not have had to go to these lengths to get treatment. [“gaston gazette”, 6/16/11, story by Diane Turbyfill]
Detroit Michigan is closing half of its public schools. Camden, New Jersey has laid off half of its police force. [NYT 7/4/11]
In one American town, with an official population of 3,000, there is no longer a post office, a supermarket, a drug store, a barber shop, or a gas station. The schools have been closed. In some places the light switches don’t work and water faucets are dry. Residents leave their garbage on the lawn because there is no truck to take it away. [Washington Post, AP, 9/19/11]
Recently, the 22 year old daughter of a very successful British businessman spent $85 million on a 57,000 square-foot home in Los Angeles. It has 123 rooms, a bowling alley, gift wrapping suites, a beauty salon, and a barbershop. She apparently described the house as “homey and livable.” And, she noted, it is important for her five miniature dogs to have space. [NYT 9/4/11]
In New York City, there is available a 3-bedroom, park-facing home for $2,560,000. [NYT 10/16/11]
The former chairman of a large U.S. defense contractor, with the hope of luring his grandkids to his vacation home, bought a fancy playhouse for them at a cost of $248,000. [WP 7/22/11]
According to the U.S. Census Bureau, the median sales price of a house in the United States in August 2011 was $209,100. In 2010 the average annual expenditure for apparel in the United States was $1,700. Currently, Saks 5th Avenue is advertising a pair of Prada Suede and Python Knee-High Boots for the bargain price of $1,700 a pair. [BLS; WWW.Saksfifthavenue]
As discussed in the last issue of the Washington Watch, the unemployment number which is reported monthly by the Bureau of Labor Statistics – and repeated breathlessly by every conceivable media outlet – 9.1% for the month of September, tells only half the story. What is most disconcerting is that those who report this monthly figure know it is only half of the story, but they continue to use it “because it allows comparison with historical numbers.” Only occasionally does the real number show up in print, as it did in a recent Wall Street Journal op-ed by Mort Zuckerman.
The real unemployment number is 13.5%, and when you include those who are working part-time because they cannot find full-time work, the total underemployment number is 19.1%.
Here are the employment “facts” for September 2011:
- 9.1% -- people who have looked for work in the last 4 weeks
- 2.5% -- the so-called “marginally attached”, people who have not looked for work in the last 4 weeks, but did look sometime in the last 12 months
- 1.9% -- people who want to work ,but have not looked for the last 12 months
- 5.6% -- people who are working part-time, but want full-time work
- 19.1% -- Total
Among Americans under 24 years of age, unemployment is 18%. [NYT 9/4/11]
About 45% of the unemployed have been without work for more than six months. [Time 6/8/11]
In Washington D.C., the seat of the Federal government, the reported unemployment rate was 11.1% for September. This is the 3rd highest “state” unemployment rate in the country, trailing #1 Nevada at 13.4% and #2 California at 11.9%.
Calculating the real unemployed/underemployed number as above, essentially doubling the number reported by the media, we find:
- Nevada 26.8%
- California 23.8%
- D.C. 22.2%
The Gallup survey has a different way of counting the unemployed and the underemployed. Gallup’s total unemployed/underemployed number for the 30-day period ending October 23rd was 17.5% - 8.3% unemployed and 9.2% working part- time who want full-time work.
8.84 million jobs were lost in the private sector from January 2008 through February 2010. [WP 2/28/11]
There is just one job available for every five individuals looking for work. [NYT 3/25/11]
16.3% of Americans did not have health coverage in 2010. [WP 9/14/11]
More than 2,000,000 home loans are in foreclosure, and 2,000,000 more are more than 90 days delinquent. Of those who are more than 3 months behind in their mortgage payments, more than 40% have not made a payment in more than a year. [WP 7/11/11]
Home prices have fallen about one-third in the last several years. The nation’s housing stock is worth $8 trillion less than it was 5 years ago. Estimates are that there are 2.2 million houses sitting vacant and 7.5 million more are facing foreclosure. [WP 10/9/11]
The value of homes in the U.S. is hovering at an 8-year low and 10 million people are underwater with their mortgages. [WP 10/25/11]
Tight lending standards prevented 2.3 million homeowners from refinancing last year. [WP 9/24/11]
In Nevada, the State with the highest unemployment rate in the country, 60.4% of the houses in the State are in negative equity. [WP 9/24/11]
26% of renters spent more than half of their pre-tax household income on rent and utilities in 2009. [WP 4/25/11]
From December 2007 to June 2011 median household income fell from $55,309 to $49, 909. [Politico 10/10/11]
Since the housing market began to collapse “about 39% of all Americans have been foreclosed upon, unemployed, underwater on a mortgage or behind more than two months on a mortgage.” [WSJ 2/19/11]
In 2010, for the first time, employees received less than half the total national income, 49.9%. [NYT 8/6/11]
In 2011, 40% of Americans said they are using college or retirement savings to pay regular bills. 29% are borrowing money from family or friends to pay bills. [Time/Money Poll 10/11]
Federal bankruptcy filings were up 8.1% in 2010 from 2009, and 42.6% from 2008. In 2010, a total of 1,593,000 bankruptcies were filed, of which 1,537,000 were personal filings and 57,000 were business related. There were more bankruptcies in 2010 than there were in 2006 and 2007 combined. [BankruptcyAction.com]
15.1% of the U.S. population, 46.2 million people, live in poverty, including 22% of children. This means that 1 in 6 Americans survive on a maximum salary of $22,314 for a family of four. This is a record number for the U.S. and is the highest percentage of people in poverty of any major industrialized nation.
The number of children living in poverty has increased by 4,000,000 since the year 2000. The number of children who fell into poverty between 2008 and 2009 was the largest single year increase ever recorded. As a result, 22% of children overall, including 40% of black children and 33% of Hispanic children, are living in poverty. [ NYT 8/6/11;WP 9/14 and 9/19/11]
The suburban poverty rate is 11.8%. That is the highest it’s been since 1967. The number of people in “deep poverty,” defined as a family of four with an income of $11,000 per year, grew to 6.7% of the population. [NYT 9/13/11]
Americans were more dependent on government assistance in 2010 than at any time in the country’s history. 18.3% of total personal income came in payments from the government for Social Security, Medicare, food stamps, unemployment benefits, and other programs. 28% of income in West Virginia came from government programs, more than any other State. [USA Today 4/26/11]
In July 2011, 45,344,000 people were on food stamps. This is an increase of 28,144,000 since 2000, when 17,200,000 were receiving this form of assistance. [U.S. Dept of Agriculture]
The number of people on Medicaid has grown from 34,000,000 in 1939 to 42,300,000 in 2007, and to 50,000,000 in 2010. [USAToday 8/05; CNNMoney 4/13/11]
The number of homeless children in public schools increased by 41% from the 2006-7 school year and the 2008-9 school year.
Of the 47 States with newly enacted budgets, 38 or more States are making deep, identifiable, cuts in K-12 education, higher education, and healthcare.
A majority of children in all racial groups cannot read or do math at grade level in the 4th, 8th or 12th grades. [NYT 8/6/11] 30% of high school students do not graduate. 3 million students attend 5,000 schools that are considered “failing” by Federal standards. [Huffington Post 10/19/10]
As of 2008 U.S. manufacturers say that 40% of 17 year olds do not have the math skills and 60% lack the reading skill to hold down a production job at a manufacturing company. [William Bennett CERC 2008]
Two-thirds of BA degree recipients, who graduated with debt in 2008, had debt of $24,000.
14,000 business leaders in 142 countries were asked to assess the infrastructure in their country. The best the United States finished in any category was 20th.
- Overall quality – 24th
- Roads – 20th
- Railroads – 20th
- Ports – 23rd
- Air transport – 31st
37% of all consumer purchases are made by the 5% of Americans with the highest incomes. [NYT 9/4/11]
As advanced education becomes ever more important, the cost of going to college continues to escalate. At public colleges, in-State tuition and fees will grow by 8.3% per year to $8,244 by 2012. When you add in room and board the total cost is $17,131.
At private schools, the average increase is 4.5% per year to $28,500 for tuition, and $38,559 when room and board is included.
While the actual price that students pay is often lower because of the availability of various types of student financial aids, many of those aids are under pressure in this economic environment. [WSJ 10/26/11]
On the lighter side, an episode that could happen only in America....
On October 25th a Fairfax County, Virginia jury took 20 minutes to exonerate a dog walker of failing to pick up after the dog she was walking, a Westie-Bichon Frise mix.
The trial included pictures snapped by the neighbors who brought the charges against the dog walker. The owner of the dog, called as a witness for the defense, was asked if the poop piles in the photographs that had been placed in evidence looked like the stools created by her dog. Her strong response was, “I’ve never seen something that big come out of my little dog.” It also turned out that the dog owner had brought a bag of the dog’s poop to the courthouse in case it was needed as evidence. She did leave it in her car. [WP 10/26/11]
An Economic ChasmIt has always been the case in the United States, and in every other country, that there is a large gap between the most wealthy and the least wealthy in society. It has also been the case that, when most folks were economically comfortable, there was little anger about these differences by those who were less economically comfortable.
That has now changed. There is a growing resentment of the inequality, and those at the top of the ladder are increasingly disparaged by those at the bottom, or even the middle of the ladder.
In 1970, the 20% of Americans who made up the lowest fifth of the country shared 4.1% of household income. In 2010, they share 3.3% of household income.
Conversely, the 20% of Americans who represent the top 5th of the country shared 43.3% of household income in 1970, which grew to 50.2% in 2010.
Those in the 3rd or middle fifth shared 17.4% of income in 1970 and 14.6% in 2010. In short, in 2010, the top 20% controlled more household income than the other 80%.
|Shares of Household Income in Fifths||2010||2000||1990||1980||1970|
|[U.S. Census Bureau, Current Population Survey]|
The upper 1% of Americans is taking in nearly a quarter of the nation’s income every year. And that 1% controls 40% of the wealth. 25 years ago the upper 1% took in 12% of the income and controlled 33% of the wealth. [Vanity Fair 5/11]
In 2009, the richest 5% claimed 63.5% of the nation’s wealth, while the bottom 80% held just 12.8%. [NYT 3/25/11]
400 people in the United States control more wealth than the poorest 150 million Americans combined. [WP 9/25/11]
The median pay for top executives at 200 of the largest companies was $10.8 million last year, an increase of 23% from 2009. [NYT 7/3/11]
U.S. workers averaged $46,700 in compensation in 2010, an increase of 2.6% from 2009. [USA Today 7/8/11]
The average American worker took home $752 a week in late 2010,up 0.5% from the year earlier. After inflation they were actually taking home a lesser percentage. [NYT 7/3/11]
Nearly one in three Americans who grew up in the middle-class has slid down the income ladder as an adult. [Pew Trust – WP 8/7/11]
From 1980-2009, the income of the top fifth of Americans grew by 55%, while that of the bottom fifth fell by 4%.
|2009 Income Range|
|Bottom Fifth||-4%||$26,934 or less|
|2nd Fifth||+7%||$26,935 - $47,914|
|3rd Fifth||+15%||$47,915 - $73,338|
|4th Fifth||+25%||$73,339 - $112,540|
|Top Fifth||+55%||$112,541 or more|
From 1979-2007, the “average inflation-adjusted after-tax income” of the top 1% grew by 275%. The bottom fifth of the population saw their household income grow by 18%.
[WW was unable to locate a 1979-2007 chart and therefore the information below is based on the period 1979-2005 as calculated by WW]
In dollar terms, the growth for those in the lowest fifth increased their after- tax income by $900 to $15,300. For those in the upper 1%, the growth was an additional $745,000, to a total of $1,071,500.
|% growth||$$ increase||2005 income|
|[Congressional Budget Office]|
Another way of looking at the redistribution of after-tax household income is to look at the share of total after-tax household income that is attributed to the top 1% versus the share that is attributed to other fifths of the population.
|Top 1 %
|[Cong. Budget Office/NYT 10/26/11]|
Proctor and Gamble estimates that it has at least one product in 98% of American households. Historically, P&G developed products for the large and sturdy American middle class. The middle class was the primary buyer of their higher priced products. As the recession wore on P&G’s lower end products, like Luvs diapers (Pampers is the higher end) and Gain detergent (Tide is the higher end), started to run ahead of its more expensive lines, despite receiving far less advertising. Now P&G is racing to develop products for high and low income consumers. More and more of their traditional middle class customers are buying lower priced products.
Citigroup refers to this phenomenon as the “Consumer Hourglass Theory.” The high income segment of the buying public and the low income segment of the buying public are becoming more pronounced, as the middle income segment is eroding. [WSJ 9/12/11]
For 79% of Americans (76% of the sample) who are familiar with the Occupy Wall Street protests, the gap between rich and poor in the United States has grown too large. [Time Swampland poll 10/10/11]
45% of Americans believe that the nation is divided into “haves” and “have- nots.” [PEW 2011]
Gallup has found the following as it asked roughly that same question over a period of 20 years. In 1988 – 26% said yes; in 1998 – 39% said yes; in 2003 – 41% said yes; in 2004 – 37% said yes; in 2006 – 45% said yes; and in 2008 – 49% said yes.
UnrestThe U.S. Geological Survey has adopted a system for describing the level of activity of a volcano.
Normal – a non- disruptive state (after having erupted sometime in the past)
Advisory – volcanic activity continues, but has decreased significantly
Watch – Heightened/escalating unrest with increased potential for eruptive activity
Warning – Highly hazardous eruption underway or imminent
In a recent Washington Post column, Dan Balz quoted a Colorado man by the name of Tom Brown. When referring to the Occupy Wall Street protests he said, “It’s kind of like a volcanic gurgle. The mountain hasn’t exploded, but it’s rumbling.”
Tom Brown has it about right. Using the standard to describe volcanoes, America is at the Watch stage. There is a heighted unrest with the current impact of economic inequality.
The United States has not experienced major social unrest since the Vietnam War sparked 8 years of periodic protest.
February 1965 - the U.S. began bombing North Vietnam and the anti- war movement took action
- There was a march on the Oakland California Army Terminal, while university professors organized “teach-ins” on campuses to educate students about the war
April 1967 – 300,000 people demonstrated in New York City against the war
June 1967 – thousands of letters were sent to the Secretary of Defense
October 1967 – 50,000 people participated in a two-day march on the Pentagon; 700 people were arrested
- Civil Rights leaders rallied the African-American community to protest the war, and labor leaders and blue-collar workers joined in
October 1969 – more than 2 million people participated in “Vietnam Moratorium” protests across the country
November 1969 – A second march on Washington drew over 500,000 participants.; another 150,000 demonstrated in San Francisco
Final escalation of the protests occurred after the 1970 news of the My Lai massacre
May 4, 1970 – Ohio National Guardsmen fired on a group of protesting students at Kent State University, killing four and wounding sixteen. A national student strike closed down 500 colleges and universities
- 100,000 demonstrated in Washington
Unrest, driven by various forms of inequality, is not limited to the United States. Here are a few examples.
Chile – August 2011
Thousands of high school and university students have marched through the capital's streets, demanding a radical overhaul of the education system. At the heart of the students' anger is a perception that Chile's education system is unfair – that it gives rich students access to some of the best schooling in Latin America, while dumping poor pupils in shabby, under-funded state schools.
England – August 2011
The four days of rioting, triggered by a fatal police shooting on August 4 in north London, were the worst civil disturbances to hit Britain since the 1980s. Those involved were primarily young and poor. Scores of stores were looted and buildings burned in several cities, including London and Birmingham. Britain’s Deputy Prime Minister Nick Clegg last month pledged new help for disadvantaged youths, saying young rioters have been let down by society.
Germany – August 2011
In a fiery spree of destruction, at least 26 luxury cars were torched by vandals in Berlin over two days in mid-August. Some worry that acts of arson could be the spark to ignite smoldering class warfare sentiment into U.K.-style rioting across Germany.
Large demonstrations against government austerity measures have become common over the last couple of years. The demonstrations are in response to cuts in social programs, the lack of jobs, and an increase in taxes. There are claims of corruption against public officials, but the momentary driver of these government actions is related to an effort to stop the government from going bankrupt.
Israel – August 2011
In a country of 7.7 million people, with a strong economy, over a quarter of a million Israelis staged the country's biggest protest in decades. They called for far-reaching social reform to ease the financial burden of the increasingly straitened middle class. From modest beginnings, the protests have mushroomed into a nationwide movement. Addressing a range of issues, the movement brought together Israelis from both ends of the political spectrum in a rare show of unity. Personal politics have taken second place to gripes over high taxation, soaring food and petrol costs, the divide between the rich and poor, and shrinking social services.
Among the targets of the demonstration is a concentration of wealth in a series of families which, through various business groups, arguably control some 30% of the economy. The net result is that a country once seen as an example of ultimate economic equality has developed a very large gap between the rich and the poor.
Russia – September 2011
While there have not been demonstrations, Vladimir Putin in making it clear that he will again become President of the country, promised strong economic growth. He promised to do away with a flat tax and instead adopt a higher tax on the wealthy. This promise apparently is intended as a response to a growing discontent in Russia with income inequality.
On October 15th rallies in sympathy with the Occupy Wall Street protests in the United States took place in 900 cities in Europe, Africa and Asia
Will There Be Major Social Unrest And Demonstrations In America’s Future?The country is moving away from Washington
In American politics today, one group of public officials believes in survival of the fittest and the other group believes that the fittest should be responsible for the survival of the less fit. Neither is the consensus position of a majority of Americans.
Most important, the public has lost faith in the ability of the Congress and the President to get anything done, good, bad or indifferent. It has become clear to them that, at least as relates to the Federal government, they are on their own.
Trust in the Federal government is at an all time low. Only 10% (1% always) (9% most of the time) believe they can trust the government . This is the lowest positive rating recorded, going back at least to 1976. There has been an 11- point drop in the trust score in the past year. [NYT/CBS 10/24/11]
82% view the Federal government as Unhealthy/stagnant (35%) or Not working well/needs large reforms (47%). [NBC/WSJ 10/10/11]
84% disapprove of the job being done by Congress. Only 9% approve. This is the worst rating of Congress in decades.
74% say the country is off on the wrong track, and 86% believe the economy is “fairly bad” (50%) or very bad (36%). 57% believe that jobs/the economy is the single most important problem facing the country today. The next highest problem is the budget deficit, at 5%.
58% disapprove of the job being done by the President in job creation. [NYT/CBS poll 10/24/11]
Is the Occupy Movement the precursor of something bigger?The “Occupy” Movement in the United States began in New York City on September 17, 2011 as “Occupy Wall Street.”
Using Facebook as a directory of the movement’s growth, as of October 19, 2011
Largest Facebook group –“Occupy Together” - 144,962 followers
Second largest group – “Occupy Wall Street” – 88,989 followers
The smallest group is Lancaster, PA – 4 followers
There are 191 city/state groups
- There is a group in every state
- There are groups in Guam, Puerto Rico, American Samoa
- Other than Occupy Wall Street in New York City
- Largest – Boston, Mass – 31,123 followers
- Smallest – State of Delaware – 1,025 followers
There have been growing numbers of physical confrontations between the “occupiers” and local law enforcement. Currently, there is considerable tension in Oakland, California. A significant injury to one demonstrator, an Iraq war veteran, during a police crackdown on protesters, has led to calls for a general strike in the city. The claim is that he was hit in the head by a tear gas canister fired by police.
So far, participation in the various Occupy protests does not appear to represent the categories of Americans that will have to join up for this movement to take the next step forward, i.e., mass numbers of the unemployed and otherwise dispossessed.
One thing is clear. The Movement has well selected its’ initial target, Wall Street. When asked, “How much do you trust Wall Street bankers and brokers?,” 76% of Americans responded negatively (54% not at all, 22% a little) . [CNN/ORC 10/16/11]
At a minimum, the idea of massive demonstrations as a way to make the case to the country’s leaders on the subject of income inequality has been planted.
How long will Americans put up with the current state of affairs?
How long will it be before a substantial number of Americans decide that enough is enough, and begin to look for some way, outside of the regular electoral system, to express their anger and desperation?
How long will it be before they look for new ways to make their angst clear to all public officials, from the most conservative to the most liberal?
Will America’s leaders catch on before it is too late? If history is any teacher, they will not act in time.
The likelihood of massive social unrest is more likely than not.
In 1965, a man named Norman Morrison set himself on fire and died outside the Pentagon, within viewing distance of a window of the Secretary of Defense’s office. It was his way of drawing attention to his opposition to the Vietnam War. He brought his infant daughter with him, but she was not harmed. His act of self- immolation was widely reported. The U.S. disengagement did not start until eight years later.
What is the name of the man or woman who will literally or figuratively set him or herself on fire in the town square of what mid-western city?
Reaction will be speedier this time. After all, in 1965 there were a total of three TV networks and many radio networks, and while there were many newspapers and magazines, there were no cell phones and therefore no cell phone cameras. There was no cable, no internet, and the primary means of communication was landline telephones, Western Union teletype, and fax machines that took 6 minutes per page to print.