Quartz has an article about the uneven economic geography of America (see here) . In effect, we have two American economies. One is made up of expensive
coastal zip codes where the pundits proclaiming “recovery” are
surrounded by prosperity. The other is composed of heartland regions
where ordinary Americans struggle without jobs. Over 50 million
Americans live in what the Economic Innovation Group calls “distressed communities”—zip
codes where over 55% of the population is unemployed. Of those
distressed communities, over half are in the South, defined generously
by the census as the region stretching from Maryland and Delaware to
Oklahoma and Texas. The rest tend to live in Midwest rust belt cities
that have long suffered from economic decline, like Gary, Indiana and
Cleveland, Ohio. It is nearly impossible for Americans of the latter
group to move to the cities of the former group—or to work in the
industries that shape public perception of how the economy is going.....In 2015, the number of Americans who moved across state lines was reported to have fallen to a low not seen since 1947. Barriers to moving include a massive drop in personal savings:
62% of Americans have less than $1,000 and are unable to afford
relocation costs. This was not always the case. Among those who had
savings prior to 2008, 57% said they’d used some or all of their savings
in the Great Recession. The soaring cost of living in cities with
healthy economies combined with the low wages of America’s distressed
heartland has locked many Americans in place.
I definitely agree that if left unchecked or in the presence of a corrupt, deregulated government that wealth inequality is inevitable. It's staggering to me that so many neoclassical economists believe that free market is the solution when we know that capitalism when left unchecked will eventually create monopoly, oligopoly, etc.
ReplyDeleteThe article says that less people are moving due to little to no savings, but even so, the people that are moving are certainly not moving to the rust belt rather out of it. Jennifer's article about the mega wealthy is key to understanding the vacuum that has been created in some areas due to lack of wealth and the midwest is where it's happening. Michigan is lauded for its multitude of great universities and colleges, but in the end, very few people stay and contribute to the economy.
The number of 62% of Americans having less than $1,000 dollars is somewhat terrifying because of the purchasing power of $1,000 dollars today. It is minimal, it is a months rent and it barely covers costs of living. Savings are the key to growth for americans because it can provide funds to invest. If there are no funds to invest then there is no growth and a vicious cycle. What can we do??
ReplyDeleteI would imagine that if you add state and federal benefits programs that the number is much higher than $1000. But I agree it is a vicious cycle.
DeletePeople who are making more than 50% of Americans probably aren't receiving many state or federal benefits. A lot of the people in this statistic are in the middle class. Also this is savings, not income. So benefits would not count unless they had saved them from the previous payment. Maybe I misunderstood your comment here, but I just don't think benefits programs have a huge impact on this statistic.
DeleteBrian brings up a good point here. Not only are people not saving enough to invest and to grow financially, but they are also stuck in a location where they can't afford to live OR afford to move. They are basically stuck between a rock and a hard place, with no foreseeable solution. As others mentioned, it would take better wages and job creation for these individuals to be able to advance themselves.
DeleteThis just goes to show that while the economy has recovered from the great recession, many average Americans have not recovered. The stock market and even the unemployment rates don't tell the whole story. It is easy forget that people are still struggling to survive. The next president needs to encourage job creation and wage growth. Without the two, like Brian said, we will remain in a vicious cycle.
ReplyDeleteI think you hit the mark by saying that job creation and wage growth are what we should strive for. Piketty does an excellent job of exposing the issues that come with using "typical" economic indicators. The U.S. has undeniably experienced significant economic growth during its relatively short existence, however, the idea of an average American is extremely abstract. Growth is allegedly the thing that keeps inherited wealth from creating perpetually wealthy families, yet the rich continue to own more wealth. One thing that I wish Piketty would talk about more is how inherited wealth has been essentially able to avoid the effects of growth.
DeleteIt's awful that some places are too expensive to live in, but it's worse that some locations have residents that are too poor to leave. One of the goals of politicians throughout this next election should be to revive these "distressed communities". Individuals should have the option for mobility in these situations, but it's just not economically feasible at the moment.
ReplyDelete