Published on Saturday, April 1, 2006 by the Madison Capital Times (Wisconsin)
Grim Economic News Gets Grimmer
by Dave Zweifel
You probably saw the story the other day that the U.S. Bureau of Labor Statistics reported that real wages in 2005 had dropped 0.9 percent from the year before.
That was big news because in 2004 overall real wages were flat. For the first time as long as wage records have been kept, American workers' income had not increased in two straight years.
There was other disturbing economic news that came at about the same time but didn't get as much publicity.
For instance, the Federal Reserve not so surprisingly found that "growing numbers of American households face mounting debt and financial instability."
Roughly 76 percent of households carry a debt load averaging $55,300 or about 128 percent of the median household income. That's not surprising either since costs for health care and education alone have been rising well above wage increases, not to mention the cost of gas for the car and natural gas for the furnace. Many American workers are now sacrificing annual raises so that their employers can afford to pay the increases in health insurance.
All of that has caused a 10 percent average family increase in credit card debt and a proliferation of bigger home equity loans almost all of it, of course, in America's middle class.
Many economic analysts see rising costs, plus greater job instability at some of the traditional blue collar corporations in the country, forcing many families to borrow on high-cost credit just to stay even. They can only hope that times will get better so that they can pay off that debt.
And, of course, the economy of the past few years has significantly widened America's infamous gap between rich and poor. America's wealthiest 10 percent experienced a net worth increase of 6.1 percent in 2004 to an average of $3.1 million. But the bottom 10 percent had their net worth fall from zero in 2001 to minus $1,400 in 2004, which means that they owed more than the value of their assets.
Pat Schneider of our staff reported only a few weeks ago that the number of families using food pantries in a 16-county area in southern Wisconsin has grown by 34 percent in the past three years. Nationally, the increase in food pantry use has averaged about 8 percent a year.
Despite fact like these, President George W. Bush came to Milwaukee recently and announced that as far as the economy is concerned, "We're just doing fine." The economy is "strong and gaining steam," he added.
Makes you wonder who in the world this man is talking to.
Dave Zweifel is editor of The Capital Times.
© 2006 The Capitol Times