Wealthy Reap Rewards While Those Who Work Lose

Published on
by
Inter Press Service

Wealthy Reap Rewards While Those Who Work Lose

by
Adrianne Appel

Times are tough for workers in the U.S. where a recession has a stranglehold on much of the economy, but life is perfectly rosy for those at the top. (photo by Flickr user wannabehipster)

BOSTON - Times are tough for
workers in the U.S. where a recession has
a stranglehold on much of the economy, but life is perfectly
rosy for those at the top.

The riches of the wealthiest North
Americans grew by double
digits in 2009, primarily from interest their money earned
when it was invested in the stock market and elsewhere,
according to a report by the Boston Consulting Group.

Millionaires in the U.S. and Canada saw their wealth
increase 15 percent in 2009, to a total of 4.6 trillion
dollars, the report found.

Worldwide, 11 million - or less than 1 percent of all
households - were millionaires in 2009. They owned about 38
percent of the world's wealth or 111 trillion dollars, up
from about 36 percent in 2008, according to Boston
Consulting Group.

About 4.7 million millionaires live in the U.S., four
percent of the population and more than anywhere else in the
world. Japan, China, Britain and Germany followed the U.S.
in the number of millionaires.

Their fortune is a stark contrast to the lives of more than
15 million people in the U.S. who are unemployed and
searching for work, and the eight million more who are just
getting by with a part-time job, according to the U.S.
Bureau of Labor Statistics. More than two million more
people were working prior to the recession but have now
dropped out of the labour force.

Apart from the newly unemployed, about 39 million people in
the U.S. are chronically poor and do not have enough food to
eat, according to the U.S. Census and U.S. Department of
Agriculture.

"The nation's jobs crisis is so catastrophic that, unless
Congress acts on the scale of the New Deal, millions of
Americans will experience extremely long periods of
unemployment for many years ahead," Lawrence Mishel,
president of the Economic Policy Institute, told a panel of
the Committee on Ways and Means recently.

Not so for millionaires and the uber-rich.

The uber-rich, those with more than 30 million dollars, are
on the rebound. They spent more money in 2009 on fancy cars,
yachts and jets compared to 2008, according to a study by
Merrill Lynch-Capgemini. They bought fine art, expensive
jewelry, gems and antiques, items that are likely to
increase in value over time, so they can sell them later and
make more money.

The recession isn't hitting those at the top as it has
workers. In fact, many wealthy people benefited from the
stock market's ups and downs, said Mike Lapham, director of
the Responsible Wealth Project at United for a Fair Economy,
an NGO in Boston.

"Folks at the top have a cushion, a disposable income to
fall back on. Maybe their portfolios took a hit but they
didn't lose their jobs and their homes. If they had losses,
they can deduct them from their taxes," Lapham told IPS.

"Some people bet successfully on the financial system going
under," he said. "The stock market went from 10,000 to 6,000
and back to 11,000. That's a big jump for people with
significant portfolios."

"The people at bottom who've lost work, it'll be years
before they get back to where they were before the crash,"
Lapham said.

The U.S. average national unemployment rate is 9.7 percent.
Only those who are actively looking for work are included in
this statistic. Among Black Americans, the rate is 15.5
percent and Latinos, 12.4 percent, according to the Bureau
of Labor Statistics.

The Congressional Budget Office predicts that unemployment
will remain almost unchanged in 2011, about 9.5 percent.

Many families have been surviving on small, weekly
unemployment checks provided for 26 weeks by their state
government, and an additional 73 weeks by the federal
government. The first group of unemployed to run through
both benefits hit that point Jul. 1, and today about a
million people are receiving no assistance at all. About
nine million more are still receiving unemployment payments.

Congress is considering extending federal assistance for
another 20 weeks. The House approved the legislation, but
the Senate did not. Congress left town for its holiday break
until mid-July without passing the legislation.

In the Senate the issue fell almost precisely along party
lines, with all but one Democrat for extending the benefit,
and all but two Republicans against it, saying the 34-
billion-dollar cost was not worth adding to the federal
deficit.

Without the vote of Democratic Senator Ben Nelson, of
Nebraska, the bill was one vote short of the 60 needed for
passage.

"I think we're going to see a new wave of heartache here in
Rhode Island," with the end of the federal assistance, Kate
Brewster, executive director of the Poverty Institute, a
Rhode Island NGO, told IPS.

The small, northeastern U.S. state, a former manufacturing
centre whose jobs moved offshore, has struggled with higher
unemployment and low-wage jobs for years. Most recently, it
was hard hit by the foreclosure crisis and the downturn in
the construction industry.

The ongoing unemployment and low jobs creation nationwide is
helping to fuel the millions of foreclosures sweeping across
the nation, according to a report by the Harvard University
Joint Center for Housing Studies.

The nation's anemic jobs creation, high foreclosures and
weak consumer spending has convinced Mishel and many
economists that the U.S. is in for an extended downturn.
Just 83,000 jobs were created in June, instead of the
150,000 needed for robust employment, according to the U.S.
Labor Department.

"The United States is undergoing the worst economic downturn
in 70 years, and the damage and suffering it is causing will
last many years beyond the official end of the recession,"
Mishel said.

Rhode Island's future is uncertain.

"We've consistently had one of the highest rates of
unemployment in the country," Brewster said. Today, in the
midst of the recession, more people are showing up at soup
kitchens for free meals and dialing in to a toll-free,
crisis phone service for families in dire circumstances, she
said.

"They've had an enormous influx of calls in the past 18 to
21 months," she said. Fewer services are available to help
them.

"Within last five years the state cut back work support
programmes like child care assistance and funded health
insurance," Brewster said. "The cruel irony is that when
families really need help, less is available."

Share This Article

More in: