Did You Get Yours?

Now that the boom has gone bust, Barbara Ehrenreich's piece in today's WaPo Outlook section notes that "The Boom Was a Bust for Ordinary People." Not that I have to tell any of you that. The only ones who haven't said this out loud are the administration & their cronies, whose reputations are tied to the idea that Bush has given the country years of good economic news. For those who haven't run across Ehrenreich before, she authored the book "Nickeled and Dimed" in which she took a series of low wage jobs to see if any of them could actually support a person on their own. Big surprise, not hardly.

In her op-ed piece she notes that the Economic Policy Institute released a study showing that real wages fell last year. Those jobs that were paid barely survival wages when she wrote her book are now paying even less in real terms.

While the stock market soared and fortunes were being made in the time it takes to say "IPO," my $6-to-$8-an-hour co-workers lunched on hot dog buns because that was all they could afford and,in some cases, fretted about whether they could find a safe place to sleep.

She goes on to note that:

In the months ahead, we can expect the hard times to spread. Citigroup has announced plans to eliminate 21,000 jobs; investment banks in general will shed 40,000. The mortgage industry is in a meltdown; Business Wire predicts a 37 percent increase in the number of companies planning layoffs this year. This is what a stimulus package needs to address: the persistent and growing struggles of the middle class and the working class, which is increasingly conterminous with the working poor.

There are reasons for doing so other than compassion. The chronically poor and the battered middle class have become a tripwire in the American economy -- generating defaults on debts, depressed consumption and global market turmoil.

Consider how we got into the current credit crisis in the first place, through defaults on subprime mortgages. These went to plenty of affluent folks and have wreaked havoc in gated communities. But overall, subprime loans were designed for, and snapped up by, the poor. According to a recent study from United for a Fair Economy, 55 percent of subprime loans went to African Americans and 17 percent to whites. Among whites, they went far more frequently to low-income people than to the wealthy -- 39 percent compared with 24 percent. Hence the subprime industry's noble boasts about providing the opportunity for home ownership to people who might otherwise have been excluded from it.

And yet companies across the US continue to pay their workers as little as they can get away with, not realizing (or not caring?) that workers who have to choose between rent and food or heat don't have a lot of extra money to spend on the products the companies are producing.

Not that we hadn't been warned. A century ago, Henry Ford realized that his company would only prosper if his own workers earned enough to buy Fords. But, like Wal-Mart, too many of our employers today haven't figured out that their cruelly low wages would eventually curtail their own growth and profits.

And the administration & Congress are really reading the wrong tea leaves if they think giving Americans a few hundred bucks in rebates (which will add to our tax bills next year) will send us shopping. What it might do is allow people to stay in their homes a bit longer by letting them pay on the mortgage that is by this point all about interest, not principle.