Happy Thanksgiving ... in 5 or 6 Years
America's shrinking middle class waits for record corporate profits to trickle down
Around the State
Fact is, there's plenty for which to be thankful because, contrary to popular perception, business is booming. Note:
- U.S. corporate profits in the third quarter rose to $1.66 trillion, the highest on record.
- After-tax earnings increased by 3.2 percent.
- Year-over-year profits jumped 28.2 percent.
- CEO compensation continues to rise accordingly.
Yes, on this Thanksgiving, many folks are faring quite nicely, thank you. In addition to the aforementioned captains of industry, include those individuals earning more than $250,000. That's the cohort President Barack Obama has classified as "wealthy." It's also the group that enjoys the lowest unemployment rate, ranging between 2 percent and 3 percent.
Beyond the bourgeoisie, the top 1 percent of U.S. earners have garnered 60 percent of all income gains in the past decade. Cheers!
Stunningly, even the bottom rungs of the economic ladder are profiting as demand for day laborers and immigrants surges. "We can't keep up," says a Baltimore labor exchange office that supplies blue-collar workers, many of the newly arrived immigrants.
Just one problem.
The middle class is shrinking and college-educated professionals are fast becoming the new working class. Exposed to the harsh vicissitudes of the global market, this growing legion of displaced workers is now competing with immigrants (legal and illegal) and lower-skilled Americans for hours at Home Depot and Burger King.
Meanwhile, Bill Gates and other high-tech entrepreneurs press Congress for more H-1B visas to bring in skilled workers from overseas.
Squeezed out of jobs they supposedly cannot or will not do, the American middle class atrophies, and the U.S. starts to look more like Brazil and other second-rate countries where the preponderance of the population is either very rich or very poor.
Still, under the theory that affluence trickles down eventually, there really is much to be thankful for, isn't there? Since the federal government officially declared America's recession over two months ago, the good times should be rolling again soon, right?
Chronically high unemployment rates -- including those among college-educated workers -- will soon be a thing of the past, politicians assure us. Go back to school, update those skills and embrace the New Economy, the education industry advises.
But behind closed doors, the Debby Downers at the Federal Reserve sounded a dreary note of caution this month.
Somewhat more than half of the participants at a previously undisclosed Fed conference predicted that "in the absence of any additional shocks ... the economy would converge fully to its longer-run rates of output growth, unemployment and inflation within about five or six years. (italics mine).
"The rest indicated it could take longer," according to newly released minutes of the meeting.
The Fed's caution -- even as it pumps $800 billion of newly printed greenbacks into the market -- suggests that the U.S. economy is in for a long slog. Can stagflation be far behind?
Amid surplus capacity and offshoring jobs, the global economy appears to be working for multinational and transnational corporations. Not so much for the home folks.
There's hope that Florida can buck the trend. Incoming Gov. Rick Scott, a successful businessman, says he has a plan to create 700,000 jobs in seven years. An independent financial forecast released this week suggested that the addition of 1 million Florida jobs is possible.
Geographically, Florida is well-positioned to attract trade-based employment from throughout the Caribbean and South America. Climatically and economically, the low-tax Sunshine State is a natural destination for U.S. companies, as well as for retirees.
But with middle-class Americans seeing their incomes and home equities evaporate in the past decade, the road back to prosperity will be a bumpy one.
I think I have a stomach ache -- and it isn't from gobbling too much turkey.
Contact Kenric Ward at email@example.com or at (772) 801-5341.