Sometimes statistics do tell the story.
According to information released by the U.S. Census Bureau last week, mid- to lower-class Vermonters took it on the chin between 2008-2010.
During those three years, median household income dropped 9.3 percent; the poverty rate for families headed by women with children jumped 12 percent — from 28 percent to 40 percent; the percentage of people relying on food stamps jumped from 8.7 percent to 13.2 percent; and while the state’s unemployment figures have been low compared to the rest of the region and nation (hovering around 5.8 percent), the number of unemployed has risen from 15,438 to 26,327, with another 4,400 dropping out of the work force.
Add it all together, and that means you have less money in the hands of individuals and families who used to spend that higher income on goods and services.
Consider also another statistic: In 1980, 70 percent of the state’s income was generated by 90 percent of the state’s income earners. Twenty-five years later, in 2005, 60 percent of the state’s income was generated by that same 90 percent… meaning that 40 percent of the state’s income was generated by the top 10 percent. According to Jack Hoffman of the Public Assets Institute, the latter statistic represents about the same percentage as before the Great Depression 75 years ago.
This growing income disparity is even more pronounced in other parts of the country, and as a nation, it’s nearing record levels, in which the richest few Americans control the vast majority of the nation’s wealth and income.
Why does that matter? Hoffman makes a good point: Increased income disparity makes low- and middle-income households poorer. Hoffman cites a recent study that debunks the myth behind President Reagan’s infamous “trickle-down theory:” when the rich get richer, the study found, prosperity doesn’t trickle down; rather, the poor and the middle class simply end up with less. And when the vast majority of Americans have less to spend, the nation’s economy comes to a standstill.
But the sad part is that this growing disparity didn’t need to happen. Rather, as Hoffman maintains, it’s the result of policies enacted by elected officials. When you reduce taxes on the wealthy as well as on the middle-class, the greater benefit goes to the wealthy. During President George W. Bush’s administration, the Republican-led House passed two significant tax cut reforms that were the largest in the nation’s history. At the same time, the very folks who were most benefiting from the tax cuts (the CEOs and investors of corporate America) were cutting middle-class jobs here at home, and hiring overseas in countries with cheaper labor. In many instances, corporate profits have skyrocketed because of those two factors, but precious little of it has benefited middle-class Americans.
“The good news,” Hoffman says, “is that we can adopt better policies. We can start by recognizing that trickle down didn’t work and, in fact, made things worse. Then we can establish polices that strengthen the middle-class and help build a state that works for everyone.”
It won’t be easy, but it’s certainly a better goal to shoot for than the one Americans have been mistakenly chasing for the past 40 years.
Angelo S. Lynn