Wednesday, December 05, 2007

Interesting viewpoint of our Economy

This is from the National Public Radio (NPR) website:

Scott Jagow: New polls out this week suggest the economy is now the number one issue for voters. Ahead of terrorism, ahead of the war in Iraq. Commentator Robert Reich says this isn't just because of the housing market, or the recent economic slowdown.

Robert Reich: The real reason is middle-class families have exhausted the coping mechanisms they've used for over three decades to get by on median wages that are barely higher than they were in the 1970's, adjusted for inflation. The income of a young man in his 30's today is actually 12 percent below that of a man three decades ago.

The first coping mechanism was moving more women into paid work. The percent of working mothers with school-age children has almost doubled since 1970 -- from 38 percent to about 70 percent. Some parents are now even doing 24-hour shifts, one on child duty while the other works. I call these families DINS, standing for "double income, no sex."

When families couldn't paddle any harder, we started paddling longer. The typical American now works two weeks more each year than we did 30 years ago. Compared to any other advanced nation we're veritable workaholics, putting in 350 more hours a year than the average European -- more even than the Japanese.

As the tide of economic necessity continued to rise, we turned to the third coping mechanism: We began taking equity out of our homes, big time. But now that home prices are sinking for the first time in decades, this no longer keeps us afloat. As Moody's reported last week, defaults on home-equity loans have surged to the highest level this decade.

In short, it's the economy, stupid. But not just the current slowdown. The underlying problem began around 1970 -- and any presidential candidate seeking to address it will have to think bigger than stimulating the economy with tax cuts or spending increases.

The fact is, most Americans are still not prospering in the global economy, and almost all the benefits of economic growth have gone to a small number at the very top. The candidate who acknowledges this and comes up with a way to truly spread prosperity will have a good chance of winning over America's middle class.

Jagow: Robert Reich was Labor Secretary under President Clinton.

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