The acceleration of a global Gilded Age: Half of the world’s wealth now owned by one percent of the population. Bottom half of world population own the same as the richest 85 people in the world.
Wealth inequality across the globe has reached epic proportions. While many bankers roll around in piles of digital million dollar bonuses for basically adding no value to the economy, the rest of the world struggles to enter this modern economic era. The perception is that this is only happening across the world in other nations. Unfortunately the US has done an excellent job of exporting the middle class and creating a widening gap between rich and poor. A report by Oxfam International highlighted the dramatic wealth inequality that now plagues the world. Half of the world’s wealth is now owned by the top one percent of the population. Interestingly enough this pattern is also unfolding here in the United States. The global banking system has protected its own interests and to what end? It appears that a modern day global Gilded Age is now unfolding.
The biggest export from America? The middle class. The tradeoff for cheap goods and financial cronyism is coming back in a big way.
There is always a tradeoff in economics. The adage about a free lunch comes to mind to the rise of low wage capitalism in America. It is a complicated web driven by financial cronyism and a system largely driven by ignoring the plight of the working class. The story of US manufacturing is probably one tiny example of how we exported our middle class in exchange for cheaper goods and a massive amount of income inequality at the top. Yet there is a winner here as well. While the US middle class is shrinking the middle classes of China and India are growing and so is our income inequality. This trend tends to grow the economies overseas but has placed a large burden on the unskilled and working class in the US. This is possibly an inevitably given the global nature of our markets. When you get addicted to low cost goods, you may find yourself in a race to low wage capitalism. In the US and Europe people would not take on the jobs that pay near wage-slave levels and have terrible working conditions in countries that are now booming. While the top wage earners in the US are doing fantastic protected by Wall Street and Washington D.C. (many are diversified across the world), those who get paid in US dollars and come from the working and middle class are having a tough time adapting. The tradeoff has been coming home to roost in a big way.
When a dollar store is too expensive: Growing class of poor Americans unable to afford items at dollar stores.
You know things are tough when people face a challenge purchasing goods at dollar stores. The dollar store economy has been robust for the last decade as the US economy has shed the weight of millions of middle class families. As more people move down the economic ladder, these stores hit a critical niche. I remember when dollar stores were simply a place to find excess junk inventory. That changed over the last few years. Many of these dollar stores like the 99 Cents Store and Family Dollar now have a giant section of food. To many families, these are their supermarkets. In fact, a giant portion of revenues come from food items as people shift gears into lower priced items and there are few items more necessary than food. No longer are off the wall brands on the shelves but name brands trying to capture the funds from the 47 million Americans on food stamp debit cards. However, there are signs that even dollar stores are having a tough time with some customers given the extremely tight budgets they face.
Low wage capitalism with a dab of cronyism: Of job sectors with the highest growing raw number of positions 9 out of 10 will pay $35,000 a year or less with little to non-existent benefits.
There was a big miss with the latest employment report. The addition of 74,000 jobs produced the weakest employment report going back to January of 2011. Yet part of this is not a surprise given the weak retail sales over the holidays at the expense of cash strapped American consumers. If you dig deep into the data you find a continuing pattern of low wage employment taking over the nation. This trend is accelerating as wealth inequality reaches record proportions. When the Great Recession struck many good paying jobs were washed away in a bathtub of corporate financilization that has truly set the country on a fast track to economic inequality. Austerity for the public and corporate welfare for Wall Street. Even the “Wolf of Wall Street†still lives in a multi-million dollar home in California while fleeced investors take a walk down memory lane. Low wage jobs are here to stay. This might be stunning for older Americans but young Americans are faced with this once the minted college degree paid by debt is picked up. What does it say that the vast majority of the top 10 job sectors in America will pay $35,000 or less?