Means-Tested recovery: Over 108,000,000 Americans received means-tested benefits in latest report from Census Bureau, more than are currently employed full-time.
The Census Bureau released some interesting data in October. One of the pieces of data that we knew was coming was the continuing decline of household income. This decline is in line with the growing income disparity that is occurring in the US. Another piece of data made this trend abundantly clear. The comprehensive data showed for the 2011 year that more Americans received means-tested government benefits than actually were employed. As usual, we can only examine data after the fact and the Census is releasing this data in October of this year. Yet it gives us a better perspective on what kind of recovery this is. This information only confirms other trends like the 1 out of 6 Americans on food stamps. Hard to believe? Only if you keep your eyes closed to the real status of the economy.
McJobs for McAmerica – Fastest growing jobs in low wage sectors. Of 10 largest occupations in US only one pays more than $35,000 per year.
The end of the Great Recession has done little to protect the middle class. The largest employment growth has come from low wage positions. According to Social Security data on wages the per capita wage for Americans is $26,000. Your typical household is pulling in about $50,000 per year. The growth in low wage jobs reinforces a continuing trend that is pulling chunks of the middle class apart. Income inequality in the US is at its highest level since the years prior to the Great Depression. This rift in the economy allows for paradoxical situations to occur like peak food stamp usage and a peak in the stock market. Little good this does for the average worker with virtually no stock wealth. There was a time when some of the top occupations actually paid good living wages. Those days seem to have disappeared as McJobs dominate the top 10 occupation fields.
Why is the cost of college education so ridiculously high? Is the current cost of pursuing higher education justified or are we witnessing another bubble?
Last week I had the chance to visit a large and prestigious public university. While walking through the massive football field, one of the tour guides mentioned that they were planning on building another one close by. “What is wrong with this one?†I asked and the tour guide responded that they were looking to modernize the stadium. Beyond this a new gym included an Olympic sized pool and all the amenities you could want. Brand new stores, buildings, and the feel of a new city being built. This is the situation of the modern college. In essence, many institutions are operating as premiere cities luring in top students with goodies you would expect from a selective gated community. These things are not cheap and the cost of tuition is rising to support this growth. Then you have on the other side of the spectrum for-profit “colleges†that exploit the poor and rely on government loans to basically provide subprime education to anyone they can lure in. Why is the cost of education so high in the US and is the cost truly justified?
Blue pill of debt exchanges temporary increase in debt for inflation: Taking the blue pill of a fabricated world addicted on debt as US standard of living hits 10-month low.
Most of you have seen The Matrix where Neo is given the choice between taking the blue or red pill. The red pill would allow Neo to escape The Matrix and enter reality whereas the blue pill would allow him to stay wandering in the fabricated world of the Matrix. The US government in essence swallowed the blue pill for the moment using duct tape to smooth us over the debt ceiling. Reality is being avoided. This isn’t to say that the default should have been allowed to happen. Yet to call this a solution is laughable. We will be back at this in early 2014. Can’t ruin the holidays with reality. That is the grand solution that was achieved by our millionaire Congress. The problem is that with $17 trillion in total debt we are entering a situation where low rates are a must to retain solvency. Yet what if rates are unable to stay this low? Since this calculus is now set, you can bet that the Fed will do everything in its power to inflate our way into the next level of the Matrix.