In U.S. economy, the devil’s in the details

Bill Knight column for Thurs., Fri., or Sat., Feb. 8, 9 or 10, 2018

Avoiding the fire-and-brimstone tone of his typical tweets, President Trump in his first State of the Union address Jan. 30 said, “After years and years of wage stagnation, we are finally seeing rising wages,” but the Associated Press noted that wages “are not rising any faster than they have before.”

Within days, Trump claimed credit for a booming stock market, the Labor Department said the economy added 200,000 jobs, wages went up 2.9 percent compared to a year ago, and then Wall Street’s “Trump Bump” had a “Trump Slump.”

The Dow Jones Industrial Average on Monday lost 4.6 percent, its biggest decline in more than six years. (The S&P lost 4.1 percent, and the Nasdaq dropped 3.8 percent.) The stock market tripled in value from 2008 to 2017, and investors’ wealth increased dramatically. But that’s had little effect on most people.

The Dow’s 1,175.21-point drop Monday followed a 665.75 loss last Friday, indicating the roller-coaster nature of the stock market. But some Americans can’t even get on the ride. (And though Trump takes credit for positives, he blames others for negatives.)

Meanwhile, there are other areas of concern:

* Workers who get tips may lose them. Trump’s Labor Department is proposing that business owners can collect and keep customers’ tips to workers under a plan to rescind a 2011 rule stating that workers’ tips are workers’ property. The 3.2 million Americans who get tips for their jobs together get about $36 billion a year in tips. Most need that income. Supposedly, “de-regulating” tips will let employers take tip money and share it with fellow workers who don’t get tips as long as they’re paid at least the minimum wage. But it’s not required.

* One in five Americans are in the world’s bottom 10 percent of wealth ownership, according to the 2017 Global Wealth Databook. These 50 million people have less savings than debt, and their wages have been virtually flat for 40 years.

* More American children live in poverty. The National Center for Children in Poverty shows that the number of kids living in households below the poverty threshold ($24,036 a year for a couple with two kids) increased by 18 percent since 2008.

* The U.S. has the worst rate of maternal deaths in the developed world, according to a six-month investigation by ProPublica and National Public Radio. At childbirth, American moms in some regions face risks almost as bad as Third World countries.

* The government has all but abandoned the mentally ill – which affects about 20 percent of the U.S population. “The state hospital-bed population had dropped more than 96 percent, to 37,679 beds – or 11.7 beds per 100,000 people,” reports the Treatment Advocacy Center.

* There’s a housing crunch. “In major U.S. cities – the only source of jobs for many low-income workers – high-priced luxury homes and apartments are pricing most people out of the housing market,” writes Paul Buchheit, author of “Disposable Americans.”

Meanwhile, U.S. Sen. Bernie Sanders (I-Vt.) sees some strength in the economy, but he puts data into context.

“The official unemployment rate today is 4.1 percent,” Sanders conceded, “but what President Trump failed to mention is that his first year in office marked the lowest level of job creation since 2010.”

Indeed, looking at a longer view, 2017 showed 2.05 million jobs created – worse than the last six years: 2.24 million jobs were created in 2016, 2.74 million in 2015, 3.11 million in 2014, 2.33 million in 2013, and 2.19 million in 2012.

The statistic for rising pay translated to 4 cents an hour, Sanders said.

“Over the last year, after adjusting for inflation, the average worker in America saw a wage increase of 4 cents an hour, or 0.17 percent. To put it in a different way, that worker received a raise of a little more than $1.60 a week. And, as is often the case, that tiny wage increase disappeared as a result of soaring health-care costs.”

Also, Sanders pointed out, Trump in his State of the Union speech neglected six other issues important to Americans’ pocketbooks – and futures: climate change, unregulated campaign finance permitted after the “Citizens United” Supreme Court ruling, voter suppression, inadequate resources at the Social Security Administration delaying benefits to disabled Americans, and others.

“Over half of older workers have no retirement savings,” Sanders continued, and “hundreds of thousands of bright young people are unable to afford to go to college, while millions of others have come out of school deeply in debt.”

The devil’s in the details.