Rising economic tide fails to lift poor, middle class USA Today

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Rising economic tide fails to lift poor, middle class

There's an old saying that “a rising tide lifts all boats.” Popularized by President John F. Kennedy, it generally refers to how a growing economy benefits everyone.

These days, however, it might need to be revised to say: “A rising tide lifts all yachts.” Or perhaps it should be retired entirely, because it no longer appears to be accurate.

That's the inescapable conclusion from Tuesday's Census Bureau report on poverty. Some 37 million Americans lived below the poverty line ($19,971 for a family of four) in 2005 — that's 4 million more than at the height of the last recession, in 2001.

The same report showed that the median annual income of $46,326 was essentially unchanged from where it was in 2001, and that the ranks of those without health insurance, now at 46.6 million, continue to grow.

What makes the numbers so troubling is that they come four years into an economic recovery that by other measures has been robust. From 2001 to 2005, the gross output of the economy increased by about 12% above the rate of inflation, worker productivity surged and corporate profits doubled.

Traditionally, those trends have been the key to lifting living standards for everyone — the cornerstone of a stable, successful society. But not this time. Technological innovation and global competition have hurt wages for low-skilled workers while creating new opportunities for skilled workers.

Indeed, while poverty has been rising, so has the percentage of households making more than $100,000 a year. In 2005, 17.2% of households made six figures. In 1990, just 12% made the inflation-adjusted equivalent.

The poverty numbers and rising income inequality pose troubling political issues. Large segments of society might see little reason to support policies — notably free trade — that promote economic growth. Instead, they could turn to protectionism and to demagogic political leaders more interested in promoting class warfare than in economic expansion.

So what can be done? Most immediately, the nation needs sweeping health reforms that arrest runaway costs and assure coverage for all, particularly workers forced to choose between health care and other life necessities.

More broadly, the numbers show what a horrible job the nation is doing in providing the education and job skills its citizens need to compete. The principal problem is not that the economy is producing too few good jobs. It is that society is producing too many unskilled workers.

Government is very good at spending money on programs that support key constituencies. Benefit programs, led by Social Security and Medicare, make up more than half of all federal spending.

But government is not very good at investing in the future. If society cannot figure a way for everyone to share in the nation's economic growth, future tides could be shallow indeed.

and it ain't coming back, neither, until the garbage has been removed. Permanently!!