The dichotomous American economy is cracking like old paint into two distinct factions. For a few solid decades after World War II we had a burgeoning middle class, a smaller financial elite, and those who still struggled financially. The main objective however was to get as many people into the secure middle class. Today the middle class, the pinnacle of the American Dream, is significantly shrinking and when this occurs, we pull from the current middle class and put new families into the financially struggling category. The pie is getting smaller for most except for the small elite at the summit. The financial gaming that is occurring is stunning. While the unemployment rate fell largely due to people not being counted in the labor report, the latest month of data showed another 395,000 Americans being added to the nationwide food stamp program. Last year we also crossed a distressing fiscal threshold. In one month we paid out more in Social Security benefits than was collected. Social Security is entering the financial tough days and as we look at the statistics, most retired Americans are using Social Security for their entire monthly budget.
Social Security by the numbers
We should start by looking at the total number of Americans receiving Social Security:
Source: Social Security Administration
In total we have over 54,000,000 Americans receiving some form of Social Security. 10 million receive disabled or dependent benefits, another 6 million receive survivors’ benefits, and the largest group of 37 million are the retired workers. The retired section is what is now putting significant strain in the system. People keep saying that Social Security has no money. That is not necessarily true since the trust fund has over $2.6 trillion:
Now you might say this is good but remember that a large amount goes out each month as well. In September of last year for example, $177 billion went out and only $158 billion came in. This is where the issues arise:
This monthly bleeding was supposed to start years down the road in some long and distant future with flying cars. It has already started in 2010. This chart shows how significant this dip was:
You see that green line dipping below the blue line? That is the likely course for the future as more and more retirees from the baby boomer cohort enter into retirement. The banking industry does not mind since they rely on taxpayer bailouts or favorable government policy but the rest of the public should be very concerned. Most Americans make too little to save for a retirement account. The average nationwide income is $25,000 after all so trying to sock away a bit of money after paying the bills might be slim. The issue is largely demographic:
In 1955 you had over 8 workers supporting one retiree. Today it is close to 3 and quickly dipping lower. You can see that changes in the size of families and lifestyles will not help and you can see the longer term problems already in countries with an aging population and low birth rates.
By and large the biggest portion of money from retirees is Social Security:
This might not surprise you. But what is surprising is that 30 percent of current retirees work to make ends meet. 30 percent of income of retirees comes from actual earnings so I’m not sure if labeling them retired is accurate. In fact, earnings now make up a larger portion of income than it did in 1962. This is an interesting chart but shows the heavy reliance on Social Security even after decades of pushing retirement plans into the stock market casino.
Where do benefits get spent? The large part is eaten up by housing, food, and transportation:
When we put all this data together we realize that many Americans are not ready to retire at least in the sense of how the media plays it up. This is largely a top 1 percent myth trying to get an entire nation to buy into the stock market casino so they can skim more money off an unsuspecting public. Now this hungry machine is taking aim at a system that is providing a basic quality of life for over 54,000,000 Americans. At least Social Security still has a fund with $2.6 trillion whereas Wall Street raided trillions of dollars out of taxpayer wallets. The priority of the nation is twisted. Both real problems, yet the poor get the stick while Wall Street gets the first class plutocracy treatment.
Food Stamps feeding the nation
While the market was digesting the faux employment recovery, another 395,000 Americans were put on the food stamp rolls. As of last count 43,595,794 Americans are now receiving some form of food assistance. Keep in mind the number has been going up non-stop for almost an entire decade with it bursting at the seams with this recession. The recession ended supposedly in June of 2009. Since that time we have added 8,000,000 Americans to the food stamp figures. Does that really sound like a recovery to you?
Just look at how steady the number has been increasing. This is probably one of the better figures of showing the middle class shrinking. Keep in mind that those 395,000 were doing enough before to stay off food assistance. Something happened in the month that pushed them into this category. Now Wall Street investment banks would like to blame the people for Social Security or food assistance simply to keep labor depressed and profits high. In the end this translates to lower wages for all and a declining standard of living. Yet the banking sector had a record 2010 for funding this kind of growth. What do they care? They robbed the American taxpayer and are making money abroad or gouging American workers. It is a warped economy we live in and Americans need to speak up or one day they are going to wake up with no middle class at all and an even more powerful plutocracy.
The employment figures come from two separate surveys. The BLS indicated that we added 36,000 jobs in January yet somehow the unemployment rate fell from 9.4 percent to 9. We need 150,000 jobs added per month just to maintain with population growth. What in the world happened? This is what happened:
Civilian labor force (Dec 2010): 153,690,000
Civilian labor force (Jan 2011): 153,186,000
Over 500,000 people just disappeared from the labor force. So this is how we are heading back to recovery! Stop counting people that drop out of the labor force because they are discouraged (and a good number probably on food stamps) and then we can label this as growth. Is this the future of the middle class? The market didn’t know what to make of the numbers but the media spun it nicely. Headlines read “36,000 jobs added last month” as if this was some kind of record shattering figure. It should have read:
“500,000 Americans drop out of the labor force thus pushing the unemployment rate lower for the wrong reasons.”
The good news is that some of the manufacturing sectors did add jobs last month. We need to get growth back in these sectors although Wall Street would rather sit behind Bloomberg terminals and make easy money skimming taxpayer’s wallets. The numbers can tell you a deeper story if you listen to them carefully. The above charts showing Social Security strain, massive growth in food stamp participation, and unemployment rate hocus pocus tell us the middle class is quickly disappearing even though the public is told the recession ended in the summer of 2009. What ended was the protection of the middle class and the continuation of a government designed for the investment banks and global growth based on American taxpayer bailouts.