A lot has been written about the gap between the wealthy and the poor in this country. You probably hear weekly from a news source that the rich are getting richer and the rest… are getting poorer.
The stability of the U.S.’s fragile economy depends on a thriving middle class. That’s what most people are, middle class, or at least they used to be.
The people that belong to this group represent the largest chunk of consumer spending. If we have stable finances from good paying jobs and sound investing, the economy stabilizes and inspires confidence. It’s our purchasing power that is the barometer economists used to determine the financial health of our nation.
Unfortunately America’s middle class has become a much smaller, more exclusive club in the last ten years. Instead of a thriving middle class, we have a growing lower class. In September the government revealed that the typical household in America made $51,017 a year, that’s roughly the same amount American households made in 1988. Ouch! The statistics show that although much has changed in the last 25 years American workers wages isn’t one of them.
What has changed over the last quarter of a century is the wages of American’s financial elite. According to the non-partisan Congressional Budget Office, income for the top one percent has skyrocketed, they make 228 percent more than they did in 2005! The difference between the rich and the poor has widened beyond just a gap, it’s now more like a great canyon.
Why has this happened? Well this time, you can honestly say, it’s not your fault.
Whose fault is it? There are two major contributors and you’re not going to like either one of them.
Before I reveal who put you in this worse off financial position I want to talk about how we got here.
There is one controversial financial tool our government has been using for the past several years that has dominated our news feeds. The government calls it Quantitative Easing, but let’s call a spade a spade, what they are doing is printing money. They are creating money we don’t actually have and pumping it into Wall Street.
Why are they giving it to Wall Street instead of Main Street?
Every month the government buys $85 billion worth of bonds. They do this to keep middle class Americans from feeling the pinch. They theorize that if they can inflate stock prices, then Americans will feel richer when they pull out their 401 (k) statements and see higher investment totals which in turn will make them go out and spend more money.
Sounds like a good plan right? Well it would be if most Americans had their money invested in the stock market. In fact, investing in stocks and bonds is prevalent only among wealthier Americans. According to the Employee Benefit Research Institute, only 35 percent of workers with household incomes less than $35,000 have saved for retirement, that’s down from a 49 percent share in 2009. Among households earning more than $75,000 the share is much higher, nearly 93 percent of those households have money saved for retirement.
Quantitative easing is helping Americans. Unfortunately it’s only helping rich Americans get richer. It has very little impact on America’s poor and lower middle class consumers. Most of these people have their financial assets stored in savings accounts and certificates of deposit, which as you know has been getting creamed by the governments zero interest rate policy over the last several years. They are earning zero percent on their money, which is further being eroded by inflation and rising fuel costs. This income group has really been hurt by the government’s financial policies.
And if you thought things were getting better because the economy has started to recover…well I don’t want to ruin your day…but things are only going to get worse for the American worker.
This great run up of the stock market has excited a panic on Wall Street. They are pressuring American companies to maximize profits and increase share prices so their stock will go up.
How do American companies pull off this feat in a recovering economy where demand for goods is still depressed? By cutting costs.
Unfortunately the costs they are cutting are coming at the expense of the American workers. Companies across the country are not increasing wages or giving out bonuses. They are keeping wages stagnant, even though inflation is raising the price of goods and services in our country so our dollars don’t go as far as they used to.
Americans are also feeling the pinch with less benefits. These companies that are trying to raise their stock price are cutting costs so they can fill their bank accounts with cash even though demand for their products are still low. They reduce health care benefits of their workers, cut 401(K) matching programs, and lay-off anyone who isn’t vitally important to running their company. All of this just so they can hoard cash.
The share of the nation’s income that is being channeled to corporation’s bank accounts is higher now than at any time since the 1920’s, while American worker’s share fell to its lowest level since 1965. The richest 10 percent of Americans now get OVER half of the income America produces.
So what do we do about this widening wealth gap? If the rich just keep getting richer, where will the rest of the population be in five years? Ten years? Twenty years? Will they all be in line for food scraps and temporary housing that is at the whim of the richest Americans in our country?
It’s a scary thought about our nation’s future where the middle class has no economic power anymore against the financial elite.
The only way to combat this is to reduce your dependence on the richest Americans that run these corporations. Just like we talk about reducing our dependence on foreign oil so we can stop the crazy run-ups in fuel prices, we need to do the same thing with our jobs. We need to stop depending on others to provide us with income. That way we won’t have to worry about being downsized, or having our benefits taken away or being laid-off, or having our paychecks buy less and less.
Once you free yourself from the tyranny of wage slavery you can become financially free. You no longer have to worry about choosing between paying your mortgage or your health premiums this month, you don’t have to get through another meeting where your boss breathes down your neck for better results, you don’t have to wait in endless lines of traffic on your way to your cubicle each day, you don’t have to put on a suit and tie and put on a dog and pony show every day for these corporate fat cats.
Instead you can enjoy working from home, in sweatpants, for just a few hours a day. This all becomes possible when you start an online business. You open yourself up to endless possibilities of a stress free life, higher income potential and more time to do the things you enjoy doing.
How do I know this is possible to achieve? Because I did it myself. I don’t have a fancy degree in computers or marketing. I’m certainly not on the cutting edge of technology or business trends either. But I am able to work from home, in my flip-flops and shorts every day for just a few hours before I head out on the town to enjoy life.
If any of this sounds appealing to you I encourage you to do what I did and reduce our dependence on these corporate fat cats who are eroding our purchasing power. You’ll never make an easier choice that’s filled with so much upside.
To your future!
Mark Patricks
