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Just In: The Latest Damage Report

The damage caused by Tropical Storm Irene is clearly evident to anyone driving even a few miles in south-central Vermont. The damage from economic policies of the last 30 years has been harder to spot, but it’s becoming visible in statistics like those released on Thursday by the U.S. Census Bureau. In Vermont, between 2008 and 2010:

  • Median household income dropped 7.0* percent.
  • The poverty rate for female-headed families with children jumped from 28.4 percent to more than 40 percent.
  • The share of people relying on food stamps rose from 8.7 percent to 13.2 percent.
  • The number of unemployed climbed from 15,438 to 26,327, and another 4,400 people dropped out of the labor force.

These statistics are the result of the recession and a painfully slow—some would say non-existent—recovery. They are also what we’d expect to see as the result of public policies that have concentrated more and more income in the hands of the wealthy and left the poor and middle class behind.

In Vermont, as in the rest of the country, the gulf between rich and poor has been widening for the last 30 years. The bottom 90 percent of Vermont earners received 70 percent of the income in 1980. By 2005, that had to dropped to less than 60 percent—about the same share they had before the Great Depression 75 years earlier. A study published by the Federal Reserve Bank of Boston a few years ago revealed that between 1989 and 2004 income disparity grew faster in Vermont than in every other state but Connecticut.

What does income disparity have to do with poverty? Increased income disparity makes low- and middle-income households poorer. That was the conclusion of Jeffrey Thompson, a research economist at the Political Economy Research Institute at the University of Massachusetts, and Elias Leight, a tax analyst with the Congressional Budget Office, in a paper published earlier this year. According to their study, when the rich get richer, prosperity doesn’t trickle down to the rest of us, the poor and the middle class simply end up with less.

This growing income disparity is not the result of mysterious, immutable laws of economics. It is the result of the policies enacted by the public officials we elected. That’s the sad part. The good news is that we can adopt better policies. We can start by recognizing that trickle down didn’t work and, in fact, made things worse. Then we can establish policies that strengthen the middle class and help build a state that works for everybody.

*Corrected 10/14/2011. Decrease in median household income was initially reported as 9.3 percent.

Posted by Jack Hoffman on September 27, 2011 at 8:46 am

3 Responses to “Just In: The Latest Damage Report”

  1. RALPH W HOWE says:

    It is very important to keep our eyes on the lives of real ordinary folks, who without natural catastrophe suffer for lack of livable wage jobs, food, adequate shelter and other basic needs. The middle class needs to see that it has more in common with the poor that the mega-wealthy.
    A friend asked me what was the biggest export of the US over the past 10 years. The answer: middle class jobs and opportunities.
    Is it not a reasonable policy to ask those who benefit the most from a political-economic structure to pay the most to help those who benefit the least? Those who benefited from deregulation of finance and business, and lower taxes on the rich owe this to the common good.
    A final note: Could it be that the problems with our tax structure derive from the failure to tax fairly? Consider this—a person making $100k in capital gains pays less than the person making $100k through labor–why is this fair? Or consider this: a person owning 100 acres of land supports Vermont schools and roads, while a person with $100m in a portfolio pays nothing. Fair? Why is labor and agriculture so devalued viz. being an arm-chair capitalist? How about equal dignity as a concept for the future?

  2. Willem Post says:

    If the minimum wage were raised to $15/hr it would have the same buying power it had in 1970, plus a little extra.

    Many of the government programs, such as food stamps, food banks, etc., would not need to exist, i.e., lower taxes, more money in people’s pockets, more revenue for business to pay the higher wages.

  3. David T. Gross says:

    Once again we are discussing the symptoms of the disease, not the disease itself. The United States is afflicted with a campaign financing sytem that is effectively unrestrictived. Thus we are told to accept that “money is speech” and “corporations have the rights of individuals” as we attempt to participate in our “representive” government. Laws and policies are crafted by the wealthy and the corporations to steer even more wealth their way. Most politicians who attempt to resist these entities find themselves suddenly faced with extemely well organized and funded opposition in the next election cycle. Today, we are left with the dilemma of either surrending our voice in our government or radically re-writing our campaign financing laws to exclude the influence of non-voters. Unfortunately, the present system is little more than one of legalized bribery and thus cannot be expected to act against the best interests of the ones who pay the campaign bills.

    What can we as Vermonters do now? We can continue to send honest capable people to Washington to speak for us on the national stage while we work to create locally the vision that we have for the nation as a whole.