Americans Growing Poorer

September 19, 2015

The above-linked report – “Income and Poverty in the United States:  2014” – was published by the Census Bureau a couple of days ago.  The news isn’t good.  In spite of the supposed decline in unemployment and all the talk of economic recovery, the median household income fell once again and the poverty rate remained at or near the highest level in fifty years.

There’s tons of data to sift through in the report, so I’ll simply quote a few of the key findings of the report:

“Median household income was $53,657 in 2014, not statistically different in real terms from the 2013 median of $54,462 (Figure 1 and Table 1). This is the third consecutive year that the annual change was not statistically significant, following two consecutive years of annual declines in median household income.”

“Median household income … in 2014 … 6.5 percent lower than the 2007 (the year before the most recent recession) median ($57,357), and 7.2 percent lower than the median household income peak ($57,843) that occurred in 1999.”

“In 2014, the official poverty rate was 14.8 percent. There were 46.7 million people in poverty.”

“The 2014 poverty rate was 2.3 percentage points higher than in 2007, the year before the most recent recession (Figure 4).”

Median household income has declined every year since 2007, and even the median income in 2007 was less than the median income in 1999.  This is the longest period of decline since the Census Bureau began tracking the data in 1967.  From 1967 to 1999, the median household income (for all races) rose from approximately $42,000 to $57,843 – a increase of 38%.  Since 1999, however, it has declined by 7.2%.

This is exactly what the inverse relationship between population density and per capita consumption would predict – that as our population density (including our “effective” population density) rises beyond a critical level, worsening unemployment and poverty is inescapable.

So what was it that happened after 1999 that threw median incomes into what increasingly appears to be a permanent state of decline?  Our population density has been rising by about 1% a year for decades but our “effective” population density – the population density that we take upon ourselves when we combine with another nation through “free” trade – skyrocketed in 2000.  That was the year that the Clinton administration granted China “permanent normal trade relations” satus, opening the door to “free” trade with China.

Look back at Chapter 7 of Five Short Blasts (especially Figure 7-5 on page 130), where we examined what happened to our effective population density as we combined our economy with other nations through “free” trade.  The effect of trading with Ireland – the nation with whom we have the largest per capita trade deficit in the world – is negligible.  They’re so small that it makes no change to our effective (combined) population density.  Add Mexico to the list, and our density rises from 85 people per square mile to 118.  Add Germany and it rises to 132.  But, when China, with one fifth of the world’s population, is added to the mix, our effective population density rockets to 242!  The downward pressure on our labor market and incomes suddenly becomes overwhelming.

As long as we continue to blindly apply “free” trade policy to all nations with no consideration of the effect of population density, the resulting downward spiral in our economy is inescapable.  With each passing year, the data on incomes and poverty in America bears this out.






Real Unemployment Holds at 8.8% in August, Unchanged Since April

September 5, 2015

During an interview with Hari Sreenivasan on the PBS Newshour last night, Diane Swonk, Chief Economist at Mesirow Financial was asked about today’s August jobs report.  Specifically, she was asked to comment on the drop in the unemployment rate to 5.1%, a level that Hari noted has traditionally been associated with “full employment.”  With a tone of cynicism in her voice, she responded by saying that, “yeah, but it sure doesn’t feel like 5.1% unemployment used to feel, does it?”  She then pointed out that, at that level of unemployment in the past, jobs were much more plentiful, the labor market was much stronger and wages were rising.  You don’t see that now.

The reason for that, of course, is how this administration has gamed the system to arrive at such a low unemployment level.  Instead of people being put back to work, they’ve arrived at that low figure largely by claiming that workers have dropped out of the work force, apparently having found some magical method of providing themselves with an income without working.  It happened yet again yesterday.  The unemployment rate is determined by the household survey, and is a function of the “employment level” and the size of the “civilian labor force.”  The employment level rose by 196,000, which is enough to have reduced the unemployment rate to 5.2%.  However, once again, the civilian labor force declined by 41,000 instead of rising by 115,000 along with the growth in the population.  Voila!  Another tenth whacked off of the unemployment rate!

Here’s why 5.1% unemployment doesn’t feel like it used to.  Look at these charts:  Per Capita Employment, Unemployed Americans.  Per capita employment, though improved, is still nowhere close to where it was before the recession.  And the number of unemployed Americans remains millions higher than it was.

A factual calculation of unemployment – one that grows the labor force in proportion to growth in the population – now has unemployment at 8.8%, exactly where it was in April.  The official unemployment rate has fallen 0.3% since April because not a single person has been added to the civilian labor force (according to the Obama administration) in spite of the fact that the population has grown by 900,000 people since then.

The difference between the official unemployment rate and the real unemployment rate (which grows the labor force along with the population) is what I call the “detachment from reality index.”  This index has risen steadily during the Obama administration and is now near its record high level.  Here’s the chart:  Detachment from Reality Index.  Doesn’t the current economy feel more like 8.8% unemployment than 5.1%?  Anyone who was in the work force more than ten years ago knows the answer to that question.


Mr. President, how can we take you seriously on climate change?

September 2, 2015

President Obama yesterday opened the “GLACIER” climate change conference in Anchorage, Alaska, chastising world leaders to do more.  He said that the U.S. “recognizes our role in creating this problem and embraces our role in solving it.”

Really?  How can we take you seriously, Mr. President, when you encourage rampant illegal immigration, adding millions of carbon emitters to our population?  Do you seriously believe that there is any solution to the climate change problem that doesn’t begin with stabilizing our population?

How can an environmentalist not be dismayed by what’s going on?  In spite of all of our efforts – recycling, improving the efficiency of our homes, cars and every product we use – the environment has never been more threatened.  There is only one logical conclusion:  all of our environmental efforts are not intended to protect the environment.  Rather, they are meant to simply make more room for more people, fattening corporate bottom lines with more consumers.

Environmental leaders share as much blame as our political leaders.  They know very well that worsening overpopulation is ruining the environment, but have chosen to remain silent to avoid alienating donors.  They should all be ashamed.

Mr. President, do you want us to take you seriously on climate change?  Then prove it by taking action to stem illegal immigration and move toward stabilizing our population.