The barely-getting-by economy

SIX YEARS into what is supposedly an economic expansion, almost half of the people in the richest country in the world live on the edge of financial troubles, unable to handle a one-time, $400 emergency expense.

That is one of many startling facts in the "Report on the Economic Well-Being of U.S. Households in 2014" put out last May by the Board of Governors of the Federal Reserve system.

The Fed's report undercuts the claim frequently made by Barack Obama that "by every economic measure," people are doing better than they were when he took office in January 2009.

The report did find that 40 percent of people say they are better off today than they were in 2009, which is slightly more than the 31 percent who say they are doing the same and the 28 percent who say they are doing worse.

But it's some weak sauce to brag that after a term and a half of a Democratic administration that has enjoyed the unflagging support of unions, liberal groups and workers generally, ordinary people are doing slightly better than they were at the official end of the worst economic crisis since the Great Depression.

Those who blindly support this (and really any) Democratic president will argue that it is taking so long for the economy to fully recover precisely because the Great Recession was so deep. But that doesn't explain why the rich have been able to recover everything they lost and then some--thanks in large part to the Bush-administered bailout of Wall Street that Obama faithfully continued, not to mention the Bush-era tax breaks that the new Democratic president promised to roll back, and then didn't in most cases.

In fact, despite Obama's claims, there is at least one very important economic indicator in which the majority of Americans are undoubtedly doing worse than before: their share of U.S. income and wealth.

According to a 2013 study by economist Emmanuel Saez, between 2009 and 2012, almost all of the gains in national income--95 percent--were vacuumed up by the country's richest 1 percent. "Corporate profits are at their highest level in at least 85 years," concluded Floyd Norris of the New York Times last year. "Employee compensation is at the lowest level in 65 years."

These figures only confirm the destructive impact of rising inequality that people can see all around them--from being priced out of their own neighborhoods by wealthy speculators to being locked out of the political system by billionaires spending ever-increasing amounts on both mainstream parties.

THE GROWING awareness of this inequality fueled support first for the Occupy Wall Street movement, and then for the strikes and protests of fast-food and other low-wage workers built around the Fight for 15 slogan.

Now that anger is being picked up by the antennas of some politicians--not only longstanding progressives like Bernie Sanders, who is surprising the corporate media with his strong showing in some Democratic presidential primary polls--but also of corporate-controlled creatures like Hillary Clinton.

Clinton served for six years as a member of the board of directors for that ultimate symbol of low-wage America: Walmart. But that didn't stop her from recently declaring that the U.S. under Obama has remained a place of "displaced jobs and undercut wages," and that "we can't stand by while inequality increases, wages stagnate, and the promise of America dims."

If politicians like Clinton really want to dig into the problems facing the 99 Percent in the Obama years, the "Report on Economic Well-Being" can give them plenty of material.

A full 47 percent of respondents--including 63 percent of Latinos and 67 percent of African Americans--reported that they couldn't handle an unexpected mandatory $400 expense without going into debt.

Many working people continue to struggle under debt. Roughly 20 percent of survey respondents spent more money than they made in the past year. Barely half--56 percent--of those with a credit card had paid their bill in full in the past year.

Some 23 percent of respondents had an education debt for themselves or a family member, with the median amount owed being $18,000. Less than half of respondents who had ever had student debt--and only a third of Blacks and Latinos--had been able to pay it off.

Not surprisingly, the number of Americans who are prepared to weather a more serious financial emergency is even lower. Less than half of those surveyed--45 percent--have enough money saved to handle an emergency that would require them to be able to cover three months of expenses. Almost a third couldn't handle such an emergency even by selling assets or borrowing money.

The report also shows that these kinds of emergencies are far from rare. Almost a quarter of respondents (24 percent) said that they or a family member they live with had gone through a financial hardship, such as losing a job or facing eviction, in the past year.

Within this section of the report lies what might be the strongest repudiation of Obama's claims of accomplishment: The most common cause of financial hardship was health care emergencies.

THE AFFORDABLE Care Act (ACA)--aka "Obamacare"--has been in the news because it recently survived another right-wing challenge in the U.S. Supreme Court, causing an outpouring of celebration among Obama supporters concerned that the president would lose his defining policy accomplishment.

ACA defenders have repeatedly touted the claim that the law has allowed over 10 million people to have health insurance. But the "Report on Economic Well-Being" proves what proponents of single-payer health care against the shortcomings of the ACA have been saying for years: having a bad health insurance policy is not the same as having health care.

Just over 30 percent of people reported going without some form of medical care in last year for economic reasons--and almost all of these people had insurance. A whopping 45 percent of those who had insurance but made under $40,000 a year reported not being able to get health care because they couldn't afford it.

That's because the ACA is designed to give the most help to the people who wrote the legislation--: the health insurance companies. The law squeezes as much money as possible out of customers through co-payments and premiums. As an Associated Press article explained last year:

Take someone under 65 with no access to health insurance on the job and making $24,000 a year...Under the health care law, that person's premiums would be capped below 7 percent of his income, about $130 a month. A stretch on a tight budget, yet doable.

But if he gets really sick or has an accident, his out-of-pocket expenses could go as high as $5,200 a year in a worst-case scenario. That's even with additional financial subsidies that the law provides people with modest incomes and high out-of-pocket costs.

The $5,200 would be more than 20 percent of the person's income, well above a common threshold for being underinsured.

Even short of worst-case scenarios, the Fed's report demonstrates that, because of various out-of-pocket costs for insurance plans set up under the ACA's rules, people continue to go without more routine treatments--25 percent couldn't handle a dental need and 13 percent couldn't fill a prescription--all of which makes more serious medical emergencies more likely.

Thus, the passage of the ACA hasn't changed the basics of the country's uniquely irrational and shameful health care system. Just as heath care emergencies were the single biggest cause of personal bankruptcy before Obamacare, they continue to be the biggest cause of hardship after its passage.

THE FACT that many people in the U.S. are struggling to get by isn't surprising, but the depths of the problem this far into an economic recovery are deeply troubling.

The Economist magazine recently warned that "it's only a matter of time before the next recession strikes," due to slowing growth in China and stagnation in Europe. When it comes, it is all but certain to hit a U.S. working class that hasn't recovered from the last slump. How will the loss of millions of jobs affect a country where half the people already have to scramble to cover a relatively small unexpected expense?

And the next administration, whether Democrat or Republican, will likely be reluctant to fight any recession with fiscal stimulus--after Bush and Obama together squandered so many trillions of dollars bailing out banks instead of halting foreclosures, creating good-paying jobs and building infrastructure.

The "Report on Economic Well-Being" also offers an explanation for why the obscene gap between rich and poor hasn't automatically led to increased resistance. The lives of the majority of American workers are so precarious--living in debt and in fear of even minor financial emergencies--that it's hard for many to find the time or the courage to organize a union or go on strike.

On the flip side, the growing wealth of the 1 Percent has further emboldened them to buy politicians and advance their attack on unions and pensions--in both the public and private sector.

One ray of light in this grim picture has been the gains made by the movement of low-wage workers, which hasn't had any big breakthroughs in organizing unions, but has succeeded in shifting the political climate and getting dozens of states--as well as major corporations like Walmart and McDonald's--to raise their bottom wages.

As a result, low-wage workers in leisure, hospitality and retail have actually seen bigger wage gains over the past year than the average private-sector worker.

These gains are still modest--only around 3 percent a year--so they don't make a major impact on inequality or workers' lives. But they do show a way forward for unions and liberal organizations.

Rather than throw all of their time and effort into putting another Democrat into the White House, which has produced only a slight improvement for workers since end of the Great Recession, we should build on the Fight for 15 movement and organize direct economic fights.