The Field Guide to the U.S. Economy (Revised and Updated)

The Field Guide to the U.S. Economy (Revised and Updated)

The Field Guide to the U.S. Economy (Revised and Updated)

A Compact and Irreverent Guide to Economic Life in America

Jonathan Teller-Elsberg, Nancy Folbre, James Heintz

in conjunction with the Center for Popular Economics

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The New Press, New York

[Copyright page]

Contents

Acknowledgements 1

Introduction 5

Chapter 1: Owners 9

1.1 Who Owns How Much? 11

1.2 Very Rich, Getting Richer 13

1.3 What’s Wealth Made Of? 15

1.4 The Color of Wealth 17

1.5 CEO Pay 19

1.6 They Didn’t Do It Alone 21

1.7 Scraping By 23

1.8 Inequality Hurts 25

1.9 The Price of Influence 27

1.10 Dollar Democracy 29

1.11 Controlling Media 31

1.12 Corporate Crime 33

1.13 Multinational Goliaths 35

1.14 The 900 Pound Gorilla 37

1.15 Owner Activism 39

1.16 Worker Owners 41

Chapter 2: Workers 42

2.1 The Wage Treadmill 44

2.2 The Working Poor 46

2.3 The Minimal Minimum Wage 48

2.4 Raising the Floor 50

2.5 Unequal Pay 52

2.6 The College Premium 54

2.7 Shrinking Health Benefits 56

2.8 Rising Retirement Risk 58

2.9 Dangerous and Deadly Jobs 60

2.10 Job Insecurity 62

2.11 Jobless 64

2.12 The Ups and Downs of Unemployment 66

2.13 Underemployment 68

2.14 Contingent Labor 70

2.15 Who Belongs to Unions? 72

2.16 Unions At Work 74

Chapter 3: Women 76

3.1 To Market, To Market, but Not so Fast 79

3.2 Part-Time Patterns 81

3.3. Women Still Earn Less than Men 83

3.4 The Lifetime Earnings Gap 85

3.5 Pink-Collar Jobs 87

3.6 The Care Penalty 89

3.7 Glass Ceilings 91

3.8 Call a Lawyer 93

3.9 Mothers, Children, and Poverty 95

3.10 Deadbeat Dads 97

3.11 Unpaid Work 99

3.12 Time Crunch 101

3.13 The Demand for Child Care 103

3.14 Family Policies Around the World 105

3.15 Reproductive Rights and Wrongs 107

3.16 The Political Gender Gap 109

Chapter 4: People of Color 111

4.1 Who We Are 113

4.2 Asian and Hispanic Diversity 115

4.3 Potential Citizens 117

4.4 Illegal Immigrants 119

4.5 Last Hired 121

4.6 Unemployment by Degrees 123

4.7 The Education Gap 125

4.8 More Menial Work 127

4.9 Wage Inequalities 129

4.10 The Color of Poverty 131

4.11 Doing Time 132

4.12 Children and Prison 134

4.13 Mothers on Their Own 135

4.14 Who’s Raising the Kids? 136

4.15 Affirmative Action in Higher Education 138

4.16 Evidence of Discrimination 139

Chapter 5: Government 141

5.1 How Big Is Government? 143

5.2 Government Spending Elsewhere 145

5.3 Where Federal Dollars Go 147

5.4 Expanding Holes in the Social Safety Net 149

5.5 National Security Priorities 151

5.6 Policing The World 153

5.7 Back In The Red 155

5.8 Borrowed Money 157

5.9 Shifting the Burden 159

5.10 Taking Home the Bacon, More and Less 161

5.11 Unfair Shares 163

5.12 Corporate Tax Loopholes 165

5.13 Buying Favors 167

5.14 Who Votes 169

5.15 Old Faithful 171

5.16 Real Solutions for Social Security 173

Chapter 6: Welfare and Education 175

6.1 Family Income 178

6.2 Low-Income Households Get a Smaller Share 180

6.3 Defining Poverty 182

6.4 The Likelihood of Being Poor 183

6.5 Poverty Among Children and the Elderly 185

6.6 Poverty Hurts Kids 187

6.7 Welfare Farewell 188

6.8 Kid Care 189

6.9 Ending Child Poverty in the U.K. 190

6.10 Corporate Welfare 191

6.11 Bare Cupboards 193

6.12 Searching for Shelter 194

6.13 Mean Streets 196

6.14 Poor Schools for Poor Kids 197

6.15 The Price of College 199

6.16 Who Graduates from College? 201

Chapter 7: Health 203

7.1 Hey, Big Spender 206

7.2 Spend More, Live Less 208

7.3 You Get What You Pay Double For 210

7.4 The Unhealthy Cost of Care 212

7.5 Earn More, Feel Better 214

7.6 Too Poor for Care 216

7.7 People of Color Lack Insurance 218

7.8 African American and Native American Children at Greater Risk 220

7.9 The Poor Pay More 222

7.10 Can’t Afford a Kid 224

7.11 Mental Health 226

7.12 Medical Bankruptcy 228

7.13 Selling Sickness 230

7.14 Rx = Big Bucks 232

7.15 HIV/AIDS 234

7.16 Health Around the World 236

Chapter 8: The Environment 238

8.1 Gifts of Nature 241

8.2 Jobs and the Environment 243

8.3 Toxic Neighbors 245

8.4 Environmental Health 247

8.5 Environmental Racism 249

8.6 Upper-Class Benefit Analysis 251

8.7 EPA S.O.S. 253

8.8 Environmental Markets 255

8.9 When a Tree Falls… 257

8.10 Biodiversity Countdown 259

8.11 Down on the Farm 261

8.12 Sprawl 263

8.13 Black Gold 265

8.14 Dinosaurs on Our Backs 267

8.15 Hot! Hot! Hot! 269

8.16 Radiation to the Rescue? 271

Chapter 9: Macroeconomics 273

9.1 The Ups and Downs of GDP 276

9.2 GDP is Misleading 278

9.3 The Growth Record 280

9.4 Investing for the Future 282

9.5 Working Hard for Your Money 284

9.6 Profits in America 286

9.7 Inflation 288

9.8 The Story Behind the Fed 290

9.9 The Cost of Borrowing 292

9.10 Long-Run, Short-Run 294

9.11 Disappearing Banks 296

9.12 Deeper in Debt 298

9.13 Housing Bubble? 300

9.14 NASDAQ Boom and Bust 302

9.15 Unbalanced Trade 304

9.16 The Value of the Dollar 306

Chapter 10: The Global Economy 308

10.1 Global Slowdown 311

10.2 Does Economic Growth Deliver? 313

10.3 World Poverty 315

10.4 The Consumption Gap 317

10.5 Cross-Border Migration 319

10.6 Brain Drain 321

10.7 Global Unemployment 322

10.8 Cheap Labor and Imports 324

10.9 Trade Transformation 326

10.10 Outsourcing 328

10.11 Tripped Up 329

10.12 Cancun Collapse 331

10.13 Have Profits, Will Travel 333

10.14 Foreign Direct Investment 335

10.15 Hot Money 337

10.16 Managing Capital 339

10.17 The Debt Trap 341

10.18 Global Assistance 343

Toolkit

T.1 A Guide to General Sources 345

T.2 How to Read and Write Graphs 353

T.3 Means, Medians, and Other Measures 358

T.4 Real vs. Nominal: How to Use Price Indices 359

T.5 The Census Vocabulary: Families, Households, Persons, and Heads 362

T.6 What They Call Us: Racial and Ethnic Labels in Economic Data 364

T.7 Measuring Growth: What’s Gross About Gross Domestic Product? 367

T.8 Uppers and Downers: The Business Cycle 369

T.9 A Guide to the Federal Budget 370

T.10 Poverty, the Poverty Line, and Quintiles 372

Glossary 375

Sources and Notes 399

10

Acknowledgements

Our first debt of gratitude is to the readers of previous editions of The Field Guide who have told us that it is a useful and entertaining book that deserves updating. One of our strongest supporters has been University of Wisconsin Professor Erik Olin Wright, who not only encouraged us to write a new edition but also suggested new topics and commented on early drafts of this manuscript.

Many other individuals contributed in one way or another to make this revision possible, including many fellow staff economists at the Center for Popular Economics. Jim Boyce, Mark Brenner, Jim Crotty, Jerry Epstein, Dean Robinson and University of Massachusetts Labor Center Professors Dale Melcher and Eve Weinbaum all gave us extensive comments on the previous edition. Emily Kawano, Executive Director of the Center for Popular Economics, provided necessary logistical support and lent a critical eye to the developing manuscript. Suresh Naidu helped us better focus several pages and was a general source of advice throughout, as was Arjun Jayadev.

Matt Clifford helped draft several pages in Chapter 2. Anita Dancs drafted most of Chapter 5, an effort well beyond the call of duty, and additional contributions came from Teresa Ghilarducci and Marty Wolfson. Cecilia Conrad and Lisa Saunders reviewed drafts of Chapter 4 and gave much helpful advice. Michael Ash, Kiaran Honderich, and Jim Westrich provided guidance in revising Chapter 7. Ash also pointed out a critical but easy-to-miss problem with data in Chapter 2, and Al Blostin, at the Bureau of Labor Statistics, National Compensation Survey, provided the solution’s final missing link. Matt Riddle helped with sources and ideas for Chapter 8 and Hector Saez reviewed a draft of the chapter and suggested improvements. Wendy Teller-Elsberg supplied numerous suggestions throughout the writing process. She, Bob Dworak and Caroline Carr provided eagle-eye copyediting and final comments as the manuscript approached completion.

McMaster University Professor Martin Daly and Harvard University School of Public Health Professor Ichiro Kawachi were very helpful in the development of page 1.8. Jeannette Wicks-Lim and Cornell University Professor Robert Frank provided advice critical to the drafting of page 2.5.

Naturally, this book could never have reached your hands if not for the support and labor of everyone at The New Press, in particular our editor, Ellen Reeves, her assistant, Jessica Colter, and Managing Editor Maury Botton. Our thanks also go to all those involved behind the scenes, from The New Press to the bookstores and libraries that connect our work to the wider world.

We want to express our sincerest thanks to the dozens of artists who contributed the cartoons that make this book special. All of them were willing to work within our meager budget. We encourage you to check out their websites and books:

· Kirk Anderson <www.kirktoons.com>

· Khalil Bendib <www.bendib.com>

· Clay Bennett <www.claybennett.com>

· Steve Benson <www.azcentral.com/arizonarepublic/opinions/benson/>

· Ruben Bolling, “Tom the Dancing Bug” <www.ucomics.com/tomthedancingbug>

· Barbara Brandon-Croft, “Where I’m Coming From” <www.ucomics.com/barbarabrandon>

· Clay Butler, “Sidewalk Bubblegum” <www.sidewalkbubblegum.com>

· Russell Christian

· M. e. Cohen <www.politicalcartoons.com>

· Barry Deutsch, “Ampersand” <www.amptoons.com>

· Darrin Drda, “Channel X” <www.darrindrda.org>

· Arcadio Esquivel <www.politicalcartoons.com>

· Brian Fairrington <www.politicalcartoons.com>

· Peter Hannan <www.peterhannan.com>

· Nicole Hollander, “Sylvia” <www.nicolehollander.com>

· The team of Gary Huck and Mike Konopacki <www.solidarity.com/hkcartoons>

· Sandy Huffaker <www.politicalcartoons.com>

· Marc Hughes <www.marchughes.com>

· Jimmy Ilson

· Olle Johansson <www.politicalcartoons.com>

· Sabrina Jones <www.sabrinaland.com>

· Keith Knight, “(Th)ink” <www.kchronicles.com>

· Mike Lane <www.politicalcartoons.com>

· Sergio Langer <www.politicalcartoons.com>

· Michael Leunig (c/o Penguin [Books] Australia)

· R. Jay Magill <www.creativehotlist.com/r-magill>

· Barrie Maguire <www.newsart.com>

· Stephanie McMillan, “Minimum Security” <www.minimumsecurity.net>

· Jim Meehan <www.newsart.com>

· Stephen Notley, “Bob the Angry Flower” <www.angryflower.com>

· Jeff Parker <www.politicalcartoons.com>

· Ted Rall <www.rall.com>

· Mikhaela Reid, “The Boiling Point” <www.mikhaela.net>

· Joe Sayers, “Thingpart” <www.jsayers.com>

· Osmani Simanca <www.politicalcartoons.com>

· Carol Simpson, “CartoonWork” <www.cartoonwork.com>

· Andy Singer, “No Exit” <www.andysinger.com>

· Chris Slane <www.politicalcartoons.com>

· Jen Sorensen, “Slowpoke” <www.slowpokecomics.com>

· Tom Tomorrow, “This Modern World” <www.thismodernworld.com>

· Dan Wasserman <www.boston.com/news/globe/editorial_opinion/oped/wasserman/>

· Matt Wuerker, “Lint Trap” <www.mwuerker.com>

Finally, we are grateful to the following friends of CPE and the Field Guide for generously purchasing numerous copies of this new edition long in advance of publication. Their purchases established our artwork budget. Without them this book would be much less fun to read and would have been much less fun to write. They are: Randy Albelda & fellow UMass-Boston faculty, Michael Ash & Krista Harper, Alexandra Bernasek, Shannon Brockman & Andy Elsberg, Jim & Pamela Crotty, Mickey & Margie Elsberg, Paula England, Jerry Epstein, Marianne Ferber, John Fitzgerald, Gerald Friedman & Debra Jacobson, Sut Jhally, Emily Kawano, Karen & Jerry Levitis, Julie Nelson, Susan & Saul Nimowitz, Manuel Pastor, Frances Fox Piven, Katha Pollitt, Juliet Schor & Prasannan Parthasarathi, Peter Skott, Timothy Smeeding, Diana Strassmann, Wendy Teller-Elsberg, Marty Wolfson & fellow Notre Dame faculty, and Howard & Roslyn Zinn.

10

The Bottom Line

If there were just one bottom line, the U.S. economy would be easier to understand. We could pretend that it was one big checking account, and we could look at our monthly statement to see how we were doing. We could see who made the deposits and who made the withdrawals and figure out who got what and why.

It’s not that simple because an economy is more than a set of accounts: It’s a system of production and distribution. People put their labor, their talents, and a little bit of their souls into it and take their livelihoods out of it. Some people get rich, some get poor; sometimes the overall economy grows, sometimes it falters. Not even the best economists in the world understand exactly how it works.

But most people want to know more about it, if only because they’re worried about the bottom line in their own checkbooks. News reports describe a growing economy, but the real wages of the typical U.S. worker are no higher now than they were in the early 1970s. New medical technologies abound, but many families can’t afford health insurance. The unemployment rate is low, but even experienced professionals and managers remain susceptible to the downsizing, outsourcing, and offshoring of their jobs. People are also worried about the larger economic trends affecting their communities, their country, and their world: the movement of U.S. corporations abroad, growing income inequality, and the threat of major environmental problems, among others.

Those who know a great deal about the U.S. economy are often exceedingly fond of it. Economic experts are far more likely to extol the virtues of the system than to criticize it. Prevailing orthodoxy holds that the economy does not need critics, watchdogs, or gadflies of any sort and, indeed, works much better without them. Typical economics courses confine much of their attention to the theory of competitive markets and treat the economy as a self-regulating system. Even when they address issues of public policy, economists often teach students that there is an inevitable tradeoff between economic equality and efficiency. The message, in ordinary language, is that social justice is just too expensive.

Some economists (like us) disagree. We believe that economic power in the U.S. is unevenly distributed and easily abused and that current economic policies are inefficient as well as unfair. We also believe that good citizens should be good critics, and that controversy and debate over economic issues are central to the democratic process. This book compiles useful information for non-economists (as well as students and teachers) who want to know more about the U.S. economy. The facts and figures we highlight reflect our personal values and our political concerns. But we stop short of developing any one interpretation of U.S. economic trends or advocating any particular social policies. Our aim here is less about persuasion; we aspire to inform and provoke, enlighten and enliven economic debate.

This Field Guide is the fourth version we have published. It is designed to serve as an accessible, concise reference for answering specific questions as well as an informative overview of the U.S. economy. Each page stands alone as a description of an economic fact or trend but also fits into a chapter that systematically covers a particular topic. You might want to read the book from cover to cover. More likely, you’ll want to scan the Table of Contents, pick a page title that interests you, and follow your nose. The ten chapters are followed by a Toolkit section, bibliographic Sources and Notes, and a Glossary. Each of the first four chapters explains the economic position of a group of people: “Owners,” “Workers,” “Women,” and “People of Color.” The next chapters cover a particular area of concern: “Government,” “Welfare and Education,” “Health,” “Environment,” “Macroeconomics,” and “The Global Economy.” The last two chapters, in particular, use some technical terms that make them more difficult than the earlier ones. If you are having trouble with them, be sure to consult the Glossary.

Each chapter opens with a brief overview that ties its pages together around a main theme. The pages of each chapter progress from the general to the specific, providing a variety of types of information—descriptions of widely discussed trends, explanations of basic economic concepts, and occasionally, more speculative analysis of possibilities for change. We use the most recent information available to us at the time of our writing (the middle of 2005), but because collecting and analyzing economic data is a difficult, time-consuming process, many of our sources lag a couple of years behind.