Can the Middle Class Survive This Economy?

Can the Middle Class Survive This Economy?

middle class blog photo-2.jpgThere are 14 million
unemployed and underemployed workers or 17.7% of our population, either looking
for a job or working in a job that is below their experience level and
education. Many of these job seekers are middle class workers all trying to
hold on to a lifestyle that they have become accustomed to.  The comfortable lifestyle that the middle
class has been living is evaporating before our eyes as our current administration
continues to make bad decisions in an effort to stimulate our lethargic economy
that only grew 1.7% in the second quarter of this year.

 

Experts say we need 2.5% annual
GDP growth to prevent our already high unemployment rate from rising.  The economy needs to add about
100,000-125,000 jobs per month to keep our unemployment rate status quo.  We only created 64,000 private sector jobs in
September. Unemployment has exceeded or equaled 9.5% for 14 months, a month
longer than our last severe recession in 1982-1983.

 

The government stimulus package
that started with former President Bush and continued with President Obama
appears to be greatly flawed.  It
continues to increase our government debt at record levels.  The bail out of our financial institutions
has helped the banks, yet they are hesitant to loan money to the consumer and
businesses, which has compounded the chance of a smooth economic recovery.  The banks are using our tax money while
hoarding cash and our federal government has not instructed them to make loans.

Bank loans are nearly
impossible to get if your income/debt ratio does not meet their
guidelines.  The problem with the banks' calculations
is that most people and businesses that need financing have more debt than
equity; that's why they are seeking a loan! 
It's easier for a recent college graduate with a job and no debt to get
a home loan than someone who has been in the job market for years and has
accumulated debt.

 

Whatever cash people have
saved is being used to service their debt while small businesses are using their
own money for their business, hoping that a cash infusion will help stimulate
growth.  Many small businesses that can't
get loans are barely staying afloat as they struggle to make money in this sluggish
economy.  Unfortunately, most of these
business owners represent the middle class.

 

There are also early signs of
inflation as the value of U.S. dollar continues to fall.  This may force money managers out of treasury
bills into equities, raising the risk of investing and making people who can
ill afford to lose money become vulnerable. To make matters worse Bernake is
considering putting more money into our system and creating an inflationary
market which will drive down the dollar even further.  This will hurt the middle class who will now
pay more for goods and services.  Our
government is making it almost impossible to make money.

 

The wealthy will benefit from
the recent stock market rally because they can afford to ride out the stock
market.  They may use the money they make
to expand their businesses and buy goods, but history has shown that the "
trickledown" theory doesn't help the middle class.  It won't drive the unemployment down or raise
the current value of homes.  The latest
appraisal on my home which is in a high rent area in the Gold Coast in Chicago,
was down by 35 percent from two years ago and now worth less than what I paid
for it nine years ago!


 The latest healthcare bill
passed by President Obama is a disaster for the middle class.  In a survey last month, conducted by Towers
Watson of 466 large and mid-size companies, healthcare costs are up 8.2% for
2011.  My own survey says it's up 15-20 %
since last year. This is in the anticipation of insurance companies having to
insure people that were previously uninsurable, yet must now be covered by
federal law.

 

The healthcare providers will
not lose money, so they are charging the hard working, responsible middle class
more money for the same benefits to off-set monies they'll lose when the
healthcare bill is in full effect, in 2014. 
Even companies like McDonald's are having issues with the new bill, but
have been given waivers until better options are available. So McDonald's gets
a waiver from our government when the rest of the small and mid-sized firms
struggle to stay afloat as they attempt to figure out how they can afford to
pay higher healthcare costs for their employees, without having to cut their
benefits.


I had high hopes that after
former President Bush left office that President Obama's Administration would
protect and support the middle class. 
This was one of his many promises to the American people.  I believed his words that he would keep the
American Dream alive and attainable for the middle class, that he would institute
programs to make it easier for small businesses to succeed, rather than making
it more difficult. I was wrong.


Every day more people who once
were part of the middle class are falling into the property level.  Many will never be able to replicate the life
they had once cherished or perhaps took for granted.  The middle class is shrinking, and neither the
republicans nor the democrats have come up with programs to help this coveted
group that represents so many of us who work hard every day to have a
comfortable life.  Where are our
government programs?  My hope is that we
finally get the leadership needed to support the middle class.  I am getting impatient.  How about you?

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