For many American families, economic crisis is nothing new

The current state of the American and World economy has become the main topic of news coverage and the most important issue on the campaign trail for several weeks now. As Dean Baker regularly points out in his excellent blog, Beat the Press, much of this coverage is erroneous and overly focused on the recent decline in the stock market and not enough on how the crisis is truly affecting American families. No doubt this reflects the pervasive elite bias of even the most "liberal" segments of the mainstream media. Whether accurately describing the current crisis or not, what much of the recent coverage on the economy misses is that under the current neo-liberal political economy in the United States, a startlingly large share of American families are constantly faced with economic crises, in good times and bad.

The Economic Policy Institute, a labor-affiliated Washington think tank that, to its credit, proclaims that "spreading the wealth around" is one of its main goals (EPI's mission is "To inform and empower people to seek solutions that will ensure broadly shared prosperity and opportunity") has just released a report showing that nearly a third of American families don't earn enough income to achieve a basic standard of living. The report is EPI's latest installment in its long-standing research on family budgets. In essence, using a variety of data available from governmental and non-governmental sources, EPI has for many years aimed to calculate exactly how much a family needs to make to fulfill their basic needs, based on family size and geographic location. The number they come up with for the cost of life's basic necessities is what they call a basic family budget. It is a welcome alternative to the current measure used by many public and private institutions to measure basic needs, the Federal Poverty line, which is quite out of date, does not adjust for differences in cost of living throughout the country and is thus largely meaningless in today's economy.

The items included in the Basic Family Budget include: Food, Child care, Transportation, Health care, Taxes, and other necessities such as: "clothing, entertainment, personal care products and services, reading materials, educational materials, and other miscellaneous but mostly necessary items". On average, EPI finds that a 2-parent, 2-child American family needs an annual income of at least $48,778 to meet their basic needs, over twice the official poverty line for a family of that size, $21,027. However, Family Budgets vary widely throughout the country. According to EPI:

In major urban areas, expenses for this four-person family range from $42,106 in Oklahoma City to $71,913 in Nassau/Suffolk, N.Y.; families in small towns and rural areas start from a low of $35,733 in Marshall County, Miss. to $73,345 in Nantucket and Dukes Counties, Mass.

Using income data from the 2007 census, which it should be noted, was the best year for the economy under the Bush Administration, EPI found that 29.8% of American families don't earn enough to meet the basic family budget. That number jumps to 43.7% for families with only a high school degree, 53% for African-Americans, 57.4% for Latinos, and 74.7% for single-parent, two child families. Given that most observers expect the economic situation in the United States to continue to get worse for at least another year, it is highly likely that the percentage of American families that fail to make ends meet will increase in 2008 and 2009. Nonetheless, the point I'm trying to make, which is clearly borne out by the data, is that even when the economy is performing well in the aggreggate (ie a high rate of GDP growth), 1 in 3 Americans suffer from privation.

Obviously the current economic crisis is terrible for nearly everyone involved, but I hope that something positive will come from it. As Naomi Klein has been saying a lot recently, I, hope that the current crisis causes us to fundamentally rethink the economic model we've adopted in the United States since Reagan and cast it, like Soviet-style central planning, to the dustbin of history. Our current unregulated, bubble-driven, and highly financialized economy clearly does not provide for the basic human needs of the American population. I'm not certain what an ideal alternative economic model would look like, but I am sure that it would little resemble the model we've lived under for the past 30 years, which has yielded stagnating wages and skyrocketing inequality, as well as even greater corporate dominance of our lives. I hope all Americans will come to the same conclusion I have that we are not experiencing a temporary bump in the road, but the manifest failure of an economic model and ideology. This crisis calls for the charting of a new course economically. That, my friends, would be change we can all believe in.