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State of the Economy, 2009

State of the Economy, 2009. UCC General Synod XXVII Grand Rapids, MI June 27, 2009. The Current Crisis Stems From Longer Trends. Unemployment Poor quality jobs Growing, HUGE inequality in income. Foreclosures, delinquent mortgages Fraud, greed, excessive risk taking

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State of the Economy, 2009

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  1. State of the Economy, 2009 UCC General Synod XXVII Grand Rapids, MI June 27, 2009

  2. The Current Crisis Stems From Longer Trends • Unemployment • Poor quality jobs • Growing, HUGE inequality in income • Foreclosures, delinquent mortgages • Fraud, greed, excessive risk taking • High debt loads: consumers, banks, businesses • Environmental destruction • Consumerism, materialism

  3. Unemployment, May 2009 • 14.5 million (9.4%) officially unemployed • 25.8 million (16.4%) not working but want to, or want full time work and only find part time. This is one in every six people. • African Americans unemployed at twice the rate of Euro-Americans, Hispanics 50% higher than whites. • Teens: 3 times those of adults.

  4. Foreclosures & Late Mortgage Payments In mid 2009: • 12% of mortgages were either in foreclosure or behind in payments • 48% of subprime, adjustable-rate mortgages were behind or in foreclosure

  5. Jobs – Low Pay One quarter of all jobs pay poverty-level wages, so low a full-time worker cannot keep a family of four above the federal poverty level ($21,200 in 2008) -- an hourly wage below about $10 / hour.

  6. Stagnant wages for “Production” WorkersAfter growing for about 30 years after WWII, wages for the 80% of workers who are not professionals or supervisors have stagnated for nearly 30 years In June 2008: $16.23 and falling

  7. Jobs – Wage Theft Employers fail to pay workers for all hours worked, in violation of the law • Millions of workers, an “epidemic” • Few penalties, little enforcement of inadequate labor laws Wage Theft in America by Kim Bobo, New Press, 2009

  8. Jobs – No Union • 12.4% of all workers in 2008 were in a union. • Membership peaked at about one-third of the workforce in the late 1940s and early 1950s. • 50 - 60 million workers would like a union The Labor Movement The Folks who Brought You the Weekend and Many Other Things

  9. Jobs – No Jobs The US imports (buys from other countries) many more goods and services than we export (sell to other countries). The difference is the “deficit” • In 2007: 5.6 million jobs lost due to the trade deficit, 70% were in manufacturing. • Producing abroad means high profits for corporations, somewhat lower prices for consumers, but loss of jobs and lower wages for workers in the US

  10. Health Ins. Coverage Declines

  11. The Uninsured live in Working Families Among the 45 million uninsured nonelderly people in 2007: • 69% live in families with one or two full-time workers and 12% live in families with part-time workers. • Just 19% have no workers in the family.

  12. Pension Coverage Declines The pension could be a traditional one or a 401(k) or similar plan

  13. No Pensions Over half of all workers do not have an employer-sponsored pension of any kind (Thank the activists of the 1930s for Social Security)

  14. Faster Income Growth at the Top

  15. Even Income Growth, 1947-1979

  16. Family Incomes Grow More Unequal

  17. Family Incomes Grow More Unequal

  18. Income Inequality The very rich get richer, everyone else gets what’s let over. The poor stay very poor. This trend is due to changes in the structure of the economy and in political influence. It is exacerbated by changes in tax policy

  19. Income Inequality • Top 1% of households: annual income up $1 million since 1979 (adjusted for inflation) • Bottom 80% of households barely up To return to the distribution of 1979: • Each household in the top 1% write a check for $800,000. Each household in the bottom 80% gets a check for an additional $10,000. • Do this EACH YEAR

  20. Income Inequality Or, to arrive at where we are now: • Each household in the bottom 80% writes a check for $10,000 • Gives it to a household in the top 1%. • All together, every household in the top 1% gets $800,000. • EVERY YEAR since 1979

  21. Little Opportunity for Advancement Among children of parents in the middle income range, 43% will end up below middle income. Just 33% will rise.

  22. Little Opportunity for Advancement Among children of parents in the lowest income range, 42% will not leave this income group. Just 17% will be above the middle

  23. “Family Budget” • The “Family Budget” is based on modest but adequate expenses for housing, food, child care, transportation, health care, taxes, and miscellaneous items. It varies by region of the country and family size. • 30% of families have incomes below the necessary Family Budget.

  24. Family Budget • On average, nationwide, working-families with two parents and two children require an income of $48,778 to meet the family budget. • This is roughly, twice the federally defined poverty line. • Over three times as many families have income below the Family Budget as below the poverty line.

  25. Taxes • Decline in share of taxes paid by corporations largely due to tax loopholes • Decline in taxes paid by wealthy especially in light of their massive increase in income • Tax advantages to upper and middle class compared with lower-income families

  26. Corporate Taxes • In 2005, the most recent year for which data are available, U.S. corporate tax revenue as a share of GDP was only 2.6%, lower than in all but two developed countries. • In the 1950s, corporations were responsible for about 25% of federal tax receipts compared with 10% today. Tax loopholes allow corporations to avoid paying.

  27. Taxes Paid by Wealthy Decline

  28. Taxes Paid by Wealthy Decline • In 1955, the top 400 taxpayers had an average income of $12.3 million (in 2006 dollars). They paid 51.2% of this in taxes. • In 2006, the top 400 taxpayers had an average income of $263.3 million (in 2006 dollars). They paid 17.2% of this in taxes.

  29. Taxes Paid by Wealthy Decline • In 2006, the top 1 percent with an average income of $1.3 million, paid 23% percent of their income in federal income tax. • In 1986, the top 1 percent averaged $507,520 in income in inflation-adjusted dollars, and paid 33% in federal income taxes.

  30. Tax Code Benefits Middle/Upper Class

  31. Growing Corporate Power Taxes : a marked decline in federal corporate income taxes. Privatization: so corporations can make a profit on things previously provided without a profit (water, energy, health care, solid waste collection, etc). Privatization of the military – huge new source of profit.

  32. Growing Corporate Power Influence on Congress: lobbying, tax breaks, loop holes, relaxation of regulation (subprime lending, consumer protections, tort “reform,” bankruptcy law), policy decisions High profits.

  33. Other Issues • Fraud, greed, excessive risk taking • Environmental destruction • Consumerism, materialism • Bubbles: stocks, housing, credit/debt The Church has much to say about all these issues

  34. Larger Economic Trends Summarized Jobs: too many with low wages and few benefits, falling or stagnant wages Jobs: too few for all the people who want to work. Growing corporate power and changed role of government – is our government democratic? On-going racial discrimination Attacks on unions

  35. People are Hurting Our economic system – “neo-liberal” policies, rules, and practices – is biased against workers and working families in the US and around the world. The current crisis has exacerbated and exposed severe, long-term problems.

  36. People are Hurting We must address: • The underlying structure of the economy that fails many working families • The cause of the crisis • The inadequate safety net

  37. No One Needs to Go WithoutGod provides abundantly for all our needs “Do not worry, saying, ‘What will we eat?’ or ‘What will we drink?’ or ‘What will we wear?’ … But strive first for the kingdom of God and God’s righteousness [justice] and all these things will be given to you as well.” Matthew 6: 31,33

  38. Priority Reforms • Fundamental health care reform • Pass the Employee Free Choice Act to strengthen workers’ right to form a union www.ucc.org/justice/worker-justice/unions/efca.html • Re-regulate the banking and credit system. • Action on climate change • Campaign finance reform, public funding of campaigns • New trade and investment agreements • Your top priority?

  39. Make Work Pay • Raise the minimum wage to a living wage • Improve supports for those with very low wages • Earned income tax credits • Child care assistance • Health insurance • Housing assistance • Food stamps • Transportation • Safety net for hard times

  40. Strengthen the Right to Organize Pass the Employee Free Choice Act Vote coming in July http://www.ucc.org/ justice/worker-justice /unions/efca.html

  41. Federal Income Taxes • Raise taxes on the wealthy • Tax income from investments (capital gains) at the same rate as income from working. • Close corporate tax loopholes.

  42. An Economy that Serves All • A job for everyone who wants one • Every job pays a livable wage • Universal health insurance and pensions • Quality education for all from pre-K to higher education • Affordable housing • Adequate income for those unable to work • Sustainable production and consumption

  43. An Economy that Serves All Reclaim our government so that it truly is of, by, and for the PEOPLE

  44. Good Things to Keep • Progressive federal income taxes Not as progressive as in years past, but still fall much more heavily on the rich. A flat tax would eliminate this. • Social Security needs small changes only. Preserve the fundamentals of the program

  45. Ways to Change the World • Join Justice and Witness Ministries’ Justice & Peace Action Network. Receive weekly alerts about pending legislation and other topcis. Click and send emails to elected officials. Keep up on important issues. Sign up at http://www.ucc.org/justice/join-the-network/ • Become a JWM Justice Leader http://www.ucc.org/justice/training/

  46. Ways to Change the World Encourage your congregation to engage in congregation-based community organizing. http://www.ucc.org/justice/cbco/

  47. Ways to Change the World • Join labor-religious-community alliances affiliated with one of these two national networks: Jobs with Justice www.jwj.org Interfaith Worker Justice www.iwj.org

  48. Ways to Change the World Learn, discern, explore, listen for God’s call: Just Neighbors http://www.familypromise.org/program/just-neighbors Just Faith http://www.justfaith.org/JF124.html

  49. Edith Rasell, PhD Minister for Workplace Justice Justice and Witness Ministries United Church of Christ 700 Prospect Ave E. Cleveland, OH 44115-1100 raselle@ucc.org 866-822-8224, ext. 3709

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