More Americans are finding themselves in the grip of poverty, at some point in their lives, than ever before. It's called "economic insecurity," and the unsettling fact is that it is probably going to get worse.
Jobs, jobs, jobs
A recent article by the Associated Press reveals that 80% of American adults find themselves in economic trouble during their lifetimes. This measure of economic insecurity is characterized as at least one year on public assistance, an income level 150% below the poverty line, or being unemployed for any length of time. If that isn't depressing enough, the incidence of those affected by economic hardship is expected to rise to 85% by 2015.
Not surprisingly, the primary reason given for this reduction in economic well-being is a lack of jobs -- more specifically, the decline of manufacturing jobs. As this chart from the Federal Reserve Bank of St. Louis clearly shows, the proportion of jobs in the manufacturing sector has taken a huge hit since 1970, to the point where only a little over 10% of the population now works in that area.
Last year, the Information Technology & Innovation Foundation noted that, during the 2000s, the U.S. lost over 33% of its manufacturing jobs, trumping the losses experienced in that sector during the years of the Great Depression.
The college conundrum
Of course, those were just the type of jobs that high school graduates could easily fill, and things have gotten much worse in that arena since the financial crisis. These days, those job-hunters are experiencing an unemployment rate of nearly 23% as they face a market in which 80% of the jobs attainable without a college degree have disappeared in just a few short years. Though both high school and college graduates have seen a drop in their overall rates of unemployment, the gap between the two continues to widen, and will likely get even wider.
A four-year college degree isn't a cure-all, but it does -- depending upon the graduate's major -- help graduates secure work. The new problem, widespread since the financial crisis, is that many more students are securing college loans to finance their educations, thus saddling themselves with onerous debt upon graduation.
Is there any hope?
The new reality is pretty bleak, and it's apt to get bleaker. People without jobs, and college graduates with crushing debt loads, don't make the best consumers -- a real problem in an economy that is 70% consumer-driven. When unemployed people and debt-laden college graduates are unable to buy homes, the housing market sputters. Another sobering thought: Both manufacturing jobs and house construction have a multiplier effect, creating new supporting jobs. When manufacturing and housing suffer, the hurt is felt far beyond the sectors themselves.
Since manufacturing jobs won't be coming back, what can be done? To me, the onus must be on education beyond high school, in an effort to give everyone a fighting chance in the new job market. Since cost is an important issue, that can best be addressed by stretching the public school system to encompass the community college level of education.
One thing is for certain. A population at risk of even temporary poverty is a drag on the economy, and that's bad news for everyone -- workers, consumers, and investors alike.