Because American citizens don’t have the money to spend they don’t spend and the consumer spending aspect of the economy takes a drastic downfall. Unemployment rates also have play in determining a recession (22). Proper money management and finances could bring an economy out of a recession. There are major flaws in the way we live that people are doing nothing to fix. Most people are in debt, in late 2005 “wage growth was shortchanged because 46 percent of the growth of total income in the corporate sector was distributed as corporate profits, far more than 20 percent in previous periods.”(24) Household income had fallen five years in a row and was 4 percent lower.
This means that the purchasing power of the minimum wage has decreased significantly over time. The current minimum wage is no longer enough to protect workers out of poverty. A person who earns the minimum wage and works full-time (40 hours/week, 52 weeks/year) only earns about $12,000 in a year. This is almost $7,000 below the poverty line for a family of three ($19,090) according to the federal poverty guidelines. As a result, the gap between poor and high-income families is continuously increasing, and taxpayers have to pay more for public assistance such as food stamps and Medicaid.
In a five time span Americans salary did not equal to their contributing. On the other hand, the Americans were squandering more than what they made financially. Because the America people were concise on cash and credit they stop investing money in the economy. Under those circumstances real estates became stagnant; additionally, working people were laid off due to less productive in the manufacturing plants (p.692). Although the stocks rise 40 percent between 1928 and 1929 lenders succumbed to paroxysm behavior.
Hardly ever do you hear about the costs of bearing the franchised uniform. Perhaps the largest threat to any employee behind the counter of a fast food restaurant is the paycheck. Thousands of workers struggle to survive on their minimal pay. According to an article composed by professor Lawrence Wittner, if congress had kept the minimum wage in line with inflation as stated under the Fair Labor Act of 1930, the current US minimum should be $10.74. Instead, today employees benefiting minimum wage receive $7.25 an hour, nearly two-thirds what it ought to be.
As business failures increased and unemployment soared--and as people with dwindling incomes nonetheless had to pay their creditors--it was apparent that the United States was in the grip of economic breakdown. Most European countries were hit even harder, because they had not yet fully recovered from the ravages of World War I.) The deepening depression essentially coincided with the term in office (1929-33) of President Herbert HOOVER. The stark statistics scarcely convey the distress of the millions of people who lost jobs, savings, and homes. From 1930 to 1933 industrial stocks lost 80% of their value.
Penalties were forced upon lending companies who refused to succumb to these destructive ideals, and we as a country entered into another Golden Age. Fast forward to 2009. The economy of the United States has failed dismally. Millions have lost their jobs, and many more have felt the pain as they watch their retirement funds plummet, and the cost of living skyrocket. In the first quarter of 2009, our GDP had dropped over 6%.
If the minimum wage were instead raised to where it should be, at least $10 per hour (which would still put it below the minimum wage in 1968), this would release at least $60 billion over two years into the economy (US Labor of Statistics). Raising the minimum wage to $10.10 an hour nationally will provide 28 million Americans with more money to spend and to invest, increasing economic activity and growth. The past 30 years have witnessed a dramatic redistribution of national and personal income in favor of profits for the rich. At the same time, this period has been associated with a dramatic decline in the performance of the US economy. To raise the minimum wage would be literally the minimum we could do for those who have suffered from the economic crisis: the working population.
Outsourcing is harmful to the United States’ economy because it paves the way for job losses, decreases product consumption, and widens the gap between the rich and the poor. With outsourcing, thousands of Americans are stripped from their jobs in many sectors of the industry, negatively impacting local, state, and federal governments. On average, these unemployed workers can only find new jobs that pay 80% of their original wage (Dobbs). Decreased wages diminishes peoples’ living conditions, and Americans are forced to consider multiple jobs, smaller homes, and fewer luxuries. In America, this reduced standard of living means fewer government funds.
Based on 2004’s Current Population Survey of America, today two million workers earn at or below minimum wage out of 73.9 million American workers who are paid at hourly rates (Characteristics). In 1996, the minimum wage raised to $5.15 per hour. Some people argue that this federal legislation helped low-wage workers a lot. Nevertheless, low-wage people are still suffering from hardship because of the big gap between their incomes and expenditures. In 1998, the minimum-wage was “$2,500 below the poverty line for a three-person family” if a worker works 40 hours a week without vacations (Rothman).
Extreme poverty has been cut by more than half since 1990, however, more than 800 million people around the world still live on less than $1.25 a day. Poverty includes the lack of basic services: hunger, education, and social discrimination and exclusion. Creating comprehensive policy frameworks at the national and international levels based on stimulating economic growth for the poor and gender-sensitive development strategies, can support faster investment decisions as well as poverty eradication actions. Nearly 3.1 million under the age of 5 die yearly due to poor nutrition. Worldwide, 1 in 9 people are malnourished.