Staving off the imminent recession

The textbook definition of a recession is three consecutive quarters of negative economic growth. These numbers can be artificially skewed by increases in worker productivity. I know increased worker productivity sounds like a good thing. But keep in mind what it essentially means is that employees are working harder days, longer hours with less take home to show for it. At present as Bush would say, "this is uniquely American." Americans are taking fewer vacation days than even the industrious Japanese.

But let's take a look at how corporations have artificially squeezed out higher profits over the last few decades. Since the 1970's wages have stagnated. When adjusted for inflation wages have increased on average less than 1% a year. Union membership has dropped significantly since the 1980's. Pension plans have slowly started disappearing being replaced by 401k's. There are increases in attrition in many companies, it is common to leave a position open for months on end if they are filled at all. Businesses start cutting benefits. Jobs have been outsourced overseas. And now the latest trend is the importing of foreign nationals to do contract work once performed by full time American employees for pennies on the dollar.

The story the economic growth figures doesn't tell what is happening to the American worker when "productivity increases" in this manner. The short answer is that they get stuck behind the 8-ball. They become that frog sitting in a pot of water that slowly warms until it is eventually boiling. Year after year, their raises are outpaced by inflation. The interest rates on their credit cards rise. They use credit more frequently for purchases with the intent of paying it off. They take out equity loans on their homes.

Then slowly they are forced to make tougher choices. They take out ARM loans for mortgages. They slowly lower the percentage of their contributions to a 401k, saying it's only temporary. That tap into savings or inheritance, not to pay off debt mind you, but to keep up the pace with the economic changes. They are now hanging on a ledge by their fingertips.

And then the situation becomes a boil. Interest rates start to rise. Their employer starts cutting medical benefits. Their monthly insurance rates start to climb. Gas prices rise year after year. Then they miss a credit card payment. And the rates on all of their credit cards revert to the default rate of 20 plus percent. Then they face an illness in the family.

This is a formula for a disaster on a mass scale, the likes of which most people living today could not imagine.

So, what's the solution? Well, that's the question we should be asking the presidential candidates.