Once upon a time, poverty was a word reserved for unfortunate third world countries, an economic condition that was rare in the great land of milk and honey. Today, poverty is everywhere and the statistical numbers regarding this topic are sobering. With the economic freefall of 2009, which destroyed the retirement portfolios of the majority of Americans, poverty has become a national epidemic. There are 43.6 million Americans living in poverty, the greatest number in 51 years.
This number means that one in seven Americans lives in a state of financial poverty. In a country known as the “land of opportunity” the notion that one in seven individual’s lives in squalor seems farfetched. However, a glimpse into the last ten years of America’s economic history paints a compelling portrait of a nation in serious trouble. The picture is crystal clear, a nation of people using credit cards to leverage their finances and making purchases they could ill afford. In short, the country was too busy spending to realize that they were walking a frayed financial tightrope without a safety net.
While there’s no single entity to place the blame on, a number of factors contributed to the country’s economic downfall, starting with the real estate market.
Home prices rose at an inflated rate over the last ten years, creating a market that was set to violently explode once a market cap was reached. Homes became valued at three to five times their actual worth. Housing is always in demand and mortgage lenders were happy to peddle mortgages that allowed many Americans to purchase homes they couldn’t afford. With all markets, a saturation point is reached and the bubble breaks. People who owned homes they couldn’t afford lived on borrowed time, unaware that a simple financial setback would send their lives spiraling down into an abyss of debt.
With real estate sellers turning large profits on home sales during this period, that money went into the stock market and other investment vehicles. Of course, the stock market was overvalued and its bubble burst, leaving many with huge losses in their portfolios. That was strike two. The third strike came as a result of the first two.
Bad economic times always lead to layoffs and, with the real estate and stock markets on the skids, layoffs came like a massive wave, sweeping away what was left of people’s financial security. Corporate layoffs were the easiest way many corporations could save themselves. As they say in baseball, three strikes and you’re out.
While many politicians paint a picture of an economy on the rebound, the country appears to be one step away from the soup lines of the great depression. Poverty is affecting the entire nation and, while some of the areas hit are not surprising, the overwhelming percentage of impoverished Americans is. States like Mississippi and Louisiana made the top of the list but surprisingly, Texas came in a close third. Texas is seeing record breaking poverty for the first time since the great depression. However, most frightening of all is the bleak future facing the dwindling middle class.
With massive corporate layoffs, many middle class families are facing life without health insurance. Many professionals have been forced to take minimum wage jobs when just a year prior they were earning six figure incomes. In the United States, 16.7 Americans are without health insurance and that number is quickly growing. High paying jobs are no longer available and the once strong middle class is becoming smaller and smaller with each passing year. In the end, the country could end up with two classes; the wealthy and the poor. While there are no easy answers regarding fixing the economy, one thing’s for sure, if something doesn’t give we’ll all end up on the unemployment line.