While affluent Americans have largely recovered from the economic recession, the road to recovery has been much longer for low-income households, according to two years’ worth of data from the Consumer Reports Index.
Economists spoke about the findings yesterday at “A Tale of Two Recessions,” an event co-sponsored by Consumer Reports and the Columbia Graduate School of Journalism. They said the data reflects a trend in the economy that has been true for years.
“The process of the rich getting richer and the poor getting poorer has been going on for about three decades now,” said Raymond D. Horton, a Frank R. Lautenberg professor of ethics and business at Columbia Business School. “But it’s been getting a lot worse because of this recession.”
In 23 of the past 24 months, lower-income Americans have lost more jobs than they have gained, according to the Consumer Reports Employment Index. Meanwhile, more affluent Americans seem to be gaining more jobs than they are losing.
Dr. Steven R. Cunningham, director of research and education for the American Institute of Economic Research, said nowadays, jobs and personal income are inextricably tied to how much education a person has received.
“People who have education are likely to have jobs, more higher-paying jobs, and better household income,” he said.
Both economists worried that the data indicates that the idea of Americans moving up in society may be a thing of the past. In fact, Horton said he thinks we’ve seen the death of the “American Dream.”
“We’ve really lost the whole idea that you can rise and fall in American society,” Horton said. “We’ve really been stagnant for a while.”
For affluent households, their feelings about the economy—measured by the Consumer Reports Sentiment Index—have been positive (above 50) since February 2010, and climbed to a two-year high of 54.8 this month.
Middle-income Americans took an extra year to cross 50 in the Sentiment Index, but currently sit above the crucial number.
But for low-income Americans, sentiment remains well below 50 after bottoming out in October 2009.
Meanwhile, the measure of how many financial problems Americans have faced—the Consumer Reports Trouble Tracker Index—shows that low-income households have faced three to five times the number of problems, such as missed mortgage payments and unpaid health care bills, as more affluent households.
While 20 percent of lower-income Americans struggled to afford medical care or medications in the past 30 days, less than 5 percent of affluent Americans had the same problem.
Nine percent of lower-income Americans will struggle to meet mortgage payments in June; the same can be said for less than 2 percent of affluent Americans.
Affluent households ($100,000 of yearly income) comprised 18 percent of Americans surveyed for the Index; middle-income households ($50-$100,000 yearly income) comprised 33 percent; and low-income households (less than $50,000 yearly income) comprised 49 percent.
“A Tale of Two Recessions” was moderated by Fox Business News anchor Gerri Willis and took place at the 3 West Club in New York City.
The Consumer Reports Index is a measure of how Americans feel about the economy, and is produced monthly. For the current Index, data was gathered from 1,000 telephone surveys and 250 cell phone surveys.