Election Season upon Us…And a Lot is at Stake!

I try and keep political issues out of my blogs. I don't think folks are interested in having my personal views foisted upon them. I do however cover political issues as they affect real estate, and in so doing will share my opinion. And welcome you sharing yours with me. This particular blog may not seem directly related to real estate. But then again, there may be no bigger issue, having a greater impact on the real estate market in the long term.

I'm talking about the shrinking Middle Class, and its weakening purchasing power. This upcoming election, and the next few elections, in my opinion will determine if we will rebuild the Middle Class or see it further erode and compress.

Regardless of your political party loyalties, Democrat or Republican, Green or Tea, or Independent, we must all be aware of what's at stake and hold our elected officials accountable for addressing it. And what's at stake is not only the impact upon real estate values, but literally - the American Dream! That being, if you work hard and play by the rules, you can support your family, have the potential for upward mobility, and send your kids through post-high school education so that they can try and make a better life.

In Robert Reich's new book, Aftershock, he explains how the U.S. went from the great period of prosperity, 1947-1975, to today's Great Recession. He, like many economists, contends that the Middle Class is shrinking and cannot be sustained unless some structural changes are made.

An increasing number of people are making the case that over the past 30 years an increasing share of our national income has been regressively redistributed to the very wealthy. In the 1970s the top 1% of earners took home 8-9% of our national income. In the 1980s that percentage was 10-14%, by the late 1990s 15-19%, in 2005 it passed 21%. In the last year it was measured, 2007, it exceeded 23%, with the richest one-tenth of 1%, 13,000 households, making more than 11% of the total income this country generates. The last time wealth was so concentrated at the top was in 1928. Just before the Great Depression.

We hear a lot about the road to recovery being job creation. That's only partially true. For years Cuba's unemployment rate was 2%. And Cuba has no shortage of poverty. Even over the past many years when the American unemployment rate was relatively low, Middle Class workers lost ground economically. Lots of low paying jobs will not save the Middle Class. Wages have been stagnant, or dropping, over the past three decades.

Case in point; a male worker earning the median wage in 2007 earned less than the median wage, adjusted for inflation, of a male worker 30 years ago. In other words, a typical son is earning less than his father did at the same age. At the same time company CEOs are earning 300-500 times more than the average worker compared to 30-50 times back in the 1950s.

The result is a shrinking Middle Class and a growing number of families sliding into poverty. To underscore this point, I would ask that you take a look at the data contained on the following website: http://www.abovetopsecret.com/forum/thread563763/pg1

I also encourage you to conduct your own Internet search, or read newspaper articles and books on this important subject. . Here are a couple of articles that appeared recently in the Oregonian:

And while some may disagree on the exact numbers, they do agree on the trend. And the future it portends if this trend is not stopped, and reversed, is sobering. Today over 44 million Americans, one in seven, live below the poverty level. This is the highest number in our history. For minorities the numbers are even worse. One in four African-Americans and Latinos fall below the poverty line, with one third of minority children growing up destitute. These numbers for our minority communities are not outliers, but leading indicators.

Again, my intent is not to push one political Party over the other or single out for support any particular slate of candidates or solutions. I'm simply lending my voice to an increasing number of people who are ‘sounding the alarm'. Regardless of who caused it, and both political parties share some of the guilt, the trend must be stopped and be reversed.

A broad, strong Middle Class is what made our country great. Originally built in large part by the enactment of the 1944 GI Bill, it is the cornerstone of our democracy. Shrink it, take away its purchasing power, and we lose our global competitive edge. Not to mention the pressures put upon our government as an increasing percentage of our population lose jobs, homes, health insurance (this year surpassing 50 million Americans!), and eventually hope.

Lastly, it is in the best interests of the wealthy to not see this trend maintained. They need competent workers, good transportation and communication networks, a modern dependable power grid, and if selling products a vibrant Middle Class of consumers to buy them. When wealth is concentrated at the top, demand for goods and services diminishes. Henry Ford understood this when in 1914 he found his employees could not afford to buy the automobiles they were building, and astonished most everyone by doubling the pay of his Model-T assembly line workers. Workers are also consumers.

So I'm asking that each of us, before casting our votes, know where your choice for elected office stands on this issue. Do they talk about it? Do they grasp the seriousness of it? And, do they endorse a plan to address it? If a candidate is not putting this issue high on their agenda, please move on to someone who is!

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