Sun, Jul 28, 2013 - Page 9 News List

The US economy is still stuck —why?

What needs to be done about the falling number of employed people in the US and the falling standard of the jobs available?

By Moira Herbst  /  The Guardian

Problem 9: The cost of college is skyrocketing

Higher education in the US is becoming an unaffordable luxury. By conservative estimates, the cost of a college education is now 50 percent higher than it was 30 years ago. Public colleges and universities are cheaper, but not cheap enough. As states cut funding, the cost of attending a four-year public institution has risen by 5.2 percent each year of the last decade. Student loan debt in this country now exceeds US$1 trillion.

Upon graduation, debt-saddled young people face a fierce job market; youth unemployment has hovered at about 16 percent for the last year-and-a-half. The conundrum is that, although college degrees are exorbitantly expensive, they are increasingly necessary to even get in the door for a decent job.

Problem 10: Inequality is getting worse

It is well known that the US ranks near the top of most unequal countries in the developed world — and that income inequality here has reached its highest levels since the Great Depression. A few statistics fill out the bleak picture: the top 1 percent of earners took 93 percent of the income gains in the first full year of the recovery. The poorest 50 percent of Americans now collectively own just 2.5 percent of the nation’s wealth.

What level of inequality is healthy for a society may be debatable, but an increasing number of economists and regulators — including those at the IMF and the US Federal Reserve — are recognizing that US-style inequality is bad for business and the economy as a whole.

As these experts are starting to realize, the recovery will only come when workers get their due. Until then, US corporations are sowing the seeds of their own destruction — and taking the rest of us down with them.

Moira Herbst is a strategist for BerlinRosen, a New York-based progressive communications firm. She has worked as a journalist for BusinessWeek, Bloomberg News and Reuters.

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