Amid the obsession with the Fed announcement, another report got less coverage: the US Census Report on Income, Poverty, and Health Insurance Coverage. It says 1 in 7 Americans live in the government’s definition of poverty. Which means that effectively more like one-fifth of us live in what anyone would call poverty.
This doesn’t mean no toys at Christmas, wearing worn-out shoes, or the typical television notions of poverty. This is going to school hungry, having a peanut butter sandwich for dinner, mothers skipping meals so the kids can eat.
The census numbers are more likely to be relevant to the lives of the 99% of us who earn our primary income from jobs rather than investments. Even if you don’t live in poverty, your employees or contractors might. Even some of your neighbors in the suburbs are having trouble meeting their monthly food costs.
Housing going up, health sector stocks going up, for-profit education becoming a booming sector while public education is hit by fluctuations in interest rates—all these things have enriched portfolios. But they mean less or no disposable income for many in the middle class.
Which means in America, you can now be considered middle class because you make $60,000 a year. But if you have two kids and a mortgage or live where the rent is high, you have no disposable income and certainly nothing left over to put into stocks or to trade futures with. And if you make $25,000 or less, your kid may be going to school hungry. In America.
The stock market rally this year has been the kind of bull run that makes even idiots able to market themselves as Wall Street rock stars. Woe unto the people who stick with them when they continue to hold after the rally is over. They’ll get the usual “stay the course, we’re going through a correction, this is a long-term investment” letters and watch their portfolios go back down because they wouldn’t do what traders do: get out.
And they’ll feel poor. It’s understandable. Some people now have hope of paying for their kids to go to college. Or retiring when they planned to and how they planned to. Most people in the stock market are almost as far from the 1-percent world as the poor are.
That “almost” is the one politicians like to exploit. But for most of us, the news about how the poor are doing is much closer to home than the news about the new post-bailout batch of overpaid CEOs breaking the same laws of the U.S. and common sense and decency as the previous batch did. [pullquote]Join a Trading Room of honest, successful, friendly working traders. Free webinar Saturday[/pullquote]
But at 5:30 AM Central on Thursday, September 19, there was nothing about American poverty on the front page of Bloomberg.com. There was an article about 41-megapixel cameras.
At 5:45 megapixels were replaced by this important article about how the biggest gain in employment is among women waiting tables. That’s pretty close to an article on poverty. Many waitresses have college degrees (and debts) and are as qualified as you or I. And they live in poverty. Sometimes, the person bringing you food is herself hungry.
Having waited tables myself, I see a microcosm of our economy in the life of a wait-person. When I taught MBA students, I always asked how many of them automatically tip 20% pretty much no matter what. After the show of hands, I ask, “How many of you have ever waited tables?” Same hands. I’m an easy-going person, but when I see someone yelling at a waitress, humiliating her in public, I get angry.
They clearly don’t know what real work is, the kind where you come home and have to wash off the smell of cleaner or cooking grease. Maybe they see the world through Mitt Romney’s 47% filter. And they probably think their fund manager, who bought in a bull market, is a genius and because they picked him, so are they. That’s why some people deserve to be in menial jobs getting yelled at and some people have a right to yell at them, because they are stock market geniuses, makers not takers.
The divide in the news, about stock rallies for some and near- or actual poverty for too many, reflects a wealth divide that will damage the American republic. Our democracy and the strength of the U.S. dollar depend on our ability to trust each other. And right now, we don’t.
That’s the news you won’t see very much of in the financial press. But surprisingly, you see more of it this time than in 2006. Maybe our skepticism is making us think differently about what an economy is for. Some still think an economy’s main purpose is to enrich those who are already rich, the corporate imperative to meet shareholder expectations at the end of the quarter.
But some of us, I call us New Capitalists, think the reason for even having an economy is something more noble and far-sighted. Happiness. The happiness of having work that is real rewarded by a chance at a decent life relatively free from needless financial worries. A life where money isn’t the constant looming fear and the only goal.
A lot of people made small fortunes this week, millions of dollars. I wonder how they get along with their kids. As our friend and mentor, Marty “Pit Bull” Schwartz, said at the end of his remarkable talk at Amherst (a MrTopStep exclusive and free here): Money is a lubricant. It doesn’t bring happiness, but it makes some things easier. “Because once you have children, you never stop worrying about them.”
If you’re one of the 46 million Americans receiving government help to feed your families—you know, welfare, food stamps, the thing that makes people love being poor so much they never want to stop—the stock market rally won’t affect you directly, but it will affect you, both in the likelihood of getting help feeding your kids and in the cost of the food needed to feed your kids. But the larger context of this is that rich or poor, you might have kids. How are they doing?
That’s it in the end, isn’t it? We want to be happy and we want our children to be OK and to love us. Isn’t that it?
I was honored a few years back to be inducted into the Golden Key honor society and give a keynote to college students on success. I struggled for weeks to find a good, impressive, Golden Key definition of success. Finally I came up with this: If somewhere, somebody is thanking God for you and it’s not just because you put money in her wallet, you are a success.