A gilded age that touches all
Crime's down. Wages are rising. Blacks and Hispanics are finding jobs more easily. Governments are racking up budget surpluses. The so-called "crisis" in the Social Security system is fading. Welfare rolls are shrinking. House ownership is rising.
These are just a few of the benefits that are due to considerable degree to America's rising affluence. Prosperity is just wonderful.
"This is a much happier country than it was 10 years ago," says James Galbraith, an economist at the University of Texas, Austin.
The economic expansion in the United States, the longest ever, is 113 months old. Unemployment is hanging around 4 percent, the lowest in 30 years. Corporate stock prices, despite their volatility, remain relatively high. Americans own more than $30 trillion in assets, ranging from homes to cars.
Prosperity has changed the nature of the presidential election campaign. It centers in part on how to use the massive budget surpluses - spend them with tax cuts or employ them to retire national debt and fortify Social Security.
These gilded times have forced economists to rethink some theories. Many had held that unemployment couldn't fall below 6 percent without kicking off faster inflation.
Now, though the jobless rate last year averaged 4.2 percent, and 4 percent so far this year, inflation has remained tame. Prices for the entire economy actually rose at a slower pace in the second quarter of this year than in the first quarter. Nor has class warfare over wages broken out, as some feared.
The public may become disturbed should the Federal Reserve hike interest rates further to slow the economy and risk prosperity to stop an invisible inflation surge.
"How can they buy into that if there is a real cost in lost prosperity?" asks Mr. Galbraith.
One such gain from good times is the rise in homeownership. Of the 119.5 million housing units in the US, 70.8 million are occupied by their owners. The proportion of households owning their own homes has risen from 63.7 percent a decade ago to 67.2 percent in the second quarter. Though home ownership by blacks is lower than for whites, it's rising faster. It was 42.2 percent five years ago, 46.7 percent now.
Home prices have soared in a few urban markets, though not everywhere in the nation. But in these times of worker shortages, many less-educated people are finding jobs that last. And if they should get laid off, they can get another job quickly. So their annual income rises. Also, many families have two members working. As a result, more lower-paid families qualify for home mortgages.
This pick-up in wages among low-income households has eased financial strains a little on many breadwinners. They can better provide food and housing for their families.
It also has reduced the financial temptation to engage in crime. The offender/ex-offender population is a sharply disadvantaged subset of low-wage workers, note economists Jared Bernstein and Ellen Houston. Its mostly young, male, and minority, with less than a high school education, and minimal job experience. One study calculates greater job opportunities account for 30 percent of the fall in crime rates from 1992 to 1997.
Mr. Bernstein and Ms. Houston offer a chart in a new study showing crime rates for all 16- to 30-year-old male high-school dropouts falling from almost 6,000 per 100,000 residents in 1992 to about 4,600 in 1998, as their unemployment rate plunged from nearly 15 percent to just under 10 percent. The decline in the crime rate of young undereducated blacks was slightly greater as their unemployment rate dropped about 7 percent - from 26.6 percent to 19.3 percent.
Jobs provide these people a means to get money other than in the underground economy, notes Houston, of the Economic Policy Institute in Washington.
There are more benefits from prosperity. Because of rising wages at the bottom, inequity in wages (though not in total income) has fallen a bit. Cities and towns are sprucing up their roads and schools. Etc., etc.
Prosperity, says Galbraith correctly, is "a tremendously benign thing."
*David R. Francis is senior economics correspondent of the Monitor.
(c) Copyright 2000. The Christian Science Publishing Society