The Great Divide in America

Dr Randy Persaud: THE United States is known for its high standard of living. No one, therefore, can doubt that there are genuine reasons for millions around the world to seek residence in that country. I suppose the notion of the American Dream is so pervasive it has become a global phenomenon.

A closer look at the United States, however, may cause those aspiring millions to think twice. In many ways, while the United States is indeed a great country to live in and to make a fortune, it is also a country of great disparities.

These disparities run across a number of categories including but not limited to health care, education, income, gender, ethnicity, and regions. Let us take a closer look.
Table I - Median Earnings

Source: The Measure of America: American Human Development Report 2008-2009.

As Table I above indicates, there are huge differences in income distribution in the U.S. based on ‘race’ and gender. Women make about 65% of what men earn and about the same difference exists between American Indians/Alaskan Natives and Hispanic/Latinos compared to Asians and Whites. While African Americans do a little better than Latinos and the Native populations, they also earn significantly less than Asians and Whites.

The distortion of income is also reproduced in huge differences in other areas including regional disparities. Broadly speaking, the bi-costal and Great Lakes states enjoy significantly higher standards of living. Accordingly, the states on the Pacific coast – California and Washington, plus the states on the eastern seaboard – broadly from Maine in the Northeast to Maryland in the Mid-Atlantic, are in the top bracket of income and standard of living.

To these we must add Virginia (especially Northern Virginia), and some of the inland states of the Great Lakes – Wisconsin, Illinois, and Ohio. Alaska and Hawaii should also be included. States in the South, South-West and the lower Mid-West are at the bottom end. The Table II below demonstrates the point.

Table II – Median Earnings – Selected States

Source: The Measure of America. New York: Columbia University Press, 2008.

These are raw data and can hide as much as they reveal. A more accurate picture can be painted if we dig down at the level of Congressional Districts. That said, even these nominal expressions can help us to understand that there are indeed great regional disparities.

Aside from regional disparities, there are problems that run across the country. Poverty is one of those pervasive problems. In this regard, the U.S. Human Development Report (2008) paints a picture that is almost unbelievable. Simply put, large sections of the U.S. population are now operating below a Basic Family Budget. The family budget measure is very useful because it compensates for differences in regional costs of living. Let us take a look.
Table III – Percentage of Persons Below Basic Family Budget in Selected States

Source: The Measure of America, 2008.

Table III clearly shows that poverty, defined in terms of living below the family budget, is widespread. The nation’s ‘capitol’ shows a staggering 48% of persons living in poverty. It must also be noted that Washington D.C. has the highest per capita GDP ($119,354) in the U.S.A.

While some regions in the US are decidedly worst off than other regions, the data show problems across the country. For instance in Idaho fully 37.2 percent of the population is living Below the Basic Family Budget. Two thousand miles away in West Virginia the picture is not much different. This is a truly depressed state – with 38% of the population living in poverty as defined above.

The depth of the problem can be further gauged if we recognise that even in the richer states – such as Maryland, New Jersey, and Massachusetts – there are still unacceptable numbers of people living below budget.

The data above were collected sometime in 2007 and so they do not reflect the catastrophic situation that developed since the economic collapse of the housing marking and the attendant crash in the economy as a whole.

Since 2008, trillions of dollars have been lost in the stock market; millions of homes have gone under due to an admixture of bad loans and conspicuous consumption habits. The U.S. unemployment rate is now over 10%, and while the rate of economic decline has been brought under some control, the recovery is still a long way off.

Most of the new jobs created in the U.S. economy today are in the low end of the service sector, most of them paying either minimum wage or a little above that. The minimum wage in the U.S. varies from state to state, but generally ranges from $6 to $7 an hour. In Maryland, for instance, the minimum wage is currently $6.15 an hour. In Montgomery County in the same state, however, a two bedroom apartment costs about $1200 to $1400 per month. Most houses sell for over US$300,000 in this area. Do the math.

For a long time we have known about the dismal economic prospects of Flint, Michigan; of the Mississippi Delta, of Appalachia; of the American Southwest; of the Deep South; and of the inner cities across America. How sad it is that rather than these depressed areas becoming part of the American Dream, we have now reached a point where significant sections of middle-class America have now mortgaged their future.