Income inequality in Illinois

At a recent town hall meeting in Joliet, Illinois, Ed Cole, a local organizer for examined effects of income inequality and wage theft. Cole explained how the negative effects of income equality directly bring down consumption, which hurts the economy. When consumers are unable to purchase items, production goes down, which leads manufacturers and service providers to lay people off, which further reduces demand since laid off people have less to spend, which leads to further reductions in production, etc…

In “Aftershock”, Robert Reich details how the cycle of lay-offs and reduced consumption directly led to the Great Depression. In fact, the greatest disparities in income occurred just prior to the great depression. Some argue that the wealthy are “job creators,” but, in fact, the wealthy do not consume enough to offset large numbers of middle class workers. Wealthy people already have pretty much everything – thus the term wealthy.

The growing disparity between the uber-rich and what used to be the working class has been allowed to continue after stock market debacles, as a direct result of the political power that money buys. At the very moment when assistance is most needed, the power that money buys is pushing for further tax-cuts for the wealthy, along with further cuts to aid for those most negatively impacted, such as Medicare, TANF and other assistance programs for the needy. The US census bureau released information indicating that poverty levels are the highest since the bureau has been measuring them. The bureau is beginning to refer to the past decade as a “lost decade,” in terms of income for average Americans.

Some of the effects of the continued economic hardship include increased crime rates in some areas. In 2011, East Saint Louis is on track to far surpass the murder rate of 2010. Unemployment continues to remain high, but is highest among minority groups – African Americans and Hispanics in particular. Young people also suffer from disproportionately high unemployment.

The last time America’s economy granted steady increases to middle class families ran from 1950 to sometime in the early 1970s. This was a time when CEO compensation packages were more tightly controlled, and financial regulations created to prevent another great depression were still in place. The understanding at the time was that allowing the middle class to prosper by giving blue collar and low level white collar workers decent paying jobs would insure prosperity for the country as a whole.

Ronald Reagan was the political candidate who first made it big by criticizing the effectiveness of government in comparison to the market. This criticism of the government led directly to the lifting of those pesky regulations that had worked so well for a prolonged period of time. We now see the long term effects of de-regulation.

In Southern Illinois, the continued effects of the recession are hitting rural areas just as hard as urban areas. Rural residents were more likely to have received high cost mortgages than were urban residents. Child poverty is higher in rural areas than in urban areas. Even during the last period of economic expansion, poverty continued to rise in rural areas. Once again, children experience some of the worst effects of poverty, with some southern Illinois counties having rates of poverty as high as 44%. This seems to matter little to legislators, when education and Medicaid are once again slated for budgets slashing. At the same time, Illinois is instituting a tax break for big companies that will cost the state an estimated $750 million. The problem may be tied to a lack of lobbyists working for the impoverished and children.