Next time you hear an economist or denizen of Wall Street talk about how the "American economy" is doing these days, watch your wallet.
There are two American economies. One is on the mend. The other is still coming apart.
The one that's mending is America's Big Money economy. It's comprised of Wall Street traders, big investors, and top professionals and corporate executives.
The Big Money economy is doing well these days. That's partly thanks to Ben Bernanke, whose Fed is keeping interest rates near zero by printing money as fast as it dare. It's essentially free money to America's Big Money economy.
Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They're merging and acquiring other companies.
And they're going abroad in search of customers.
Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They're selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America's biggest investors are also going abroad to get a nice return on their money.
So don't worry about America's Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.
The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America's largest corporations are heading upward.
But there's another American economy, and it's not on the mend. Call it the Average Worker economy.
Last Friday's jobs report showed 159,000 new private-sector jobs in October. That's better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.
Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force -- including everyone too discouraged to look for a job -- we're down about 22 million.
Or to put it another way, we're still getting nowhere on jobs.
One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn't working, chances are high that family incomes are down compared to what they were three years ago.
And that means the bills aren't getting paid.
According to a recent Washington Post poll, more than half of all Americans -- 53 percent -- are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.
Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.
Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.
And even though interest rates are falling, most people in the Average Worker economy can't refinance their homes. They can't get home equity loans. Banks don't want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.
And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.
Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.
Inhabitants of the Average Worker economy aren't so sure. The economy has been so bad they're angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.
But if nothing changes in the Average Worker economy, there will be hell to pay.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
As part of the ongoing Mashable Awards, we’re taking a closer look at each of the nomination categories. This is “Most Influential Social Good Champion” supported by Yahoo!. Be sure to nominate your favorites and join us for the Gala in Las Vegas!
Social Good is a brand new form of online giving that draws both from small non-profits and large brand cause-marketing campaigns. But like any burgeoning movement, social good requires champions to bring it to the public and promote its growth.
While “social good” and “influence” may not have absolutely concrete definitions (is influence based on Twitter followers? Raising the most money?), it is easy to see when an individual has taken on the cause of social good to create some real change.
Even though the exact parameters are a subjective call, we scoured the web for three social good activists who are using their skills to create change. We’ve highlighted three individuals who are utilizing social media and online campaigns to shape the way that we think about activism.
1. The Free Agent
Beth Kanter and Allison Fine defined the concept of the “free agent” this year in their book, The Networked Nonprofit. A “free agent,” as they defined it, is a “person who is passionate about a social cause, but is working outside of a nonprofit organization to organize, mobilize, raise money, and engage with others.” Using social media tools, free agents are able to make an impact that was once only capable within the infrastructure of an organization.
We’ve covered a number of free agents who had influence this year. Individuals like Shawn Ahmed, who posts YouTube
Kanter, a free agent herself, has played an influential role in helping non-profit organizations accept and cooperate with these social media-powered activists. Among her efforts, she facilitated a conversation at the State Department’s Tech@State Civil Society 2.0 event about how non-profits and free agents can work together.
2. Ben Rattray, Founder and CEO of Change.org
There are two hurdles that almost every cause campaign struggles with. The first is making the complexities and realities of its cause understood. The second is mobilizing people effectively. Change.org, which was founded by Ben Rattray in 2006, helps solve both.
The site has more than 100 writers who contribute in-depth reporting on 15 different causes. When people come to the site to read about a cause they’re passionate about, they also have the opportunity to take action toward that cause by signing petitions. While these cumulative actions lack the drama of a protest, mobilizing a large network toward one specific action has proved a lot more effective than a hodgepodge of independent actions.
Change.org has partnered with thousands of non-profits, and together the community has accomplished more than 100 “victories,” in which they’ve changed an unjust practice, law or policy. The organization connects activists with similar passions, and by doing so it gives them power as a cohort that they would never have as individuals.
3. Scott Harrison, Founder of Charity: Water
Charity: water uses 100% of public donations to fund water projects and is transparent about how donations are used. Both of these qualities make it somewhat of an oddball in the non-profit world — which might be exactly what the non-profit world needs.
When people donate money to most organizations, they’re not sure what happens to their donation or how efficiently it was used. When they give to charity: water, they can look up a picture and GPS coordinates of the project they contributed to. Since the organization relies on private donors for the money that makes it run, there’s no doubt about whether your donation ended up paying for somebody’s flight instead of funding a water project. The organization even covers its PayPal fees on donations.
This model of transparency and accountability has created trust and helped raise more than $20 million for 3,196 projects in the past four years. We hope that its success will influence other non-profits to do the same.
What’s Your Pick?
Who were your social good champions this year? Let us know in the comments or nominate them for a Mashable Awards. The Mashable Awards Gala at Cirque du Soleil Zumanity (Vegas)
In partnership with Cirque du Soleil, The Mashable Awards Gala event will bring together the winners and nominees, the
Date: Thursday, January 6th, 2011 (during International CES Convention week)
Mashable Awards Category Sponsor:
Yahoo! is an innovative technology company that operates the largest digital media, content, and communications business in the world. Yahoo! keeps more than half a billion consumers worldwide connected to what matters to them most, and delivers powerful audience solutions to advertisers through its unique combination of Science + Art + Scale. Yahoo! is proud to sponsor this Mashable Award because Yahoo! is focused on connecting individuals to a community of millions so they can change the world together. That’s How Good Grows at Yahoo!. Yahoo! is headquartered in Sunnyvale, California. For more information, visit the company’s blog, Yodel Anecdotal.
Image courtesy of iStockphoto
For more Social Good coverage:
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