24 Oct 2009

Who Suffers More During a Recession?

This [unedited] guest post is by a student in my EEP100 class (background post).
Please praise/critique/comment on its economic quality and importance to you.

Christopher Rodriguez says:

Census data reveals that the income gap in the United States is getting bigger. The toll that the recession had on income in the US was more evident in low and middle income individuals. The data shows that the median income in the US is at its lowest level since 1997. This data is interesting because it shows that poor and middle class Americans are hurting the most in this economic downturn, while those with the top 10% of income in the US are not harmed as much.

The individuals who we hear about in the news receiving loads of money for running a bad company are the ones benefitting from this recession.

The data also reveals that the use of food stamps increased 13% from last year and that there are 9.8 million households using food stamps. I'm not too sure how the supply and demand for food stamps works, but its kind of crazy to think that more money is being used on food stamps, as income levels decrease.

Where will or where does the extra funding come from? If there are less jobs and income out there, that means there is a decrease in taxes collected by the government. I also read somewhere online (not sure where) that someone was saying that since income decreases more for poor families that they will now be able to qualify for food stamps and therefore that compensates for the loss in income. I feel that this is just dumb. I'm sure people would much rather be off of the food stamp program and would rather work for their wages. I feel that the utility that one receives from working is greater than the amount they receive in food stamps.

Bottom line: The recession has hit middle and low income individuals at a larger scale than it has the upper class. Programs such as food stamps are not a perfect substitute for work and income.