US study shows one-third of adults suffer severe income fluctuations
By Josh Varlin
7 June 2017
A recent survey by the US Federal Reserve indicates that income volatility—shifts in income from month to month—regularly affects large shares of the US workforce and can be extreme. Income volatility makes weathering unexpected expenses nearly impossible for many workers, and compounds problems associated with low savings, student loan debt and informal work in the “gig economy.”
The report, published by the Consumer and Community Development Research Section of the Federal Reserve Board’s Division of Consumer and Community Affairs last month, is based on an October 2016 survey of 6,610 households. The survey collected extensive data on respondents’ personal finances, employment characteristics, income, retirement and other indicators of economic health.
The report’s shocking findings give some indication of the social crisis confronting vast sections of the US working class. One significant finding is that 32 percent of adults “say that their income varies to some degree month to month, and 13 percent struggle to pay bills in some months due to income volatility.” Forty percent of people with volatile incomes struggled to pay their bills because of irregular income schedules.
Income volatility disproportionately affects racial and ethnic minorities, with 70 percent of white adults reporting income stability compared to only 60 percent of blacks and 59 percent of Hispanics. Moreover, blacks and Hispanics are more likely to report that income volatility resulted in economic hardship than whites, even after controlling for a number of factors.
Nevertheless, according to the study, “Non-Hispanic white adults with a high school degree or less are somewhat less likely than those of other races and ethnicities or those with more education to report that their financial well-being improved in 2016.”
Seventeen percent of all US workers have variable schedules, with half of these workers having schedules that could vary with three days’ notice or less. Variable schedules are not only a contributing factor to income volatility, they also make finding childcare for working parents extremely difficult, especially if they are told they need to work last-minute.
Income volatility is often obscured in “snapshot” studies or studies that look at annualized data, rather than looking month-to-month.
The New York Times, in a May 31 article titled “Steady Jobs, With Pay and Hours That Are Anything But,” highlights the burden this places on working parents. The Times interviewed Mirella Casares, a worker at an Ocala, Florida Victoria’s Secret clothing store, whose variable schedule and low pay makes it necessary for her to supplement her income as a waitress at Olive Garden. “The lowest hours I’ve gotten is 15 and the highest I’ve gotten is 39,” Casares told the Times .
Her schedule at Victoria’s Secret, which frequently changes at the last minute, makes it difficult for the 27-year-old mother to find childcare for her two young children.
The Times also interviewed Tomika Waggoner, a nursing home aide in Newport, Kentucky, who also copes with income volatility. Her work schedule is largely determined by the availability of care for her 15-year-old son, who has epilepsy. Waggoner, 44, had to use a $700 tax refund to pay for graduation costs for her daughter and some debt. Other families use tax refunds to pay for doctor’s visits.
Income volatility is also affecting broader layers of workers besides the “working poor.” Diana Farrell, the president and chief executive of the JPMorgan Chase Institute, told the Times, “Only households that earn $105,000 or more a year are secure against the volatility they are exposed to.”
Even middle-income households can experience monthly expenses that shift by $1,000 or more. In the words of Jonathan Morduch, director of the US Financial Diaries project, “instability and insecurity are increasingly a part of middle-class life, too.”
Medical bills are often the cause of unexpected expenses, with an accident or unexpected medical emergency causing financial difficulties for months, even for middle-income workers.
The Federal Reserve study notes that 23 percent of adults faced “a major unexpected out-of-pocket medical expense in the prior year” and that a quarter of adults skipped some kind of health care in the past year due to affordability. This was in 2016, after the implementation of the Affordable Care Act, commonly known as Obamacare.
Ten percent of adults “are carrying debt from medical expenses that they had to pay out of pocket in the previous year,” working out to about 24 million people.
Few US adults are prepared to pay for unexpected expenses. As the World Socialist Web Site has previously reported, some two-thirds of Americans “would be unable to pay for an emergency medical expense of $1,000, such as an emergency room visit or the cost of repairing a broken-down vehicle, out of pocket.”
This has continued to hold true, with the Federal Reserve study indicating that 44 percent of adults “say they either could not cover an emergency medical expense costing $400 [significantly less than $1,000], or would cover it by selling something or borrowing money.”
Many workers supplement their formal employment with “informal income-generating activities,” including through participating in the “gig economy.” Twenty-eight percent of adults participate in these informal income-generating activities, which can include working part-time as an Uber driver, for example.
Other findings from the Fed report include:
· Thirty percent of US adults report “either finding it difficult to get by or are just getting by financially.”
· Almost a quarter of US adults “are not able to pay all of their current month’s bills in full.”
· Only 27 percent of part-time workers and 8 percent of contract workers are offered paid sick leave.
· “One third of borrowers with some college, a certificate, or a technical degree are behind on their education debt payments, compared to 11 percent of borrowers with a bachelor’s degree who are behind.”
· Almost half of all black and Hispanic retirees report that “poor health contributed to their decision about when to retire.”
These statistics indicate a social crisis in the United Sates affecting wide layers of workers, far from merely a small “underclass” or “precariat.” With contract, low-wage and irregular work increasingly common, it is no wonder that US workers have economic anxiety and have little faith in the “American dream.”
Deaths from drug overdoses see largest increase in US history
By Genevieve Leigh
7 June 2017
7 June 2017
Deaths from drug overdoses jumped by the largest margin ever recorded in US history in 2016, according to preliminary data compiled by the New York Times. While the precise number will not be available until December due to the months it takes to certify an overdose death, the Times estimates that in 2016 more than 59,000 people died from drug overdoses, a 19 percent increase from 2015.
The scope of this public health crisis is immense. Drug overdoses now far surpass both the annual death toll from HIV/AIDS at the peak of the US epidemic in the late ’80s and early ’90s and the number killed in the country’s peak year of gun violence, 1993. It is now the leading cause of death among Americans under the age of 50.
The primary drugs responsible for deaths in recent years, accounting for more than half, are opioids. More Americans have died from opiate overdoses in the last two years than in the entire Vietnam War. Opiates include illegal drugs like heroin and drugs that are often legally prescribed for pain, such as hydrocodone and oxycodone (known by the brand names Vicodin and OxyContin, respectively).
Fentanyl, a synthetic pain killer, is the deadliest opioid and the drug that many blame for the rising death toll. Since 2014, fentanyl and its cousin, carfentanil, have proliferated dramatically. These drugs are extremely lethal. Less than half a teaspoon of pure fentanyl is enough to kill 10 people. Carfentanil, which is used as an elephant tranquilizer, is 5,000 times stronger than heroin. For a human, an amount of carfentanil equal to a few grains of salt can be a lethal dose.
Opioids, like many other highly addictive drugs, often sweep through entire towns and regions. In Ohio, fatal overdoses more than quadrupled in the past decade, according to the data analyzed by the Times. In Dayton, Ohio the number of overdose deaths reported in the first 33 days of this year is already more than half the yearly totals for the past two years. The coroner’s office for the county, overwhelmed with corpses, was forced to use refrigerated trucks to store bodies for up to a week on three separate occasions.
Kenneth M. Betz, director of the coroner’s office in Montgomery county, Ohio, told the Times, “Our staff is, quite frankly, tired. The doctors are tired. The investigators are tired. We’ve never had volumes like this.” These workers, along with rehab clinicians, youth counselors and emergency room staff witness the horrors of the epidemic on a daily basis.
Emergency responders on the front lines often see scores of overdoses in a single day when a “bad batch” of one or another drug arrives in a town. Social service workers in places like West Virginia and Florida have been flooded with cases of children who need homes due to the circumstances of their parents’ addiction. The overall psychological toll of these experiences on workers is devastating.
Drug abuse is a problem confronting all types of people regardless of skin color, gender, nationality or even income. However, the most devastating consequences of addiction are felt by the working class and poor.
Economically depressed areas with high poverty and unemployment, including regions devastated by deindustrialization, have become breeding grounds for drug abuse. Workers who suffer from job injuries and other physical ailments that come with poor health insurance and bad living conditions often become addicted to prescription drugs first before turning to the less expensive street versions.
Those whose prescriptions no longer suffice, or who have been cut off from their health insurance, are forced to buy drugs on the streets in communities often wracked by crime and violence.
The class character of the drug epidemic is most evident in treatment options. Rehab clinics that accept state insurance are scarce, overcrowded and always have long wait lists. Many have “one strike” policies in which an addict may not return if he ir she does not complete the program, despite the fact that experts put the relapse rate for opioid users as high as 80 percent.
Efforts to combat the drug epidemic have largely been limited to impotent local- and state-level measures. Many states, including Maryland, Arizona and Florida, have declared states of emergency over the crisis.
Pharmaceutical companies have played a decisive role in fostering the opioid epidemic. Prescriptions for opioids such as Percocet, OxyContin and Vicodin have skyrocketed, from 76 million in 1991 to nearly 259 million in 2012. This is enough to supply each American adult with “a bottle of pills and then some,” as US Surgeon General Vivek Murthy put it last year. A report issued in 2013 found that hydrocodone, the generic version of Vicodin, had been prescribed to more Medicare patients than any other drug in existence.
Drug companies go to great lengths to incentivize doctors to prescribe dangerous addictive painkillers to patients. Companies like Purdue Pharma have gone as far as creating promotional videos for advertising their drugs in waiting rooms, and doctors are given incentives for reaching a certain number of prescriptions.
The state of Ohio filed a lawsuit last week accusing five drug companies of abetting the opioid epidemic. However, no major drug companies have faced any serious consequences for their actions.
The most significant attempt to prosecute a pharmaceutical company was against Purdue Pharma. In 2007, three of the company’s executives were charged with misbranding the drug OxyContin and massively downplaying the possibility of addiction. All three pleaded guilty due to the sheer amount of evidence against them. The company settled with the US government for $635 million, a mere fraction of what was made off the drug, which brought in over $30 billion in sales over the two decades it was on the market.
The prosecution did nothing to curb the profit-hungry pharmaceutical companies or help the millions of people whose lives were destroyed by the drugs. A former sales representative for drug company Insys Therapeutics recently spoke out against almost identical practices. The whistleblower, Patty Nixon, said the company developed a scheme to get the highly addictive drug Subsys to patients who never should have had it. Subsys, which costs anywhere from $3,000 to $30,000 for a 30-day supply, contains fentanyl.
Nixon told NBC news that her job was to make sure Subsys got into the hands of “as many patients as possible.” The drug was designed to be used on cancer patients, but like many other opioids it has been widely pushed as a painkiller. One victim of the scheme, Sarah Fuller, was prescribed the drug for chronic neck and back pain from two car accidents. Sarah’s father told NBC News that when her doctor prescribed Subsys, an Insys sales rep was sitting in the room with them.
After Fuller’s prescription was tripled within the course of a month, she was found dead in her house. Prosecutors involved in Fuller’s case say the company paid hundreds of thousands of dollars to doctors in exchange for prescribing Subsys, a standard practice. Insys founder Dr. John Kapoor is a billionaire and among the wealthiest Americans.
The profiteering of giant drug companies mirrors that of every other corporate conglomerate, from the giant energy enterprises to agriculture and technology companies, all of which subordinate human need, and sometimes human life, to private profit.
Beyond the role of drug companies, the opioid epidemic is produced by a coalescence of the ills of capitalism. It is the expression of a profound social illness—the consequence of inequality, poverty, unemployment and a general feeling of hopelessness that afflicts broad sections of the population, combined with an economic and political system that leaves those most severely impacted by the social crisis to fend for themselves.