Tax rebate checks are starting to arrive in bank accounts. These checks represent the effort by Congress and our federal administration to discourage further economic downturn. This article from the Associated Press takes a look at how taxpayers intend to spend the check, which our government decided to send out as an effort at stimulating the economy because as the article points out:

“Personal spending accounts for the single-biggest chunk of gross domestic product, which measures national economic activity. Because of that, people’s behavior is important in determining whether the country will survive the economic turmoil or fall victim to it.”

The current economic situation presents us with a few lessons we should not ignore.

Why did people stop spending? This is a good question to examine. And the math isn’t too complicated.

Employment wages have been flat or declining for about the last 8 years. Meanwhile, costs of gas, housing, food, education, and other daily expenses continued to rise.

How did workers deal with the increasing costs for necessities when their income wasn’t going up?

They went into debt – including refinancing homes that seemed to be increasing in value every year. They took the money from the loan and spent it on everyday needs. Or they took out additional credit card debt to pay things like grocery bills.

Then suddenly, there was a crisis in the credit markets and it became a lot harder to get a loan. Meanwhile, housing values stopped going up in most places. So, there was no way to continue borrowing to manage the household budget. And people started spending less.

Remembering that a strong economy depends heavily on people spending, you can see why it started to sputter. And when everyone’s economy goes south – everyone suffers. Even people whose income comes from the stock markets.

About one-third of the jobs in the labor market today are low-paying and come without benefits like health care and paid sick days. So, too many communities are forced to depend on employers with jobs that just don’t pay well.

It’s a good time to remember that everyone – even the very wealthy - suffers when the economy is bad. So, jobs that don’t pay well end up hurting all of us. A strong economy actually requires that everyone is doing relatively well.

The current situation is unsustainable. Turning bad jobs into better jobs with higher wages, paid sick days, predictable hours, and a ladder for advancement will go a long way toward creating a stronger nation for everyone.