American Middle Class; RIP

 

I grew up with Ozzie and Harriet, first on radio then on 1950s television.  Ozzie was the breadwinner, and Harriet was a homemaker who took care of the two boys, David and Ricky Nelson.  We also had Father Knows Best with another typical 50s middle-class family, the Andersons. There was the Cleaver family with Leave It To Beaver.  These sitcoms provided a simple example of America’s middle class.  They were able to own a home and live comfortably on a single income.

From a Wikipedia description under the heading American middle class we find, “Middle-class persons commonly have a comfortable standard of living, significant economic security, considerable work autonomy and rely on their expertise to sustain themselves.  In 1970, around 61% of Americans were in the middle class after a significant expansion following World War II.  Wages increased and the economy grew.

In the 70s, things like offshore manufacturing, inflation, and stagnant wages forced women to enter the workforce as two incomes were now required to maintain the standard of living.  In 1970, around 30% of US families were dual income.  By 2014, that number had risen to 70%.

The federal minimum wage in 1970 was $1.60 hr.  Today’s minimum wage is $7.25 hr.  If the minimum wage had kept up with just inflation, the minimum wage would be $15 hr.  If the minimum wage also kept up with gains in worker productivity as it did in the post-WWII era, that minimum wage would be around $25 hr.

So, while corporations held wages below the rate of inflation and provided no compensation for the increases in worker productivity, the middle class shrank.  Not even the efforts of two wage earners could keep up in many cases.  The corporations saw burgeoning profits at the expense of the working middle class.  The effects on the working poor were even more devastating.

During this same period of 50 years, CEO compensation rose 1,094% while the average worker saw just a 26% increase.  While the CEO-to-worker pay gap was around 20-to-1 in the 60s, by 2020 it was 351-to-1.  If adjusted for inflation, we see that real CEO pay went up 878% while real worker pay rose by just 4.5%.  America’s CEO pay structure is the absolute highest among developed nations.

Also, during this period, we saw a new corporate emphasis on shareholder wealth, a decline in union power, and the globalization of the economy.  Executive compensation now also includes more stock awards and options.  With executive wealth directly tied to stock values, the impetus for holding down costs, i.e. worker wages, is paramount.  Currently, the uber-rich in the top 10% hold 67% of all our nation’s wealth.

I put forth this analysis, not to challenge corporate success, but to point out that the rise in numbers of people needing government assistance is not all because people are lazy and looking for a free lunch, but because of gross income disparity. 

I regularly hear from those who bitch and moan about their tax dollars going to lazy people who refuse to work.  The reality is that over 70% of those in programs like SNAP and Medicaid work full time and 86% of non-disabled, working-age SNAP households had jobs.  Almost 89% of households with children and a working-age, non-disabled adult had at least one member who worked.

Between rising inflation, stagnant wages, and skyrocketing costs for education, the working poor are getting poorer and they are being joined more and more by former members of the middle class.  As the song lyrics from several songs point out, “The rich get richer and the poor get poorer.”  To that I would hesitate to add, “Ain’t we got fun.”

So, for those pissing and moaning about the national debt being caused by freeloaders on welfare I say, stop your bitchin’.  The rich are rich at the expense of the poor as they control more of the government which has lost sight of those who can’t donate to their personal election coffers.  Maybe it’s time to properly tax the wealthy if for no other reason than they wouldn’t be where they are without milking the disadvantaged.  The middle class is dwindling for a reason, and it’s not because everyone got lazy while somehow becoming more productive.