The middle class in America is on a steady decline, which is not a good thing for social stability. Manhattan has been a microcosm of this for a long time, and has become a place for the very wealthy and the poor. Middle class people can’t afford a decent lifestyle there because it is out of reach, so they have moved further and further out along with their long commutes. This is not good.
The New York Times recently did an analysis of the U.S., Canada and Europe that shows us falling in rankings as the country with the most people per capita in the middle class. Canada has passed the United States in the number of people with more after tax income. Most of the European countries are also trending in the direction of Canada. While the United States is still the richest country in the world, the distribution of that wealth is what should concern us.
This is not an argument for redistribution of wealth; we already have that through the tax system that takes from each of us and applies various sums to causes and programs that we can all find disagreement. But something is very wrong when the backbone of this great nation is weakening because wages are not keeping up with costs, and more money is going to the top 1% than at any time in perhaps a hundred years. While companies are making big profits and sitting on upwards of $3 trillion, most of the profits are going to the C level executives and shareholders, not the workers who put in the sweat equity.
There was a time when things were different. Henry Ford paid his people on the assembly line enough money that they could realistically expect to own a Ford product. Today you have companies that will do anything to cut employee costs, because employees are expendable in tough times. Many of those employees have to sign up for food stamps and other government benefits. In other words, the taxpayers are subsidizing the private sector and corporate profits. This should be troubling to more people than it seems to be. George Romney, president of American Motors, chose to cap his salary at lower multiples of what he was offered because he thought that the workers should be paid a decent wage. What has changed?
Another analysis that I recently read reported that no couple that survived on the income of a minimum wage worker could afford to rent a place to live in any county in the U.S. Considering that the couple would be living on $15,000/52 week year before taxes, and that even those too poor to pay income taxes still pay FICA, sales tax, commuting costs, groceries, clothing, and out of pocket medical and dental costs if there is any money left, this analysis makes sense. Remarkably the annual COLA given to Social Security recipients, those with veterans benefits, civil service retirements, and pay increases provided for those in the private sector (lucky enough to get one) don’t cause inflationary concerns with most. Yet a small bump in the minimum wage scares the daylights out of the same people.
Today’s workers are expected to produce more for less remuneration. It’s the modern day version of the outlawed assembly line speedup. If union bashers think that unions are the cause of all the problems, the numbers don’t support it. Union membership is a fraction of what it was even thirty years ago. Foreign auto plants in the U.S. don’t pay anywhere near what their American counterparts pay. The uprising in Egypt a few years ago was the result of rampant corruption and an unemployment rate of forty percent among college graduates. There was no hope of things getting better. We aren’t there, but we should be paying attention and working to fix the things that can be fixed in order to return to a much more equitable society that the U.S. experienced in the 1950s and 1960s.
If anyone doubts the seriousness of the growing disparity of wealth and income in America, they are making a big mistake. Fewer people with disposable income means our consumer based economy is going to slow down even more than it has. In my former travels to Eastern Europe, I discovered that many of these countries had declining birth rates. I frequently asked why, and the response was always the same, that people didn’t have enough money to raise children. They also said that there was little hope of upward mobility in their jobs or a chance to enjoy what we once took for granted here---the ready availability of a good middle class life.
Our country can do better. Reforming the tax code would be a start. Anything to stimulate the economy, especially hiring private businesses to rebuild so much of our decaying infrastructure would also go a long way. There are a lot of good ideas out there, but unfortunately all we hear are partisan attacks by both sides and no meaningful dialogue. We should keep that in mind on May 20th and November 4th.