The Shrinking Middle Class

The Shrinking Middle Class        Gerry O'Shea

The expression Banana Republic is often used to describe the way the economy operates in most of the countries in Central and South America. The people at the top, including the army brass, the government elite and, of course, the business leaders enjoy the best the country has to offer, while the great majority of the rest of the people work long hours for low wages and minimal benefits.

By comparison, all the Western democracies have a large and vibrant middle class, people who earn sufficient income to ensure that their children get a good education and who often own their own homes. This is the essence of the American Dream: hard work, a good education, a family home with the promise of a better life for the next generation.

This situation is changing dramatically in the United States. The top 1% now owns 70% of the wealth of the country while the bottom 90% can claim just 27%.

 In a recent international study dealing with CEO pay, respondents who self-identified as conservatives said the top manager in a company should be paid five times the average worker while people who called themselves liberals reduced the multiple to four; the reality is that in America  CEO remuneration comes to, on average, 350 times the pay of the median worker.

Pew research reveals that the share of national wealth accruing to middle income households was 43% in 2014, down substantially from 62% in 1970. These are ominous figures and all indications are that the situation has worsened in the last four years.

Company profits have soared during most of the last fifty years due mostly to major advances in technology, but workers' wages have stagnated during that time. Even since the recent  serious recession of 2007-2009, productivity has increased by 12% with negligible improvement in employee wages. In fact, median wealth (assets minus debts) for middle-class families fell by 28% from 2001 to 2013.

During the same period lower income families - about 20% of the population - saw their meager incomes fall further by 9%.

Today only 6.8% of workers in private industry are unionized; in the 1970's the percentage was about four times higher. Salaries and benefits negotiated by unions in those days guaranteed a good standard of living for workers and their families. Even today employees carrying a union card earn around 30% more than comparable workers who are not organized.

Poor teacher salaries in Arizona, Oklahoma and elsewhere have been in the news lately. It is disgraceful that college graduates in an important profession, most with masters degrees, earn only about $1000 a week. This situation is mainly a testament to conservative state governments following anti-public worker policies and weak unions settling for miserly contracts over many years.

Teachers on these paltry salaries have to scramble in second jobs to pay their bills every month. Instead of correcting students' homework at night, they are waitressing or driving taxis to make ends meet. They are part of the working poor, not the middle class.

Workers in Europe -  where trade unions are still strong -  talk about the social wage, meaning their total package, the vacation time and working conditions, the cost of attending college and most of all, they focus on the healthcare benefits for themselves and their families.

All of these issues are vital for American workers too - especially accessing good medical care. Every other Western democracy provides universal health insurance for all its citizens. Obamacare was a commendable effort to expand coverage to include most Americans. Republicans fought this positive program from the beginning and in trying to repeal it during the last eighteen months, they caused big increases in the cost of premiums.

During the presidential election campaign Donald Trump promised that he had a healthcare plan with universal coverage "very much formulated, down to the final strokes" that would reduce costs for all policies. Unfortunately, he never even outlined any alternative to Obamacare and millions of poor and middle income people have lost coverage because insurance costs have ballooned out of reach for them.

The Trump/Ryan/McConnell budget, passed a few months ago, accelerates the shrinking of the middle class. The bulk of the benefits go to big corporations and the privileged plutocrats at the top, a group that was already doing very well.  Middle class workers get crumbs from the table and see programs designed to help college students and for people on Medicaid reduced.

The denuding of the middle class has serious medium and long term consequences for the United States as workers get squeezed financially and have to settle for reduced benefits.  Oliver Goldsmith's warning in The Deserted Village comes to mind: Ill fares the land to hastening ills a prey where wealth accumulates and men decay.

Gerry O'Shea blogs at  wemustbetalking.com

The Shrinking Middle Class        Gerry O'Shea

The expression Banana Republic is often used to describe the way the economy operates in most of the countries in Central and South America. The people at the top, including the army brass, the government elite and, of course, the business leaders enjoy the best the country has to offer, while the great majority of the rest of the people work long hours for low wages and minimal benefits.

By comparison, all the Western democracies have a large and vibrant middle class, people who earn sufficient income to ensure that their children get a good education and who often own their own homes. This is the essence of the American Dream: hard work, a good education, a family home with the promise of a better life for the next generation.

This situation is changing dramatically in the United States. The top 1% now owns 70% of the wealth of the country while the bottom 90% can claim just 27%.

 In a recent international study dealing with CEO pay, respondents who self-identified as conservatives said the top manager in a company should be paid five times the average worker while people who called themselves liberals reduced the multiple to four; the reality is that in America  CEO remuneration comes to, on average, 350 times the pay of the median worker.

Pew research reveals that the share of national wealth accruing to middle income households was 43% in 2014, down substantially from 62% in 1970. These are ominous figures and all indications are that the situation has worsened in the last four years.

Company profits have soared during most of the last fifty years due mostly to major advances in technology, but workers' wages have stagnated during that time. Even since the recent  serious recession of 2007-2009, productivity has increased by 12% with negligible improvement in employee wages. In fact, median wealth (assets minus debts) for middle-class families fell by 28% from 2001 to 2013.

During the same period lower income families - about 20% of the population - saw their meager incomes fall further by 9%.

Today only 6.8% of workers in private industry are unionized; in the 1970's the percentage was about four times higher. Salaries and benefits negotiated by unions in those days guaranteed a good standard of living for workers and their families. Even today employees carrying a union card earn around 30% more than comparable workers who are not organized.

Poor teacher salaries in Arizona, Oklahoma and elsewhere have been in the news lately. It is disgraceful that college graduates in an important profession, most with masters degrees, earn only about $1000 a week. This situation is mainly a testament to conservative state governments following anti-public worker policies and weak unions settling for miserly contracts over many years.

Teachers on these paltry salaries have to scramble in second jobs to pay their bills every month. Instead of correcting students' homework at night, they are waitressing or driving taxis to make ends meet. They are part of the working poor, not the middle class.

Workers in Europe -  where trade unions are still strong -  talk about the social wage, meaning their total package, the vacation time and working conditions, the cost of attending college and most of all, they focus on the healthcare benefits for themselves and their families.

All of these issues are vital for American workers too - especially accessing good medical care. Every other Western democracy provides universal health insurance for all its citizens. Obamacare was a commendable effort to expand coverage to include most Americans. Republicans fought this positive program from the beginning and in trying to repeal it during the last eighteen months, they caused big increases in the cost of premiums.

During the presidential election campaign Donald Trump promised that he had a healthcare plan with universal coverage "very much formulated, down to the final strokes" that would reduce costs for all policies. Unfortunately, he never even outlined any alternative to Obamacare and millions of poor and middle income people have lost coverage because insurance costs have ballooned out of reach for them.

The Trump/Ryan/McConnell budget, passed a few months ago, accelerates the shrinking of the middle class. The bulk of the benefits go to big corporations and the privileged plutocrats at the top, a group that was already doing very well.  Middle class workers get crumbs from the table and see programs designed to help college students and for people on Medicaid reduced.

The denuding of the middle class has serious medium and long term consequences for the United States as workers get squeezed financially and have to settle for reduced benefits.  Oliver Goldsmith's warning in The Deserted Village comes to mind: Ill fares the land to hastening ills a prey where wealth accumulates and men decay.

Gerry O'Shea blogs at  wemustbetalking.com