The Fading American Middle Class
The Washington Post has been running a series of articles on the fading American middle class. These articles are enlightening. However they are not all surprising. The reality is the American middle class is an endangered species. America is quickly dividing into a society of haves and have nots. This trend probably does not bode well for the United States. If it continues it may actually hasten the sort of liberalism anathema to many so enamored with our current corporate-ocracy.
Is “corporate-ocracy” too strong a word? I don’t think so. I would argue strongly that a government by and for the corporation has supplanted our republican government. There are exceptions. But the safeguards put in place during more liberal times that restrained corporations so they act in the public’s interest have frayed to the point where they are becoming hard to see. If anyone doubts that special interests are firmly in control of our government they need only watch the recent 60 Minutes interview with outgoing South Carolina Senator Fritz Hollings. He laid it all out: money buys influence and as a result the public interest gets short shrift.
“Communications, defense, you got them all - farms, agriculture people and everything else like that … They get their piece of the pie. That’s our problem. Today, you can’t find the real interests of the country.”
It would be tempting to blame the decline of the middle class entirely on American corporations. And certainly they share a lot of the blame. For the last thirty years corporate America has worked hard to marginalize labor unions. They are now at the point where they hardly exist anymore. Even when they exist unions are increasingly impotent. Corporations have options now they didn’t have before, such as the ability to quickly outsource jobs to countries where pesky labor laws don’t exist. And Congress has aided and abetted this process. It has made it easier for a company with pension plans to change them so that workers receive less in the way of pensions. The better companies throw newer workers into 401-K plans instead of defined benefit plans. Some of them convert all their workers to 401-K plans. Others have used legal shenanigans to raid pension funds to prop up their share prices. And if the corporate pension fund goes bankrupt, it’s not a problem for shareholders. The costs are foisted on the taxpayer, that is the Pension Benefit Guarantee Corporation. Increasingly, if companies offer health insurance benefits at all then workers are asked to pay larger shares of premiums and higher deductibles.
The result is that marginal cost of living raises are more than eaten up by increased costs for health insurance. This cascades into a decline of the standard of living for middle class people. Increasingly these costs have the effect of dumping people out of the middle class. A labor force that is increasingly disposable exacerbates the situation. Careers long thought secure are now often easily outsourced. Workers that used to be able to get benefits are often now employed as temporary employees or as contractors, if their work is not outsourced to some foreign country.
It is hard for many of us, particularly younger workers, to grasp the magnitude of the change that has occurred over the last 30-40 years. Consider this: in the 1960s a single breadwinner could support the middle class lifestyle for a family. For example a bus driver could afford to buy his own house and car, keep the wife at home and send the kids to college. He usually didn’t need a second job. What’s the situation today? To live a middle class lifestyle a family requires at least two wage earners. The bus driver is likely living in an apartment somewhere, and is probably working another job. His wife is pulling a couple jobs too. It’s increasingly unlikely his family has health insurance. They are precariously holding on to their middle class existence. One lost job or one huge medical bill and their lifestyle is blown away.
The Washington Post talks about the $17 an hour job as typical middle class wages. I laughed when I saw this number. Exactly who can afford a middle class existence on $17 an hour? It can’t be done in my neighborhood, that’s for sure, unless the spouse is also earning $17 an hour. And those kind of wages likely mean they are living in an apartment, or perhaps a modest town home, not some single family house with a two car garage.
And what sorts of jobs are paying this kind of money? I can think of some. Clerks perhaps, mechanics and plumbers. Many of these jobs are also the most vulnerable to outsourcing. What does one do when they lose that $17 an hour job that has been outsourced or made obsolete? It’s possible but unlikely that they will find another job at this wage rate. Instead, as the Post documents, they are working two jobs somewhere to maintain the same income level. But if they had benefits before it’s unlikely they have much in the way of benefits now.
Working two jobs instead of one they live an increasingly precarious and exhausting life. The smartest ones may have anticipated their obsolescence and went back to school. But as many computer programmers found out in the last few years there is no guarantee that the money invested in a new career will ever pay off. In our modern world the uncertainty of maintaining any job is much higher.
And so the middle class slowly disappears. Manufacturing moves overseas. Machines handle more farm jobs. Computer repair people find they aren’t needed because machines can be replaced for less money than it takes to fix them. The winners are those who are born into money or can simultaneously be savvy, intelligent, multitask and have connections. To sustain the middle class lifestyle it is no longer sufficient to have a trade. You must continually reinvent yourself. You must be a shrewd businessman. You must do your market research. You must find a particular niche. You must network ruthlessly. In short this new Darwinism requires a combination of skills never needed before. Not all can cope with the complexity and demands of such changes. So they fall through the cracks. They spend their days as cashiers at Wal-Marts and their nights at a second job, and their weekends at a third job.
And who is benefiting? Perhaps by shopping at Wal-Mart in their few off hours they are saving a few bucks. Clearly stockholders are benefiting. Their share prices are increasing. But where is this wealth really coming from? In effect we have decided that in America that we will transfer wealth by screwing the hard working earnest American laborer tighter and tighter. The money will largely go to those who had wealth to begin with, making them increasingly wealthy. And that’s how the middle class disappears, slowly, until one day it is gone entirely. By that time it will seem natural and we’ll all smile and say we are happy because we believe in the Republican Party, and the Republicans are good.
How long can this go on? I would hope not much longer, or the character of the country that I grew up in will be changed irretrievably. I often feel like our future will look a lot like Brazil’s. It seems that the stranglehold by the corporation on our democracy is virtually complete. But perhaps the corporation has pressed its advantage too far. Perhaps like Howard Beale the American worker will no longer play the patsy and demand a government of, by and for the people again.
But this seems naive. Apparently we are a nation of sheep. We’ve bought into the whole corporate bullshit and we’ve wrapped it around God and the American flag. We can’t tell them apart anymore. Why are the people who are getting screwed the worst pushing for their own obsolescence and poverty?
There is a solution to this madness. It’s called electing people who represent your interests, and not the special interests. It remains to be seen if Karl Rove can keep sufficient numbers of Americans ignorant of what we are in effect doing to ourselves.
Sphere: Related Content