Now that we have a short reprieve from the debt crisis and government shutdown, we should look at what caused the decline of the middle class in America.
Anyone who disagrees that the middle class has declined only needs to look at their own household budgets to see this is not a myth. The President ran his campaign on “rebuilding” the middle class. Statistics prove that income levels for the middle class has remained basically stagnant for the last 40 years!
While the middle class incomes have stagnated, the incomes of those at the top have risen dramatically. Here’s what I am talking about:
Income for the top 20 percent has increased since the 1970s while income for the bottom 80 percent declined. In the 1970s the top 1 percent received 8 percent of total income while today they receive 18 percent. During the same period income for the bottom 20 percent had decreased 30 percent.
In the 1970s the top 0.1 percent of Americans received 2 percent of total income. Today they get 8 percent.
In 1980 the average CEO made 50 times more money than the average worker while today the average CEO makes almost 300 times more than the average worker.
As Warren Buffett, the second richest man in America, famously said, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
We have been struggling in a slow recovery from the great recession of 2008. From 2009 to 2012, average real income per family grew modestly by 6.0% but the gains were very uneven. Top 1% incomes grew by 31.4% while bottom 99% incomes grew only by 0.4%. Hence, the top 1% captured 95% of the income gains in the first two years of the recovery. From 2009 to 2010, top 1% grew fast and then stagnated from 2010 to 2011. Bottom 99% stagnated both from 2009 to 2010 and from 2010 to 2011. Preliminary statistics for year 2012 show that top 1% incomes increased sharply from 2011 to 2012 while bottom 99% incomes grew only modestly.
In the 1980′s Ronald Reagan introduced “Supply Side Economics” commonly called the “trickle down effect”. He popularized the controversial idea that greater tax cuts for investors and entrepreneurs provide incentives to save and invest and produce economic benefits that trickle down into the overall economy.
In other words, if government economic policy focuses on making the rich richer, the benefits will “trickle down” to everyone else. As supply-siders are fond of saying, “A rising tide lifts all boats.” Since Supply Side economics came to dominate American economic policy during the Reagan administration, the rising economic tide has certainly lifted a lot of yachts, but at the same time it has left most of the row boats stuck in the mud.
The past quarter century of Republican economics has proven that the trickle down theory is just a convenient excuse to justify an economic policy favoring the rich, with the benefits trickling up to make the very wealthy even wealthier.
Okay, so how did all of this happen? Many will blame Reagan and his trickle down effect. Many will blame greed of the CEO’s. Many will blame outsourcing. There are actually thousands of reasons why the middle class has declined. However, there is one item that is commonly overlooked, and never talked about. All of this is the fault of the American People. That’s right, it is all our fault. We allowed the one entity that protected our wages to be made the evil villain and allowed its influence to wane.
It all started back in the 1970′s. At the time we saw many factories shut down, manufacturing jobs were being lost by the boatful, and we allowed our politicians to hoodwink us into believing that the Unions were totally to blame. As a result, Unions were villainized, their influence in collective bargaining was weakened, and the decline began in earnest.
I have to admit, I was one of those who was hoodwinked! I looked at the argument the other side was making and figured if the Unions weren’t inflating wages and benefits, we could make things cheaper and better compete on the global market. I am here to announce that I was wrong!!! The Unions were not inflating wages and benefits, they were protecting us from greedy owners who only looked at profits and didn’t care about the workers.
People were saying we were losing jobs overseas because of the Unions and their demands. But, we were really losing our jobs overseas because the manufacturers were using outdated, cumbersome, and inefficient equipment. Rather than spending capital and modernizing their factories, the found it cheaper to close them down and move overseas where they were building new modern factories. And, we all bought into their argument that it was the Unions fault.
It was difficult growing up on the south side of Chicago. That was the true blue-collar area of the City. I watched as Wisconsin Steel shut down. Inland Steel shut down. Pittsburgh Paints shut down. U.S. Steel shut down. It went on and on until just about all of the manufacturing jobs in the area were shutdown. What we overlooked at the time, was the owners of the facilities didn’t shut down, they simply moved overseas and took our jobs with them.
Because of all of the shutdowns in the 1970′s, the Unions lost their popularity and their influence on our behalf. That has directly resulted in the stagnation of the middle class and the upswing in the top 1%’s wealth. It doesn’t take a genius to figure that out either. Look at Wisconsin and Ohio where the governors blocked collective bargaining for government workers! In Detroit, the “Manager” appointed by the governor is more in favor of paying bond holders than in paying city workers their pensions! They are still villainizing the Unions. The rich are getting richer, the poor are getting poorer, and the middle class is disappearing.
Taking into account Wisconsin, Ohio and Detroit, the real problem is that too many of us are still buying into this crap! There are still thousands of people who still blame the Unions. They still think that fighting for a livable wage for them is going against their interests! It is time for the American Worker to start standing up for themselves again. We must stop rolling over every time our politicians tell us it all starts at the top. Remember during the last election when Mr. Romney kept yelling “we built this”? Well he was wrong. The rich did not build it. We the workers of America through our sweat, blood, and sometimes tears BUILT IT!
I say it is time we own up to our mistake from the past and to tell our politicians to stop their war on the working people of America. It is time we actually join the war and fight back! There is absolutely no justification for anyone in this country who puts in a full day’s work to be forced to live below the poverty line. The minimum wage is the biggest contributor to the rise in poverty in this country! The minimum wage MUST be raised to a livable wage, and we must trust our Unions again! Otherwise the American middle class will completely disappear!


