This article is a must read:
What happened to America’s middle-class? This article’s calling it the Great Stagnation:
The slow economic strangulation of … middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.
Some blame globalization or the technology explosion. There’s no doubt those are important factors. But I agree with Paul Krugman on one of the main causes:
…Paul Krugman [blames] politics, notably the conservative backlash which began when Ronald Reagan came to power in 1980, and which sped up the decline of unions and reversed the most progressive features of the US tax system.
Fewer than a tenth of American private sector workers now belong to a union. People in Europe and Canada are subjected to the same forces of globalisation and technology. But they belong to unions in larger numbers and their healthcare is publicly funded. More than half of household bankruptcies in the US are caused by a serious illness or accident.
I’m not sure exactly how Reagan and the conservatives demonized unions in the ’80s — but they did it successfully AND they got people who would have benefited from labor unions, who DID benefit from labor unions (directly or indirectly), to vote against their own self-interests. Nothing new there – it’s just incredible when you think about it. Trading your own (and your country’s) economic security for “Guns, God and Gays!” social conservatism. A good example of “patriotic” corporate doublespeak is WalMart, which used to have “Buy American!” banners throughout their stores and a well-publicized “Made in the U.S.A.” campaign — even though 85% of its merchandise is made outside the U.S. Another aspect of Walmart’s ‘patriotic’ hypocrisy: the company is rabidly anti-union for its own employees. Yet, for whatever reason, conservative voters will argue for Walmart’s success above their own.
American labor unions used to be considered patriotic (see 1981 classic ad: “Look for the union label!“). Think of the generations of American union members who worked hard and proudly raised middle-class families before unions were demonized: meat-packers, stevedores, telephone and garment and manufacturing and auto workers, police, firemen, truckers, construction trades, printers, teachers, nurses — and, of course, air traffic controllers. The list goes on and on. And today, the GOP-TeaParty would probably call union ideology and membership “Marxist” or “Socialist” (or ‘corrupt’). Because, conservatives seem to say, true American “patriots” believe in Capitalism: Let the market decide! Trickle down! Deregulate! The invisible, benevolent hand of the free market! Don’t let the terrorists win — go shopping!
What’s the future hold for the American Dream? Read the rest…