The Beginning of the End of the Middle: An S.O.S. from the Middle Class
BY HANNAH WALDMAN
“It’s not that we don’t care, we just know that the fight ain’t fair, so we keep on waiting, waiting on the world to change,” croons John Mayer in what has become an anthem for the millennial generation. Let’s face it—as college students, we often shrug our shoulders at big issues, assuring ourselves that our nation’s problems are inevitable simply because they can feel too daunting to fully comprehend—much less to address through activism. After four years of “recovering” from the Great Recession, we still regard the subject of the United States’ economy with a tired acceptance that the rich are getting richer, the poor are getting poorer, and there is nothing we can do about it. The Occupy movement attempted to address this issue through superficial activism. However, by blaming Wall Street and emphasizing the role of the wealthy, the movement aligned its efforts with petty class warfare, overlooking the root cause behind our economy’s anemic recovery: the dwindling power of the middle-class.
Why revitalize the middle class? In a new documentary entitled Inequality for All, former Secretary of Labor and University of California, Berkeley professor Robert Reich explains that middle class individuals comprise the core of consumer spending, yet earn far less than in the past, when adjusted for inflation. In a study conducted by the Economic Policy Institute, the years 1947-1979, known as the Great Prosperity, witnessed a 119 percent increase in wages. After this period, though, the value of goods appreciated and worker compensation stagnated, eventually falling below the 1979 peak. If the federal minimum wage followed the trend in average productivity since 1968, it would have reached $21.72 per hour by 2012—nearly triple the current $7.25.
In order to prove that strengthening the middle class is not a zero-sum game, Inequality for All features an interview with Nick Hanauer, venture capitalist and CEO of the Pacific Coast Feather Company. Hanauer remarks that no matter how much money he has, he can only sleep on one pillow. Like countless other businesses, the Pacific Coast Feather Company relies upon the diffuse wealth of middle class consumers, not the concentrated wealth of the upper class. According to the Industrial Production Index, the wealthiest Americans spend only 5 percent of their assets on commodities, investing the bulk of their earnings in hedge funds and private equity and thus contributing a smaller portion of their income to the economy than their middle and lower class counterparts. We can no longer consider the upper class the center of the economic universe. In the 2012 election campaigns, Romney and Obama both made sweeping statements promising their support to “Middle America”. However, as long as politicians continue to frame the wealthy as “job-creators” entitled to tax exemptions, our government’s policies contradict basic principles of supply and demand. Large corporations, not unlike Hanauer’s, create jobs only if consumer demand—driven largely by the middle class— supports such growth.
In order to address the backwardness of our current policies, Reich explains, we must shift the conversation surrounding the US economy by looking to different models of capitalism. During the Great Prosperity, wages reflected rising prices, the government incentivized education through the GI bill, and workers organized through unions that gave them power to influence their compensation. Unions, organized to protect the interests of the middle and lower classes, played a pivotal role in the health of the US economy. But unions today hold only a shadow of the power they had in previous decades. President Reagan’s public defeat of the Professional Air- Traffic Controllers Organization, which instigated a nationwide assault on labor unions, marked the beginning of the end of the middle class, as they lost the collective bargaining power required to demand fair wages. While unionized workers made up over one-third of all laborers during the 1950s, today, the Bureau of Labor Statistics reported that this group comprised only 11.3 percent in 2012, down from 11.8 percent in 2011. Despite decreased union membership, unionized workers earn, on average, $943 dollars per week, whereas laborers not represented by unions receive an average of $742 per week.
In Inequality for All, Reich calls for a return to the American dream by creating a society that encourages social mobility. Students can advance this initiative by supporting businesses that allow unionized labor, acting as advocates for tax reform, and informing themselves about the larger implications of income inequality. As students and voters, we must conceptualize ourselves as participants in, not spectators of, the greater economic system. No matter how complex the issue of economic inequality may seem, we as college students should start acting on it now. If everyone keeps waiting on the world to change, it never will.