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middle class
Trump’s Rise Was Four Decades of Upward Wealth Transfer in the Making
When most people stop believing that they and their children have a fair chance to make it, the tacit social contract begins to unravel, and a nation becomes susceptible to demagogues peddling the politics of hate.
Dec 29, 2024
U.S. President-elect Donald Trump isn’t the cause of what ails America. He’s the consequence. The real causes go back four decades.
Let me start with a bit of family history. During the 1950s and 1960s, my father, Ed Reich, owned a shop on the main street from which he sold women’s clothing to the wives of factory workers.
This time of year reminds me of his anxious dependence on holiday sales (and in the days after Christmas, the frantic returns). Between Thanksgiving and Christmas, he needed to earn enough to pay the bills and have a sufficient sum to carry us through the first part of the following year.
It’s crucial that Democrats focus on reversing the staggering inequalities of this era and getting big money out of politics.
We weren’t rich but never felt poor, and our standard of living rose steadily through the 1950s and 1960s—as factory workers and their spouses did better and better.
This was an era when the income of a single factory worker or schoolteacher or baker or salesman or mechanic was enough to buy a home, have two cars, and raise a family.
For three decades after World War II, America created the largest middle class the world had ever seen. During those years, the earnings of the typical American worker doubled, just as the size of the American economy doubled.
Over the last 40 years, by contrast, the size of the economy has more than doubled again, but the earnings of the typical American have barely budged (adjusted for inflation). Most of the gains have gone to the top.
In the 1950s and 1960s, the CEOs of large corporations earned an average of about 20 times the pay of their typical worker. Now they rake in over 300 times the pay of an average worker.
In the 1950s and 1960s, the richest 1% of Americans took home about 10% of the nation’s total income. Today they take home more than the bottom 90% put together.
Then, the economy generated hope. Hard work paid off. The living standards of most people improved through their working lives. Their children enjoyed better lives than they had. Most felt that the rules of the economic game were basically fair.
Although many women, Black people, and Latinos were still blocked from getting a fair share of the economy’s gains, the nation committed itself to changing this. New laws guaranteed equal opportunity, barred discrimination, promoted affirmative action, and expanded educational opportunity for all.
Today, confidence in the economic system has sharply declined. Its apparent arbitrariness and unfairness have undermined the public’s faith in it. Cynicism abounds. Equal opportunity is no longer high on the nation’s agenda.
As you’ll see in “The Big Picture” video above, recent American history can be divided into five periods:
- 1946-1979, we grew together. Almost everyone gained ground.
- 1980-2008, the great U-turn. Most economic gains began going to the top.
- 2008-2010, the financial crisis. The banks were bailed out, but millions of Americans lost their jobs, homes, and savings. The experience revealed the gross inequalities of wealth and power that underlay the new economy. This caused widespread disillusionment with the system.
- 2010-2016, anger at the establishment. Both Sen. Bernie Sanders (I-Vt.) and Donald Trump emerged as anti-establishment candidates—although Trump’s anti-establishment persona was fake (and still is).
- 2016-2050, the choice between oligarchy and democracy. The 2024 election represented a lurch toward oligarchy, but I believe Trump and his oligarchy will overreach, and we’ll choose a more robust democracy.
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When most people stop believing that they and their children have a fair chance to make it, the tacit social contract begins to unravel. And a nation becomes susceptible to demagogues such as Donald Trump peddling the politics of hate.
Many of the most vocal proponents of the “free market”—including Elon Musk, executives of large corporations and their ubiquitous lawyers and lobbyists, denizens of Wall Street and their political lackeys, and numerous multimillionaires and billionaires—have been actively reorganizing the market for their own benefit.
The consequence has been a market created by those with great wealth for the purpose of further increasing their wealth.
This has resulted in ever-larger upward distributions inside the market, from the middle class, working class, and poor to a wealthy minority at the top.
Because these distributions occur inside the market, they have largely escaped notice. We tend to debate only downward “redistributions” that occur outside the market, through taxing the rich and transferring some benefits to the poor and working class.
Musk and Trump want to reduce such redistributions.
But the hidden upward redistributions inside the market are arguably larger.
This is why it’s so important that those of us who care about social justice speak out and explain what has happened. And why it’s crucial that Democrats focus on reversing the staggering inequalities of this era and getting big money out of politics.
Otherwise, the only explanation most Americans receive for what has happened comes from Trump authoritarians who falsely blame immigrants, “socialists,” the “deep state,” “woke”ism, Democrats, Black people, women, and other countries.
And the only agenda most Americans receive for remedying what has occurred is by backing Trump and Musk and their lurch toward fascism.
My friends, the underlying issue is not the size of government. It’s whom the government is for. The fundamental choice is democracy or oligarchy.
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Trump and the GOP Want to Drown the Middle Class in the Bathtub
As the middle class shrinks and poverty grows, the cash stash at the very top of the American economic pyramid grows exponentially.
Jun 25, 2024
As we head toward the presidential debate this week, the Republicans’ vision for America is becoming clearer by the day.
From Trump to Project 2025 to the speeches of multiple Republican senators and members of Congress, you’ll frequently hear the phrase “post-constitutional” applied. They refer to a “post-constitutional moment” and a Republican “post-constitutional presidency.” But what do they mean by this?
In the five decades after the Republican Great Depression, Franklin D. Roosevelt, Harry Truman, Dwight Eisenhower, Jack Kennedy, Lyndon Johnson, Richard Nixon, Gerald Ford, and Jimmy Carter taught America and the world a great truth: a middle class is not a normal thing, and if a country wants one it must be created by direct government intervention in the marketplace.
Prior to FDR’s New Deal, America had never had a broad middle class that encompassed more than half of us. What we today call the middle class — the ability to raise a family, buy a house and car, take a vacation, save for old age — was, until the 1940s, typically very small in the United States, as it was in much of the rest of the developed world.
As recently as 1900, for example, women couldn’t vote, senators were appointed by the wealthiest power brokers in the states, and poverty stalked America. There was no minimum wage; when workers tried to organize unions, police would help employers beat or even murder their ringleaders; and social safety net programs like unemployment insurance, Social Security, Medicare, food and housing supports, and Medicaid didn’t exist.
There was no income tax to pay for such programs, and federal receipts were a mere 3 percent of GDP (today its around 20 percent). As the President’s Council of Economic Advisors noted in their 2000 Annual Report:
“To appreciate how far we have come, it is instructive to look back on what American life was like in 1900. At the turn of the century, fewer than 10 percent of homes had electricity, and fewer than 2 percent of people had telephones. An automobile was a luxury that only the very wealthy could afford.
“Many women still sewed their own clothes and gave birth at home. Because chlorination had not yet been introduced and water filtration was rare, typhoid fever, spread by contaminated water, was a common affliction. One in 10 children died in infancy. Average life expectancy was a mere 47 years.
“Fewer than 14 percent of Americans graduated from high school. ... Widowhood was far more common than divorce [because of the dire economic consequences to women of divorce]. The average household had close to five members, and a fifth of all households had seven or more. …
“Average income per capita, in 1999 dollars, was about $4,200. … The typical workweek in manufacturing was about 50 hours, 20 percent longer than the average today.”
This is the America Republicans want to return us to today. This is how, they assert, the Constitution wants us to live. The way things used to be.
In the decades immediately following the Civil War, American government was fundamentally altered. The process was sped up with the 16th Amendment, authorizing the income tax, and the 19th Amendment that allowed women to vote. Along with the 13th, 14th, and 15th Amendments, these changes provided the basis for the US government to intervene in the “free market” and create America’s first broad middle class.
FDR imposed a top income tax rate of 90 percent on the morbidly rich, 50% on corporate profits, and passed legislation giving average people the right to unionize, balancing the power equation between management and labor.
The result was that by 1980 well over 60 percent of Americans were in the middle class, the majority with a single household income.
This is the series of events to which Republicans object when they say they want to either “return America to constitutional principles” or enter into a “post-constitutional” era, depending on who’s speaking.
Libertarian billionaires consider any interference in the “magical free market” to be a violation of some sort of natural law that creates Dickensian societies with massive concentrations of wealth at the top, widespread poverty among the working class at the bottom, and a small middle class made up almost entirely of entrepreneurs and professional people like doctors and lawyers.
This is why Republican intellectuals like former OMB Director Russell Vought, a major advisor to Trump and Project 2025, are, as Heather Cox Richardson noted in her brilliant Substack newsletter:
“[C]alling for draconian cuts to government agencies, student loans, and housing, health care, and food assistance. [Vought] called for $2 trillion in cuts to Medicaid over ten years, more than $600 billion in cuts to the Affordable Care Act, more than $400 billion in cuts to food assistance, and so on.”
It's why Republicans are working so hard to disempower women in the workplace, starting with eliminating their control over their own reproductive capacity (which is what drove the women’s liberation movement of the 1970s post-Roe v Wade).
It’s also why they’re doing everything they can to shut down corporate Diversity, Equity, and Inclusion (DEI) programs nationwide; the majority of the hiring and increased pay benefits coming from corporate, government, and academic DEI programs go to women, a situation Republican men find intolerable.
Republicans want to either “return” to a pre-Civil War understanding of the Constitution (as advocated by Clarence Thomas and Sam Alito) or a “post-constitutional” order in which the last century’s “innovations” (including the income tax, women’s suffrage, “welfare” programs, entitlements, and even free public school and college) are ended.
We see this in the ways Republicans on the Supreme Court have gutted both the Civil Rights Act of 1964 and the Voting Rights Act of 1965, how they’ve stripped most of the teeth out of the 1935 National Labor Relations Act, and how they’re working to castrate most regulatory agencies including the EPA, FTC, and even the IRS.
Some of it is simple greed: as the middle class shrinks and poverty grows, the cash stash at the very top of the American economic pyramid grows exponentially. Other American oligarchs follow the teachings of Russell Kirk, William F. Buckley, and Ronald Reagan who all argued that a larger-than-50% middle class is a threat to the stability of the nation.
When the 1960s happened and workers, women, draft-age young men, Blacks, Hispanics, and gays were all simultaneously demanding equal rights and protection from exploitation, conservatives in the GOP believed they were seeing the actual, disastrous unraveling of America.
They argued that transferring even part of the wealth of rich people to help build a middle class is the first step in a socialist agenda that must ultimately end with torches, pitchforks, and rich people facing the guillotine in a full-blown communist takeover of America.
As Richardson notes:
“Vought argues that the United States is in a ‘post constitutional moment’ that ‘pays only lip service to the old Constitution.’ He attributes that crisis to ‘the Left,’ which he says ‘quietly adopted a strategy of institutional change,’ by which he appears to mean the growth of the federal government to protect individual Americans. He attributes that change to the presidency of President Woodrow Wilson beginning in 1913. Vought calls for what he calls ‘Radical Constitutionalism’ to destroy the power of the modern administrative state and instead elevate the president to supreme authority.”
These are the real stakes in this fall’s election:
— Democratic President Joe Biden believes that government intervening in the marketplace to build and sustain a broad and diverse middle class is good for all Americans. He holds up the success of the New Deal and the Great Society as exemplars, justification for programs holding corporate America to account and empowering women, minorities, and workers generally.
— Republican Donald Trump and his fellow billionaires in the GOP believe the middle class is still too large at today’s 49 percent and needs to be cut further down to size to take America back to the pre-1913 “constitutional” era when there was no income tax; women couldn’t vote, work, or have a checking account; there was no minimum wage or unemployment insurance; no Social Security, Medicare, or Medicaid; and police routinely collaborated with employers to murder union organizers.
Republicans are dead serious about this. Your vote, and those of your friends and acquaintances, will determine which of these two dueling narratives about the future of the American middle class will win.
Choose wisely.
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America—Democracy or Plutocracy?
What happened to the middle class in the United States? The rich ate it.
May 09, 2024
Almost 90 percent of us think of ourselves as being “middle class,” but we’re way off. In 1970, 62 percent of Americans did qualify; but by 2021, our shrinking middle class was down to 42 percent. By 2022, the value of our minimum wage has fallen by 40 percent since the late 60s.
And our poverty rate? Today, at 12.4 percent, it’s the highest among almost all 38 OECD nations. Only the newest member, Costa Rica, suffers a higher poverty rate.
So, how did our view of ourselves become so distorted?
We were once indeed primarily middle class because we had stepped up to tackle poverty. In the late 1950s, our official poverty rate was about 22 percent, but Lyndon Johnson’s War on Poverty cut that rate in half, hitting a low of 11 percent in 1973. Then Reaganism struck, and by 1983 poverty had spread to nearly 15 percent.
And now?
While our official rate is indeed lower, it is still high and misses millions struggling to meet essential needs.
Our path to this sad outcome began in the 1980s. Reversing the War on Poverty, Reagan began dismantling welfare protections while slashing taxes on the ultrarich. Capturing the tenor of the time, in the 1987 film “Wall Street”, Gordon Gekko declared “greed is good.”
Reaganomics paved the way for today’s shocking inequality.
In 1978, the top 0.1 percent held roughly 7 percent of wealth. By 2018, this tiny group enjoyed about 18 percent. Most shocking: By 2019, America’s three richest families held more wealth than the bottom half of us.
Hardly a middle-class nation, today’s concentration of wealth ought to make a Russian oligarch blush. Out of 178 countries the CIA ranks by income inequality, the U.S. lands between Micronesia and Morocco—at 56th. No industrial democracy is near us. The closest—New Zealand—is 31 places less extreme, at 86th.
An additional injustice?
While workers’ share of national wealth has been shrinking, their productivity has soared. Between 1979 and 2017, worker productivity grew by 70 percent, while hourly compensation rose by a meager 11 percent.
And who benefited?
As earnings for the bottom 90 percent of Americans rose by just over a fifth, the wealth of the top 0.1 percent grew by 343 percent. That's 17 times more!
Thus, we shouldn’t be surprised that in 2019 the bottom half of us held only 2 percent of the nation’s wealth.
Moreover, while American workers had to take on more hours to boost their relatively stagnant earnings and as healthcare and housing costs climbed, the wealthy increased their gains and used it to further warp our nation’s democratic institutions: By funding candidates and hiring lobbyists to ensure their interests were heard at the expense of ours. From 1998 to 2023 alone, dollars spent paying Washington lobbyists grew almost three-fold, from $1.5 billion to $4.1 billion.
Thus, when our rules are set to bring the highest return to those with the most, a market economy not only selectively rewards the already wealthy; it undercuts democracy.
The pain of Reaganomics should have taught us one clear lesson. A market economy can only work for the common good within rules set democratically—free from private control—to ensure opportunity for all. The beginning of these rules would be basics such as an enforced, livable minimum wage, as well as strong and enforced anti-trust laws.
Such steps could move us toward a market serving the most basic freedom of all—the freedom to thrive.Keep ReadingShow Less
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