America’s Vanishing Middle Class

By: Eric Kain

Any analysis of wages earned in prior decades and wages earned today needs to take into account the fact that a lot of non-white-males have entered the workforce. Still, these are troubling numbers from John Cassidy of The New Yorker:

Median earnings for full-time, year-round male workers: 2010—$47,715; 1972—$47,550. That not a typo. In thirty-eight years, the annual earnings of the typical male worker, adjusted to 2010 dollars, have risen by $165, or $3.17 a week.

If you do the comparison with 1973 it is even worse. The figure for median earnings of full-time male workers in that year (when O. J. rushed two thousand yards and Tony Orlando had a chart-topper with “Tie a Yellow Ribbon Round the Old Oak Tree”) was $49,065. Between now and then, Archie Bunker and Willie Loman have suffered a pay cut of more than twenty-five dollars a week.

The gap is only growing wider, and the structural issues at the heart of the gap are becoming more entrenched in this current recession. The problem isn’t with income inequality per se. There will always be income inequality, and that’s not necessarily a bad thing so long as the people at the bottom aren’t living in poverty. The problem is that you reach a certain point where income inequality becomes a destabilizing force both economically and politically.

And while a number of consumer goods have gotten cheaper over the years – like personal computers and all the stuff you can waste time with online – important and essential items like healthcare have gotten much, much more expensive:

Now we can quibble about why costs have risen so much, and really there’s a number of reasons. If you want an in-depth look at those reasons, you should read Aaron Carroll’s series on health costs. One way or another we’re talking about a major expense for middle and working class people, and that’s on top of growing education and housing costs. The big essentials are breaking the bank for many Americans, even if we can afford refrigerators and flat screen televisions.

Does this mean we need more regulation or less? Does it mean we need higher taxes and more redistribution? I would propose a grand bargain along these lines:

  • Let’s deregulate the economy as much as possible, eliminating barriers to entry from as many fields as possible, and allowing the DIY economy to flourish. This includes a bunch of supply side stuff in the health sector.
  • Let’s do away with the corporate income tax altogether to encourage domestic investment, especially since this tax is just passed along to consumers.
  • Let’s reform the progressive tax code to be way more progressive – especially on the top tiers. The top earners in this country can afford to spread the wealth around.
  • Let’s get rid of Medicare, Medicaid, and the ACA and replace them with straight-up single payer health insurance for everyone. Simplify and save money in the process. Take the burden off of employers.
  • Let’s let markets do their thing and public options do theirs. We don’t need Romney’s “unemployment accounts” – unemployment insurance works just fine. I’d be more sanguine about private savings accounts if markets weren’t so prone to crashing, but as it stands Social Security just needs some tinkering to be perfectly sustainable.
  • We should invest more in our public institutions, from schools to universities to public libraries. We should also invest a lot in our public infrastructure, and we should use higher fossil fuel taxes to make those investments.

That’s a broad sketch – and I do mean sketch – of my basic blueprint for market-social-democracy (or something like it). Less government in how we actually interact with people, whether that’s running a business out of our home or smoking marijuana, coupled with a more focused public sector geared toward providing basic services (transit, healthcare, education, etc.).

Oh, and quit spending nearly a trillion dollars a year on war. Keep those dollars here in America and put them to better use. We can defend our country just fine without getting our nose in everybody else’s business.


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