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“Eat the rich…

…there’s only one thing that they’re good for.” – AerosmithEat the Rich

Of course the title of the article, “How the middle class became the underclass,” caught my eye. My blog entry back in the third month of this blog, November 2007, entitled “We’re all mad here,” cited the November 26, 2007 issue of Time magazine, about the happiness of people in various jobs in the U.S.

The surprise for me was that the average income of 99% of Americans had remained virtually stagnant since 1980, while the incomes of the top 1% (and 0.1% and 0.01%) had increased dramatically!

The latest CNNMoney article asks the rhetorical question, “Are you better off than your parents?” and then answers it, “Probably not if you’re in the middle class.” The article notes that incomes for 90% of Americans have remained stagnant. In 1988, the average American taxpayer had an income of $33,400, and in 2008, this income had dropped slightly to $33,000. Meanwhile, the richest 1%, with incomes of $380,000 or more, have seen their incomes climb 33% over the last 20 years.

The incomes of the middle class have been stagnant for at least a generation – long before the Great Recession.

So what are the causes of the stagnation (and with inflation, EROSION) of middle-class incomes?

  1. The decline of unions and erosion of collective bargaining: According to Bill Rodgers, a former chief economist with the Labor Department and now professor at Rutgers University, union workers traditionally earned 15-20% more than their non-union counterparts. in 1983, union workers made up around 20% of the workforce. In 2010, union workers were less than 12%. I was personally surprised, after moving to California, to see strong unions here, after watching years of union-busting activity in Ohio. (A history of union-busting activity in the U.S. is here.) Of course most or all of the “professional” :-) (the “oldest profession?”) levels in high tech in Silicon Valley are non-union.
  2. International competition: What CNNMoney lists under “international competition is not so much “competition” as the “offshoring” of American jobs by multinational corporations. Bill Rodgers said, “As we became more connected to China, that poses the question of whether our wages are being set in Beijing.” The U.S. has emerged primary as a services-producing economy, something that was predicted many years ago.
  3. The wealthy have capitalized on globalization: Corporations have reduced costs and increased profits. New markets for those products have emerged around the world. CNNMoney quotes Alan Johnson, a Wall Street compensation consultant: “With a global economy, people who have extraordinary skills… whether they be in financial services, technology, entertainment or media, have a bigger place to play and be rewarded from.” It sounds very much like something that someone on Wall Street would say. :-) I am REASONABLY sure that Mr. Johnson must be talking about the MANAGEMENT of the people with the really extraordinary skills. In my experience, the people with the skills themselves (probably a lot of people in that “bottom 90%” above) receive stagnant incomes while their skills are exploited, usually by people less educated, less skilled, and often less intelligent than themselves. The CNNMoney article points out that workers with a high school diploma in 1980 earned about 71% of what college-educated workers earned, and in 2010, they earned only 55% of what college-educated workers earned. Aside from some professions (medicine and law come to mind), it might be wise to stop at a Bachelor’s degree. Many of the post-graduate-degree holding people I have met wound up working for a boss with only a Bachelor’s degree.
  4. The stock market: The S&P 500 has increased more than 1,300% since 1970, disproportionately helping the rich.
  5. Government regulation or lack thereof: The article cites examples of deregulation and other actions taken by administrations of Reagan through Obama that have helped the rich disproportionately. Unfortunately for the middle class, the incompetence of these actions led directly to the Great Recession.

Now, as corporations sit on piles of cash and the stock market is at or near a 2-year high, the wealthiest Americans continue to benefit, while over 13.9 million people are out of work.

Alan Johnson was quoted: “I think it’s a terrible dilemma, because what we’re obviously heading toward is some kind of class warfare.”

I disagree. The facts suggest that class warfare has been occurring for at least a generation, and that 95-99% of us have been losing.

It is important to remember that the rich have the money, but not the numbers, to influence government. That is why they must keep the bottom 99% fighting among ourselves.

-Bill at

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