AN – RIP Middle Class
Saved under Features, Social
Tags: Competition, Democracy, Employment, Governance, Labor Force, Living Standards, Markets, Poverty
RIP, the Middle Class: 1946-2013
The 1 percent hollowed out the middle class and our industrial base. And Washington just let it happen.
I know I’m dating myself by writing this, but I remember the middle class.
I grew up in an automaking town in the 1970s, when it was still possible for a high school graduate — or even a high school dropout — to get a job on an assembly line and earn more money than a high school teacher.
“I had this student,” my history teacher once told me, “a real chucklehead. Just refused to study. Dropped out of school, a year or so later, he came back to see me. He pointed out the window at a brand-new Camaro and said, ‘That’s my car.’ Meanwhile, I was driving a beat-up station wagon. I think he was an electrician’s assistant or something. He handed light bulbs to an electrician.”
In our neighbors’ driveways, in their living rooms, in their backyards, I saw the evidence of prosperity distributed equally among the social classes: speedboats, Corvette Stingrays, waterbeds, snowmobiles, motorcycles, hunting rifles, RVs, CB radios. I’ve always believed that the ’70s are remembered as the Decade That Taste Forgot because they were a time when people without culture or education had the money to not only indulge their passions, but flaunt them in front of the entire nation. It was an era, to use the title of a 1975 sociological study of a Wisconsin tavern, of blue-collar aristocrats.
That all began to change in the 1980s. The recession at the beginning of that decade – America’s first Great Recession – was the beginning of the end for the bourgeois proletariat. Steelworkers showed up for first shift to find padlocks on mill gates. Autoworkers were laid off for years. The lucky ones were transferred to plants far from home. The unlucky never built another car.
When I was growing up, it was assumed that America’s shared prosperity was the natural endpoint of our economy’s development, that capitalism had produced the workers paradise to which Communism unsuccessfully aspired. Now, with the perspective of 40 years, it’s obvious that the nonstop economic expansion that lasted from the end of World War II to the Arab oil embargo of 1973 was a historical fluke, made possible by the fact that the United States was the only country to emerge from that war with its industrial capacity intact. Unfortunately, the middle class – especially the blue-collar middle class – is also starting to look like a fluke, an interlude between Gilded Ages that more closely reflects the way most societies structure themselves economically. For the majority of human history – and in the majority of countries today – there have been only two classes: aristocracy and peasantry. It’s an order in which the many toil for subsistence wages to provide luxuries for the few. Twentieth century America temporarily escaped this stratification, but now, as statistics on economic inequality demonstrate, we’re slipping back in that direction. Between 1970 and today, the share of the nation’s income that went to the middle class – households earning two-thirds to double the national median – fell from 62 percent to 45 percent. Last year, the wealthiest 1 percent took in 19 percent of America’s income – their highest share since 1928. It’s as though the New Deal and the modern labor movement never happened.
Here’s the story of a couple whose working lives began during the Golden Age of middle-class employment, and are ending in this current age of inequality. Gary Galipeau was born in Syracuse, N.Y., in the baby boom sweet spot of 1948. At age 19, he hired in at his hometown’s flagship business, the Carrier Corp., which gave Syracuse the title “Air-Conditioning Capital of the World.” Starting at $2.37 an hour, Galipeau worked his way into the skilled trades, eventually becoming a metal fabricator earning 10 times his original wage.
“Understand,” he said, “in the mid-’60s, you could figuratively roll out of bed and find a manufacturing job.”
Voss joined Carrier after dropping out of Syracuse University, and getting laid off from an industrial laundry.
“It was 1978,” she said. “You could still go from factory to factory. One day, a friend and I were looking for a job. We saw this big building. We said, ‘Must be jobs in there.’ In those days, you could fill out an application and get an interview the same day. I was offered a job within three or four days, making window units. I sprayed glue on fiberglass insulation, stuck it inside units – 400 a day, nearly one a minute. I was told, ‘After five years, you’ll have a job for life. You’ll be golden.’”
Galipeau and Voss, who met working at Carrier, lost their jobs in 2004, when the company moved the last of its Syracuse manufacturing operations to Singapore. There, even the most skilled workers were paid half the $27 an hour Galipeau had earned as a metalworker. The corporation they’d expected to spend their careers with divorced them in middle age, and now they had to bridge the years until Social Security and Medicare. Eligible for Trade Adjustment Assistance, because her job had moved overseas, Voss earned a two-year degree in health information technology – “a fancy way of saying medical records.”
Even with the degree, Voss couldn’t find decent-paying work in healthcare, so she took a job with a sump pump manufacturer, for $12.47 an hour — a substantial drop from Carrier, but decent money for Central New York in the A.D. of A/C. (The No. 1 employer of ex-Carrier workers is an Iroquois casino.) Less than two weeks into the new job, a thread on Voss’ work glove wrapped itself around a drill press, taking Voss’ finger with it. The digit was torn off at the first knuckle. When Voss returned to work, two months later, she found the factory so distressing that she soon took a medical records job in a hospital, paying $2.50 an hour less.
After earning a degree in human resources management, Galipeau found that 56 was too old to start a new career. Fortunate enough to draw a full pension from Carrier, Galipeau took a part-time job at a supermarket meat counter, for the health insurance. Syracuse’s leading vocations are now education and medicine – the training of the young and the preservation of the old. Where nothing is left for the middle-aged, or the middle class, it’s difficult to be both.
The shrinking of the middle class is not a failure of capitalism. It’s a failure of government. Capitalism has been doing exactly what it was designed to do: concentrating wealth in the ownership class, while providing the mass of workers with just enough wages to feed, house and clothe themselves. Young people who graduate from college to $9.80 an hour jobs as sales clerks or data processors are giving up on the concept of employment as a vehicle for improving their financial fortunes: In a recent survey, 24 percent defined the American dream as “not being in debt.” They’re not trying to get ahead. They’re just trying to get to zero.
That’s the natural drift of the relationship between capital and labor, and it can only be arrested by an activist government that chooses to step in as a referee. The organizing victories that founded the modern union movement were made possible by the National Labor Relations Act, a piece of New Deal legislation guaranteeing workers the right to bargain collectively. The plotters of the 1936-37 Flint Sit Down Strike, which gave birth to the United Auto Workers, tried to time their action to coincide with the inauguration of Frank Murphy, Michigan’s newly elected New Deal governor. Murphy dispatched the National Guard to Flint, but instead of ordering his guardsmen to throw the workers out of the plants, as he legally could have done, he ordered them to ensure the workers remained safely inside. The strike resulted in a nickel an hour raise and an end to arbitrary firings. It guaranteed the success of the UAW, whose high wages and benefits set the standard for American workers for the next 45 years. (I know a Sit Down Striker who died on Sept. 17, at 98 years old, an age he might not have attained without the lifetime health benefits won by the UAW.)
The United States will never again be as wealthy as it was in the 1950s and ’60s. Never again will 18-year-olds graduate directly from high school to jobs that pay well enough to buy a house and support a family. (Even the auto plants now demand a few years in junior college.) That was inevitable, due to the recovery of our World War II enemies, and automation that enables 5,000 workers to build the same number of cars that once required 25,000 hands. What was not inevitable was the federal government withdrawing its supervision of the economy at the precise moment Americans began to need it more than at any time since the Great Depression.
The last president who had a plan for protecting American workers from the vicissitudes of the global economy was Richard Nixon, who was in office when foreign steel and foreign cars began seriously competing with domestic products. The most farsighted politician of his generation, Nixon realized that America’s economic hegemony was coming to an end, and was determined to cushion the decline by a) preventing foreign manufacturers from overrunning our markets and b) teaching Americans to live within their new limits. When the United States began running a trade deficit, Nixon tried to reverse the trend with a 10 percent tariff on imported products. After the 1973 Arab Oil Embargo suddenly increased the price of gasoline from 36 cents to 53 cents a gallon (and just as suddenly increased the demand for fuel-efficient German and Japanese cars), Nixon lowered the speed limit to 55 miles an hour and introduced the Corporate Average Fuel Economy law, which gave automakers until 1985 to double their fleetwide fuel efficiency to 27.5 miles per gallon.
Had Nixon survived Watergate, he might have set the nation on a course that emphasized government regulation of the economy, and trade protection as a response to globalism. We might also have preserved more of the manufacturing base necessary for a strong middle class. But his successors dismantled that vision, beginning with Jimmy Carter, an economically conservative Southern planter. Nixon’s answer to inflation had been wage and price controls, an intrusion into the free market that would be unimaginable today. Carter deregulated the airline, rail and trucking industries, hoping that competition would result in lower prices. It didn’t, but it gave the newly liberated companies more leverage against their unions. When inflation nonetheless reached 14 percent, Carter’s hand-picked Federal Reserve Board chairman, Paul Volcker, responded by tightening the money supply, raising interest rates so high that Americans could not afford loans for cars or houses. Ronald Reagan also chose low prices over employment, refusing to free up money until inflation declined. Car sales hit a 20-year low. In the fall of 1982, the national unemployment rate was 10.8 percent, the highest since the Great Depression. Walter Mondale accused Reagan of turning the Midwest into “a rust bowl” – a term reformulated to Rust Belt. Buffalo, Cleveland, Flint and Detroit still haven’t recovered. Neither has the middle class.
“You can’t grow an economy, grow a middle class, without making things, producing stuff,” says Mike Stout, a steelworker who lost his job when Pennsylvania’s Homestead Works closed in 1986. “It’s just impossible. I haven’t seen it anywhere.”
Reagan also fired the striking members of the Professional Air Traffic Controllers Organization. He argued that he was simply trying to end an illegal strike by public employees, but his action encouraged private employers to use the same tactic. Once workers realized they could lose their jobs by joining a picket line, the number of strikes dropped tenfold, from 300 a year before 1981, to 30 a year today.
Pre-PATCO, 21 percent of workers belonged to unions (still down from the all-time high of 30 percent). Now, fewer than 12 percent do. Union membership is at 14.7 million, the lowest total since just before World War II. There’s a well-known graph that shows middle-class income share declining along the same axis as unionization.
Bill Clinton continued down the same deregulatory path, signing the North American Free Trade Agreement and the repeal of the Glass-Steagall Act, which prohibited commercial banks from owning investment firms.
NAFTA, which resulted in hundreds of small manufacturers moving to Mexico, was passed over the vehement objections of labor.
In 1994, Rep. Glenn Poshard of Illinois tried to persuade the Labor Department to intervene in a lockout at the A.E. Staley Mfg. Co., a Decatur corn starch manufacturer that had been bought by Tate and Lyle, a London-based food conglomerate. Poshard considered the dispute the “flashpoint” for the new economic globalism of the 1990s, but when he took a group of workers to meet Labor Secretary Robert Reich, the secretary gave no indication the federal government would try to settle the matter.
After two-and-a-half years, the union capitulated, settling for a third of its pre-lockout jobs.
Only in 2008, after the bubble of false prosperity created by easy credit and inflated housing values blew up, did two presidents finally take an active role in the economy. George W. Bush decided he didn’t want to be remembered as the president who allowed American automakers to fall apart, and sent them $17.4 billion of the $700 billion Wall Street bailout money. Barack Obama finished the job, setting up an auto task force to guide General Motors and Chrysler through bankruptcy. (He did so over the objections of his house Clintonite, Chief of Staff Rahm Emanuel. Emanuel’s response to the prospect of tens of thousands of autoworkers losing their jobs: “Fuck the UAW”). Even so, new autoworkers now start at $14 an hour – hardly a middle-class wage.
Obama also passed the Affordable Care Act, the most significant piece of social welfare legislation since the Great Society, but author Peter Beinart still thinks Obama belongs to the modern tradition of small government presidents, calling his politics “pro-capitalist, anti-bureaucratic, Reaganized liberalism.”
The lesson of the last 40 years is that we can’t depend on the free market to sustain a middle class. It’s not going to happen without government intervention. Even when American industry dominated the world, one reason workers prospered was that the economy operated on New Deal underpinnings, which included legal protections for labor unions, government regulation of industry and high marginal income tax rates.
It’s time to declare an end to the deregulatory experiment that has resulted in the greatest disparity between the top earners and the middle earners in nearly a century. Now that the New Deal has been vanquished – a goal conservatives have cherished since before Robert Taft went extinct – we need a Newer Deal that will raise the minimum wage, reduce obstacles to union organizing, levy higher taxes on passive wealth such as investments and inheritances, and provide benefits for workers unable to obtain it at their jobs, perhaps by lowering Medicaid eligibility or instituting a single-payer health system. The demand for such reforms is brewing. We heard from the middle class during the Occupy movement of 2011, and from the lower class in this year’s fast food strikes.
Not long ago, I was in Flint, Mich., to meet with its new congressman, Dan Kildee. No American city has suffered more during the Age of Deregulation than Flint. In 1978, Flint had 80,000 automaking jobs, and the highest per capita income in the nation. Today, it has 6,000 automaking jobs, and the highest murder rate in the English-speaking world. Instead of Corvettes and speedboats, the yards are filled with mean dogs, “This Property Protected by Smith & Wesson” signs, and weeds. So far, Kildee’s biggest achievement has been securing federal funding to tear down 2,000 abandoned houses. In Flint, where the average home sale price is $15,000, eliminating blight increases property values. Having seen the consequences of government indifference, Kildee wants to return to the days of government activism. As county treasurer, he founded a public land bank that helped revive downtown Flint by purchasing and renovating a hotel that had sat empty since 1973.
“It is a myth that there is any market that is not supported or affected by the structure of government in one way or another,” he said. “We’re picking winners and losers right now, and we’re picking the wrong ones. We’re making matters worse by not intervening in these communities. It’s not fine for Flint to be one of the losers, as far as I’m concerned.”
As far as I’m concerned, it’s not fine for the middle class to be one of the losers, either.