Tuesday, September 23, 2014

Killing off America’s middle class is economic suicide

My father was the son of Italian immigrants. Like many young men of his generation, he quit high school to fend for himself during the Great Depression. He became a self-taught auto mechanic and eventually co-owned a garage in Oakland, California. The third of three children, I came along in the early 1950s and grew up in a comfortable middle-class part of the city, enjoying the material benefits of the post-war boom in America. Our house was small but comfortable. He was the sole breadwinner, yet we could afford upper-end cars and took two-week vacations every summer.

We were not Ozzie and Harriet’s family, and we had our struggles and trials, but still, I was brought up living a modest, secure life even though my father never finished the eighth grade and worked with his hands. We were tried and true middle class Americans, a blue-collar family that could still afford nice things.

The point of my little trip down memory lane is to contrast a time when opportunity existed for a large portion of American society, as opposed to today, where opportunity exists for only a very small group at the top of the food chain. The middle class is dying or, more accurately, being killed off by the one percent. In an article on income inequality by Morgan Stanley, there are more than a few depressing graphs and charts illustrating the decline of America’s middle class, but one that stands out is a chart showing the U.S. leading the developed countries of the world in its share of low paying jobs. What does this mean? It means the gap between the tiny group of haves and the rest of us will continue to grow wider and wider.

And this is where I become confused. Doesn’t destroying America’s middle class mean destroying the customer base for many large retailers? If my wages are stagnant or declining while prices of goods rise, that means I’m not going to be able to afford a new model car or a new dishwasher or the latest phone. If I’m the CEO of Target or GM or Amana, why would I support policies or candidates who want to shrink my customer base? Doesn’t that seem self-defeating to you? Yet it’s exactly what’s happening. If the current trajectory doesn’t change, the average person won’t be able to afford to buy things we consider necessities now, like appliances or cars or insurance.

It could be that the richest of the rich simply don’t care. Their wealth places them beyond the concerns of mere mortals and the future of their families seems secure. Are they all as callous, greedy and heartless as the Koch brothers? Perhaps. How else to explain what is happening to our economy?

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