The rise and fall of the American middle class
Glenwood Springs, CO Colorado
The American middle class is a phenomenon of the 20th Century. Its roots lie in more than a half century of strife that began in the 1870s, when workers were essentially thralls of the mines and mills in which they labored, working six 10- to 14-hour days under deplorable working conditions at pitiful wages. Miners typically lived in company towns and were paid in scrip, all of which went back to the company to pay the rent in company housing and food and clothing at the company store.
Efforts by labor to organize and strike to improve their lot were met with arrests and anti-union court rulings (including the U.S. Supreme Court), and violence from company guards, sheriff’s posses, state militias and national guards and federal troops, killing hundreds of workers and family members.
Two of these events took place in Colorado: the 1914 Ludlow Massacre, in which the Colorado National Guard opened fire on the miners and set fire to their tents, killing 12 miners and 13 relatives; and the 1927 Columbine Mine Massacre, in which Colorado state police and company guards machine-gunned unarmed miners, killing six and wounding dozens more.
The one single event heralded as the birth of the American middle class was Henry Ford’s recognition that assembly-line efficiencies could increase the productivity of his workers, allowing him to raise their pay from $2.50 for a 10-hour day to $5 for an eight-hour day, so they would be able to buy the cars they were building, thereby increasing his market. Most of American industry followed suit, and the middle class prospered.
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After a setback during the Great Depression years of the 1930s, American manufacturing boomed during World War II. Women working in war-production plants became the new middle class. But with rationing, and with most manufacturing dedicated to military production, there was little for them to buy.
When the war ended and 16 million servicemen returned to civilian life, the pent-up demand and the financial means to fulfill it fueled the post-war boom. It created millions of jobs in manufacturing and home construction, and a huge prosperous middle class.
But the times were too good for everyone’s good, workers and companies alike.
Unions went overboard, asking for and getting higher wages and generous health care and retirement benefits. Business and profits were so good that companies didn’t want to see them interrupted by strikes. It was easier to give in and raise prices a few notches, and everyone was happy.
No one foresaw the long-term implications of these measures – increased life expectancy and exponentially rising health care costs.
So now businesses are confronted with the double whammy burden of health care and pension costs. They have met that challenge with automation and computers, greatly reducing their need for employees. Furthermore, many of the jobs that remain have been shipped overseas to a lower-cost labor market.
The result has been a reduction in the size and purchasing power of the middle class, further negatively impacting American businesses.
America is also facing a changed world. No longer is the U.S. the super manufacturer selling our production to the rest of the world. Emerging economies like China, Japan, India, Brazil and dozens of other countries are now manufacturing goods at a lower cost and selling their goods to us at prices that American companies can match only by further cost-cutting measures, reducing wages and benefits for a shrinking middle class.
What can be done to reverse this trend?
An article in the September issue of The Atlantic titled “Can the Middle Class Be Saved?” offers some suggestions.
• Expanding education opportunities, improving the quality of education to produce the know-how and skills to keep America in the forefront of creativity and innovation, paid for by progressive taxation (increasing the top income tax rate), and reducing military and Medicare spending.
• Reducing bureaucratic obstacles.
• Increasing government financial incentives for research and development.
The article concluded with comments that to save itself, the middle class is going to have to step up and put forth the effort needed to prepare itself for the challenges it is facing.
Its final note: “As a society, we should be more concerned about whether most Americans are getting ahead, than about the size of the gains at the top.”
“As I See It” appears on the first and third Thursdays of the month. Hal Sundin lives in Glenwood Springs and is a retired environmental and structural engineer. Contact him at firstname.lastname@example.org.
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