How to Restore America’s Middle Class

I grew up during the heyday of American economic prosperity. It was in the 1950s and 1960s that the archetype of the American Dream was born. It was not something available only to a lucky few; it was within the reach of most Americans. Yes, some were left out, notably African-Americans and Native Americans, but for a golden moment we all believed that we would someday soon eradicate poverty in those communities too, and usher in an age of universal prosperity.

At that time, a single wage-earner with a high school education could own a home, raise a family, have vacations, and save for retirement. That’s how it should be. If you work hard, you should have a decent life.

What has happened instead of the poor rising into middle-class prosperity is the opposite. The former middle class is falling into precariousness. From 1979-2019, income inequality in the United States grew by 25%. Over the past five decades, the top 1% of American earners have nearly doubled their share of national income. The current federal minimum wage is $7.25 — in terms of purchasing power, which is about half what it was in 1968. As that is the “floor” for all wages, worker pay in general has stagnated. 

The real-life consequences are shocking. In order to maintain the basics of a decent life, Americans have piled up enormous amounts of debt. Credit card debt, student debt, and medical debt have reached unsustainable levels. This makes people vulnerable to the smallest setback to send them into poverty. A divorce, an illness, or even a car repair can push them over the edge. 

That’s why so many Americans are moving into their vehicles. There has been a huge exodus from houses to vans as property taxes and the cost of living skyrockets. This article is from 2021. Since then, rising interest rates have also put homeownership out of reach for even more Americans. In the last two and a half years, home financing costs have risen by 150% and the average cost of a home has increased by 23%. As more and more people are priced out of home ownership, rents have skyrocketed as well, rising 17% over the last year.

Is this what the American Dream has come to? People living in their vehicles? Does anybody in Washington D.C. understand what’s happening in America? Workers can’t afford to live in this country. 

Today that American Dream has become a fantasy as much of the former middle class has descended into precariousness, scrambling in the gig economy, mired in debt, and borrowing from relatives. 

Causes of middle-class decline

What has happened? It’s not that workers have become less productive. It’s not that technological levels have declined. Here are some of the reasons for the decline of the middle class, and what, therefore, we can do about it.

• Up into the 1970s, worker pay increased about as fast as worker productivity. Since 1979, worker productivity has increased 3.7 times faster than worker pay. As a result, millions of workers have dropped out of the middle class. 

• One simple reason for the stagnation in worker pay is the decline in union membership from over 30% of the workforce in 1950 to barely 10% today. We learned in the 19th century that capitalism cannot work if workers cannot bargain collectively with employers.

• Free trade agreements have put American workers in competition with low-wage workers elsewhere in the world. “Free trade” sounds like a good idea, but it means that employers move production to places where environmental regulations are lax and where worker protections are non-existent. Companies in the US have to either offshore or extract concessions from their workers. Up through the 1970s, union bargaining was all about pay increases. When deindustrialization gathered momentum in the 1980s, it became about saving jobs and holding on. 

• Military spending is at record levels. The official military budget is around $800 billion, but estimates of total national security spending range from $1.2 to $1.5 trillion. Military spending directs productive labor toward “goods and services” that don’t actually benefit anyone. That makes the things people actually need and want comparatively more expensive. 

• Healthcare costs are out of control, accounting now for more than one-sixth of GDP. That’s compared to one-twentieth in 1960. Per capita, U.S. healthcare spending is more than double that of Japan, France, the UK, Canada, and most other countries. 

• Corporations have taken over our government, bending laws and regulations to benefit themselves at the expense of the majority of workers.

• Tax loopholes allow the super-wealthy to avoid paying the level of taxes necessary to ameliorate wealth inequality.

Solutions for restoring the middle class

The middle class won’t recover overnight, but here are some of the things I’ll do as President to improve the lives of the middle segment of society. 

• Renegotiate free trade agreements and impose compensatory tariffs on imports from low-wage countries. 

• Rein in military spending. A family of four’s share of current defense spending is at least $10,000 a year. Imagine if that money was devoted to free childcare or child tax credits.

• Cut healthcare costs with Medicare-for-all, restrict pharmaceutical companies’ profiteering, and redirect a portion of medical research toward inexpensive natural, holistic, and alternative therapies.

• Implement some form of student debt relief. Allow student debt to be dischargeable in bankruptcy. Cut interest rates on student loans to zero. 

• Raise the minimum wage to $15 an hour – about the level it was in 1968 – which will raise the floor on all wages and return a share of productivity growth back to workers.

• Close loopholes and tighten enforcement against illegal corporate union-busting activity. The NLRB and Department of Justice must take vigorous action to enforce the letter and the spirit of the law.

Underneath all these practical measures is a restoration of neglected American values. We have to make people the priority, and not corporate profits or geopolitical fantasies. It may take decades to fully rebuild America’s middle class and return to the days when anyone who worked hard could expect a secure and decent life. But I promise you, even in four years we can make changes that significantly improve the family budget.