The decline of the middle class

By Jan Dolcater

There is no doubt that this subject is reality. I intend to examine many of the root causes and also offer some avenues to change this trajectory.

Many families and individuals have become addicted to accumulating debt. We are consuming more wealth than we produce and have piled up the biggest amount of debt in the history of the world. Each of us has the responsibility to learn to live within our means and not be enticed into credit card irresponsibility.

In addition we continue electing politicians from both sides of the aisle that have had absolutely no concern for the long-term future for our country. To achieve a turnaround this must change and soon.

We are now faced with income inequality and this has been exacerbated since 2007 with many restraints on our economy and also excessive regulations put in place by the current administration. Since Obama became president household income has decreased by more than $4,000.

Other negative facts are as follows:

1) For each of the past six years more businesses have closed in the U.S. than have opened. Prior to 2008 this has never happened before.

2) Home ownership has fallen eight years in a row.

3) Student loan debt is now larger than credit card and auto loan debt combined.

4) Twenty-five percent of millennials now live with their parents

5) In 2010 42 percent of single moms were on food stamps

6) Child homelessness has risen 33 percent since 2007.

7) Today one in six are now on Medicaid.

During this period Wall Street and other large business enterprises have benefited, but the worker has not. Major corporations definitely need to exercise understanding and compassion for their employees. The relationship between Wall Street and Washington has been far too cozy. Without significant change this situation unquestionably becomes worse.

Smaller businesses have also benefited but nearly at the rate of large enterprises.

It has been suggested that a raise in the minimum wage to $ 15 per hour would be a significant benefit to help change this differential. However, consider that in 2014 77.2 million workers age 16 and older in the U.S. were paid in hourly rates representing 58.7 percent of all wage and salary workers. 1.3 million earned exactly the prevailing minimum wage.

In other words only 1.68 percent of the hourly paid workers were paid minimum wage. Such a small percentage being paid such an increase would have minimum economic benefits but that increase is even far more than most small businesses in the country can deal without being forced into unprofitable situations. Perhaps an increase of a $ 10 per hour would be a satisfactory compromise.

I would also offer the following for consideration to help in this situation. Over 50 years ago in a wholesale building supply business where I was a principal, we did not offer paid vacation pay, but rather double paid vacation pay. In other words the employee had the pay to cover his basic expenses and then they had pay to help pay for a vacation. We found by doing this that when the worker returned from vacation that they were more efficient than they would have been without this offering.

Good paying jobs are in short supply drowning the middle class in red ink and making many more and more dependent on government. Our country’s rise to world preeminence and admiration stemmed from the fact that its prosperity was widely shared. In the first decades after World War II the percentage of households earning middle incomes doubled to 60 percent. It was no mirage, but a fundamental accomplishment of enlightened capitalism.

How our political leaders respond to this downward spiral of mobility will define the future of our nation. A pro-growth program could take several forms. We should encourage the growth of high wage blue collar industries in construction, energy as well as manufacturing with significant emphasis on our becoming energy independent. Reform our tax code for both individuals and employers to make us more competitive in world markets. It is also very important to encourage students to take full advantage of trade school skills.

I heard an interview recently with Tim Cook, CEO of Apple, who commented that the rise of the middle class in China was directly due to their major emphasis placed on increasing skilled workers. This makes sound judgment rather than imposing huge tuitions on students who may not finish with a degree that offers good employment opportunities.

It is critical that the benefits of capitalism need to be more widely shared for the middle class to once again rise rather than decline.

Jan Dolcater of Rockport is a member of a group of concerned Midcoast citizens who meet to discuss issues of public interest. Their weekly column “Another View” has been awarded by the Maine Press Association.