The Forgotten Middle Class
Published July 25, 2013
By Tom Campbell
By Tom Campbell, July 25, 2013.
Once upon a time, in fact until 1980, the average worker could maintain a middle class income laboring in our factories, building our homes and offices, nursing us to health and working in our companies. They were the economic engine that built North Carolina and our nation, but the middle class is today neglected and forgotten.
From World War II until 1980, companies understood the moral obligation to share productivity and income gains with workers but the trickle down theory isn’t trickling downward. In 1965, the average CEO earned 24.2 times as much as the average worker but some sources report today’s CEO compensation as much as 531 times average worker earnings. The wealthiest 1 percent, earning a median income of $385,000, own more than the bottom 90 percent. The last time when middle class incomes increased was in the 1990s. Two income families increased from 39 to 61 percent and today’s average American works 300 hours longer each year than in 1979. The top 5 percent work 93 fewer hours.
Once upon a time middle class families understood the path to a better life for their children meant getting more education, but the cost of college has risen 140 percent since 1980, forcing many to either incur large debts or forgo college altogether. Only 47 percent of high scoring middle income students are likely to complete a college education while 74 percent of high income students get their college degree. Health care is another worry. In 1980, two-thirds of high school graduates got health insurance with their first job. Today it is just over 25 percent. Even health insurance for college graduates has dropped from 80 percent to 65 percent.
The rich are getting richer while the middle class is squeezed and shrinking. Middle class dreams have become a nightmare. We are becoming a society of polar extremes between the rich and the poor. The middle class most frequently lost jobs during the recession; often finding replacement jobs with pay cuts averaging $600 in monthly salary and benefits, sometimes working two jobs to get by. To maintain their lifestyles they went deeply into debt or reduced savings for retirement and are now largely dependent on Social Security and Medicare in their old age. Financial pressures resulted in unhappiness, distrust and disengagement. In 1960, about 80 percent were married but today that number is barely 50 percent. They are less involved with their communities, civic organizations, even their churches. Along with their dreams, the middle class lost their trust in politicians and corporations.
Once upon a time both Democrats and Republicans fought for support from the middle class but Democrats became advocates for the poor and disenfranchised while Republicans grew into the party for big business and the rich. This “silent majority” watched both parties cater to big money contributors and special interests. Curiously, the middle class votes in numbers sufficient to change their situation but they no longer have a political party or leaders advocating for them and feel too beaten up to rise up.
It is time to become champions for the middle class. Our state cannot thrive and prosper without a strong middle class and history records what happens when their fears and anger grow too great.
July 25, 2013 at 12:52 pm
dj anderson says:
Tom's comments always bring out thoughts, and some thoughts I'd like to share. Wish others would share, too.
As for Tom's class warfare comments against CEOs prospering, I'm all for those CEOs making 'too much' money to have it taken away, and how do we do that? We do it by taxing them.
Fact is, we are, for the rich are being taxed (income /corporate /estate)at the highest since Jimmy Carter. Yet, NC just stopped the few dozen that paid the 'death tax.'
The bottom 20% of wage earners pay NO federal tax, and since NC's reform, that will now probably hold true even for NC taxes. Of course, even the lowest paid worker has the same 6% taken out for SS, another 1% for Medicare/FICA...but couldn't we have the top 49% pay those amounts for the 51%.
When Tom said: "the cost of college has risen 140 percent since 1980, forcing many to either incur large debts or forgo college altogether." I thought about how record high numbers of Americans are going to college since 1980, and how more is owed on college debt than to credit cards in this country. People are not paying off their debts perhaps in part because the interest on loans is less than other loans they have?
Maybe Tom is right about our needing a new party of the middle class, whatever that is. Define middle class. In NC. the average household income is $46,000 so middle class would be what, 36K to 56K? Plenty of people making $100K or even $200K fancy themselves middle class. It's not just what is earned, but what is saved & invested, too. I keep taking off on tangents, but what would the Middle Class party stand for other than making the rich pay more and not get so rich?
July 25, 2013 at 7:35 pm
Richard Bunce says:
1980 code word renders the rest of the article moot. Voters free to elect whoever they want and last year they wanted this legislature and governor. Nobody owes anyone a job and the employer and employee free to negotiate a mutually agreeable wage. Any employee doesn't like that is free to be an employer. If productivity gain is a result of capital expenditures by the employer there is not reason the employee should expect a piece of that gain.
July 30, 2013 at 3:01 pm
Ron Woodard says:
Yes the middle class has shrunk. One of the reasons is the global economy but another big reason for low-skilled middle class wages doing down is mass immigration to the USA. Instead of tilting legal immigration to the higher skilled in sensible numbers, the Dems in Congress were able to tilt legal immigration to large numbers of low-skilled and then doing nothing about illegal immigration (more low-skilled). Today when legal and illegal immigration are included, over 80% of all immigrants immigrating to the USA (over 1.2 million each year) are less skilled and barely have a high school diploma from their native country. So the upper skilled middle class has prospered mostly while the lower and middle income middle class persons have seen their prospects dimmed. All the while the wealthy, often benefiting from cheap labor through immigration have greatly prospered, not to mention CEOs increasing their income by often mediocre performance but with fat incomes offered by a hand-picked Boards of Directors. The aforementioned is not the whole story but it is a significant part of the story.
July 31, 2013 at 1:07 am
dj anderson says:
Let's define our terms, please. Someone argue with me, but who are the middle class we are talking about?
What is the income range of middle class? The mean (average) household income is about $50,000 in NC, I guess, and the Median is just below that, say $46,000. The mode or most frequent is, and I'm guessing, about $22,000. Almost every household makes $11,000 or more. Minimum wage would be $15,000, which is the federal poverty level. Those on food stamps, get free lunch, Medicaid should add those values to income. For the last five years a lot of people have been out of work.
Let's just say that the middle class household brings in from 26 to 66 thousand, which is about 20K on each side of average household income. That would be my guess for 2/3's of the households.
Why would Tom think those people forgotten? Well, those at the low end might well not have health insurance or retirement programs. They don't have trust funds or inheritances to fall back on. They have two cars & either rent or have mortgages that take half their income. Their children go to public school, ride the bus, and they do shop at Wal-mart sometimes. They basically live from pay check to paycheck, but do save enough to take a Staycation, go to a carnival, a couple of movies, and eat out once a month. They have air conditioning and central heat. They might have cable but if not, do the Red Box thing. The middle class often envies the poor, but won't give up the little they have to be poor enough to get benefits. The middle class envies the rich who have late model cars, two homes, kids at major universities, take distant vacations to first rate accommodations, by air.
That's how the middle class is forgotten. Their kids don't get medicaid with its $1 drugs, $1 MD visits, & $1 dental, food stamps, or free lunch. They don't get anything but do get by until something happens, then they call on family, friends and church.
I'm contradicting myself in a post below on the amounts hoping someone will give us accepted figures to define what is middle class.