The 40-Year Slump (if you have ever read a post about the middle class wages read this!!!)

[Omaha Steve]

I found this while doing research for a post in LBN about pensions.

Be sure to cliclk the box on the left side for more info on the subject. It looks like this


http://prospect.org/article/40-year-slump

The 40-Year Slump

By Harold Meyerson

The 40-Year Slump

The steady stream of Watergate revelations, President Richard Nixon’s twists and turns to fend off disclosures, the impeachment hearings, and finally an unprecedented resignation—all these riveted the nation’s attention in 1974. Hardly anyone paid attention to a story that seemed no more than a statistical oddity: That year, for the first time since the end of World War II, Americans’ wages declined.

Since 1947, Americans at all points on the economic spectrum had become a little better off with each passing year. The economy’s rising tide, as President John F. Kennedy had famously said, was lifting all boats. Productivity had risen by 97 percent in the preceding quarter-century, and median wages had risen by 95 percent. As economist John Kenneth Galbraith noted in The Affluent Society, this newly middle-class nation had become more egalitarian. The poorest fifth had seen their incomes increase by 42 percent since the end of the war, while the wealthiest fifth had seen their incomes rise by just 8 percent. Economists have dubbed the period the “Great Compression.”

This egalitarianism, of course, was severely circumscribed. African Americans had only recently won civil equality, and economic equality remained a distant dream. Women entered the workforce in record numbers during the early 1970s to find a profoundly discriminatory labor market. A new generation of workers rebelled at the regimentation of factory life, staging strikes across the Midwest to slow down and humanize the assembly line. But no one could deny that Americans in 1974 lived lives of greater comfort and security than they had a quarter-century earlier. During that time, median family income more than doubled.

Then, it all stopped. In 1974, wages fell by 2.1 percent and median household income shrunk by $1,500. To be sure, it was a year of mild recession, but the nation had experienced five previous downturns during its 25-year run of prosperity without seeing wages come down.

FULL story at link.

[Odin2005]

1. I this why I want to punch people taking about an "Obama Recovery".

[OutNow]

2. Time to Organize

No government, no matter how "enlightened" can solve the inequality inherent in capitalism in isolation from a real struggle by working people. The gains of the 1930s, including government programs such as Social Security and unemployment compensation were part of a massive movement for worker's rights led by the CIO. The post world war 2 strike wave led to stronger unions with the resultant increase in wages and benefits that spread to include many non-union jobs (mainly to keep the unions out of the white collar sector).

If we sit around, thinking that all we have to do is vote every couple of years to fix our economy, we are doomed. We need a revitalized union movement. I see some positive signs, including the Fight for $15/hour wages by fast food and Walmart workers. It won't be easy to fight and scratch our way back to the power working people exerted in the 1930s, but we have no choice. It's the only way to fight back. Elections are important, and I'm fortunate to live in Oregon where most of our elected officials are supportive of these goals, but it's clearly not enough to make the needed changes.

[mountain grammy]

3. You're right, time for a revitalized union movement..

the only hope for the working class.

[elleng]

5. Yes.

[Flatulo]

6. No leverage. Just about every job can be outsourced to

a lower labor cost country. Even if the Chinese develop a strong middle class, there's still Africa and Latin America to exploit.

About the only jobs that can't be outsourced are some trades, like plumber or carpenter, and some medical professionals.

The American middle class was an interesting hiccup in a two-thousand year history of human suffering.

[stillwaiting]

9. Just how do the Germans and Scandinavians keep a hold on their standard of living?

And to be clear: U.S. Americans have not enjoyed the strongest standard of living in the world in quite some time. MANY countries enjoy a more robust standard of living and get to live in a country that is much less stressful as a result.

So, "The American middle class was an interesting hiccup in a two-thousand year history of human suffering" does not ring true to me. There are many places in the world that have enjoyed robust middle classes, and they continue to enjoy stronger middle classes than Americans do today.

[Flatulo]

13. They achieve an equitable distribution of wealth becsusr

their parliament still represent the interests of the people, not their corporate masters. Our congress has been so utterly corrupted that we've crossed a tipping point where it's now impossible to get laws passed that benefit the majority. Witness the latest budget bill.

Also, the people in Europe are willing to pay more money for quality products that are locally designed and manufactured, while Ameicsns fill their homes with Chinese garbage that fails after just a few years.

With the exception of a few mavericks, who have no chance of getting elected, our leaders have put out the For Sale sign. Our whole system
is rotten to the core and is now impossible to dislodge.

I knew we'd reached the end of our run when we couldn't get an assault weapon ban enacted after Newtown, despite 90% approval from the people.

[Dustlawyer]

31. It will take unions joining with people fighting for Women's rights, immigration reform, public

education, environment/climate change, LGBTV rights, Wall Street reform (bust up big banks), GMO's, voting rights, sensible gun laws, NSA spying, and all other issues where people are fighting against well funded corporate and 1% interests!
They are currently fighting the symptoms of the corruption of our political process, campaign donations and Super Packs pushed by a corrupt media propaganda machine! If we could somehow join forces and create mass, the politicians would come over so they could perpetuate their positions. They could be made to make the changes necessary to get us back on track. Our work would be extremely difficult and dangerous as they will not give up control without a fight.
People here at DU could get these groups together as I am sure we have members fighting most of these issues that are close to their hearts. Once we demonstrate the power of numbers, the politicians would do OUR bidding. We could have them bust up the big banks and the media oligopolies. Without the propaganda machine politics would get less partisan and we could wake up some of the brainwashed. Close and lock the revolving door, beef up the regulatory agencies, and re institute a fair, progressive tax structure.
All of this could be done if the people that follow what is really going on got together and used their various skills and connections. DU could be the catalyst! Sadly, we would still have to convince many here that the Democratic Party has been corrupted by the big money and no longer care much for the base. It can be done and Bernie Sanders would be a great person to rally around simply because he understands all of this and is willing to take the heat if enough of us will support him. Who knows, Elizebeth Warren may yet be recruited to run with him if we encourage it with our numbers. Please do your part as citizens and fight to save our country! Many other countries have a better standard of living simply because they have not allowed the level of corporate corruption that we have!!!

[TygrBright]

4. An accurate, comprehensive, and illuminating-- if depressing-- read. n/t

[Downwinder]

7. It is only workers wages that have slumped.

[og1]

8. The capitalist push system

This is how capitalism works it's a push system that push wages down and profits up! In order to increase profits for corporation and to increase corporate profits it must produce at lowest price and in order to feed its horrendous appetite for corporate it loves the free market which allows it access to cheap human labor and cheap natural resources. And if we are consumers of these products we are just the grease for the push system!

[TBF]

16. Sort of like a pyramid scheme ... nt

[Jackpine Radical]

30. The whole of economics is a pyramid scheme

because the whole system is postulated upon a model of continuous growth in a finite world.

[AZ Progressive]

10. Excellent Article, pretty much a history of how we got to this point, though doesn't talk about....

...the conspiracy that started in the early 70's with the Powell Memo and the formation of the think tanks (Heritage and Cato for instance) and thus the political element.

[Enthusiast]

11. Precisely.

[Enthusiast]

12. K&R! This post deserves hundreds of recommendations!

Get with it, people!

Thank you, Omaha Steve.

[hay rick]

14. Excellent overview.

Thanks Omaha Steve.

[rhett o rick]

15. k & r. Thanks for posting. nm

[marmar]

17. K/R

[moondust]

18. Related.

The most important chart of 2014, explained in under a minute

[liberal_at_heart]

19. K&R

[roaminronin]

20. Could it be that those countries

Are largely racially homogenous, so the government can't play "We can't do anything cause some other group is getting too much" Blame them, and we'll let you be our head foreman!

[cantbeserious]

21. Thank You For Sharing

eom

[Teamster Jeff]

22. Kick

[Major Nikon]

23. Robert Reich has a good documentary on the subject that's on Netflix

http://inequalityforall.com/

[RiverLover]

26. Thanks Major Nixon. I'll definitely watch it. nt

[SoCalDem]

24. Baby boomers hit their working years, and of course there were just so many of us

It was unreasonable to expect wages to rise..

Our parents' era was marked by war..the era before that depression and war before that.. The workforce had been hollowed out, and most jobs were menial labor.


Boomers ushered in a modernity that expected some things to remain as they always were, and thought that things would always get "better".. We were very wrong (in most cases)..

Just as we stepped up to the plate, pensions went away, wages were frozen/depressed, but of course costs kept on rising.. We were caught up in a vortex that many never escaped from..

[RiverLover]

25. The State of Work in an Age of Anxiety

kick

Great article. The co I work for isn't GE, but suffice to say GE has had a huge impact on its corporate philosophies, like massive layoffs & reduced pay to "maximize efficiencies". Many high ranking GE execs moved to my co shortly before this all happened...

The loss of workers’ leverage was compounded by a radical shift in corporations’ view of their mission. In August 1981, at New York’s Pierre Hotel, Jack Welch, General Electric’s new CEO, delivered a kind of inaugural address, which he titled “Growing Fast in a Slow-Growth Economy.” GE, Welch proclaimed, would henceforth shed all its divisions that weren’t No. 1 or No. 2 in their markets. If that meant shedding workers, so be it. All that mattered was pushing the company to pre-eminence, and the [b]measure of a company’s pre-eminence was its stock price.

Between late 1980 and 1985, Welch reduced the number of GE employees from 411,000 to 299,000. He cut basic research. The company’s stock price soared. So much for balancing the interests of employees, stockholders, consumers, and the public. The new model company was answerable solely to its stockholders.

In the decade preceding Welch’s speech, a number of conservative economists, chiefly from the University of Chicago, had argued that the midcentury U.S. corporation had to contend with a mishmash of competing demands. Boosting the company’s share price, they contended, gave corporate executives a clear purpose—even clearer if those executives were incentivized by receiving their payments in stock. After Welch’s speech, the goal of America’s corporate executives became the elevation of the company’s—and their own—stock. If revenues weren’t rising, and even if they were, that goal could be accomplished by reducing wages, curtailing pensions, making employees pay more for their health coverage, cutting research, eliminating worker training, and offshoring production.
(After CEO Louis Gerstner announced in 1999 that IBM, long considered a model employer, would no longer pay its workers defined benefits and would switch to 401(k)s, corporate America largely abandoned paying for its employees’ secure retirements.)

By the end of the century, corporations acknowledged that they had downgraded workers in their calculus of concerns. In the 1980s, a Conference Board survey of corporate executives found that 56 percent agreed that “employees who are loyal to the company and further its business goals deserve an assurance of continued employment.” When the Conference Board asked the same question in the 1990s, 6 percent of executives agreed. “Loyalty to a company,” Welch once said, “it’s nonsense.”

"measure of a company’s pre-eminence was its stock price"

This ^^^ is the bottom line problem with capitalism today imo.

[polynomial]

27. It is in the numbers

that someday a new balance will happen, hopefully in my life time. Many argue that a new economy or good government responsibility will not happen plus you can’t do anything about it because it is rigged.

What is an astonishing reality from my view is those with money cannot sustain the money they have or enrich to further family fortunes. Many will even lose more than they thought.

America has already witnessed a huge change in the economic wealth via the Bush wars coupled with the Bush banking scams swindling trillions in the housing debacle with underwater real-estate mortgages will eventually hit the stock market in that whisper culture derivatives market that is expected to collapse into the trillions.

That whole era produced a gap in American money and the international market business. The American middle class is shifting.

The income and spending is changing from a boomer working class to a boomer pension economy, so is the world.

That is a whole lot less and expected by the one percent, but not by many others. That will drive a huge hole in the income taxable space. You can be sure billionaires will not make up the difference and try to squeeze the pension market. That’s the vote that will change history and what the one percent are frightened of.

The boomers retiring at a rate of ten thousand a month and increasing are an impact right now and many or more than half do not have 401 savings to continue spending at the previous rate. Don’t forget aliens are in this retirement mix that are not on the books. Millions that is.

The money people know this and are bracing for it. Now, gas prices really dropping to encourage stability as the spending slides.

However like all business decisions, with greed, this time around there will be no bail outs, the tax base can not take it, with incredible economic sputtering not really covered by the mainstream media to avoid chaos and panic, mainly the Wall Streeter's are going to sell off.

[dawg]

28. Someone wrote an article about my love life?

Seriously, there are two reasons Americans have born the brunt of this:

1. We are "ground zero" for multinational corporations. It's only natural they would seize control here first.

2. The racism thing. Keeping the poor folks divided is a sure fire way to prevent them from mounting any serious resistance.

Canadians and Europeans need to realize that they are next. The process is well underway.

[CrispyQ]

29. Great article. Worth the time to read.

The middle has fallen out of the American economy—precipitously since 2008, but it’s been falling out slowly and cumulatively for the past 40 years. Far from a statistical oddity, 1974 marked an epochal turn. The age of economic security ended. The age of anxiety began.

And we've become a less civil & polite society as a result. I'm certain economic anxiety is partly to blame for the hostility that is becoming more commonplace.