Are You Better Off Than You Were 36 Years Ago?

In less than 16 months, when Americans go to the polls to select a new president, one of the central issues will be how to address the stagnant wages of the middle class, people who neither live in abject poverty nor spend their weekends on yachts. This graph from a recent New York Times story shows how dramatically wages are trailing gains in worker productivity:

Thanks to greater worker efficiency and vast improvements in technology, the American economy has seen a steady rise in productivity since the end of World War II. But since the 1970s, worker compensation has barely budged. The yawning gap between pay and productivity is what Marx called the increasing “surplus value” of labor: the profit accruing to companies when a worker performs the tasks she was hired to do. Capitalism only functions because a worker’s hourly pay is lower than the value of the work she performs in an hour; a busboy at a high-end restaurant earns a pittance while serving customers who shell out hundreds of dollars for their meals. But never in the sweep of American capitalism has the chasm between wages and productivity been this wide. The bosses (or “owners of the means of production,” in Marx’s terms), gobble up larger and larger profits while their workers hang on for dear life.

The evidence is stark: Since 1979, middle-income workers have seen their wages rise 6 percent. That’s an average raise of 0.167 percent a year. The lowest-earning workers saw their incomes fall 5 percent over the same period. Meanwhile, high earners saw their wages rise 41 percent. And then there are the soaring profits of the companies they all work for.  

“Middle-class rhetoric makes for great politics,” Michael Kinsley writes in Vanity Fair, “but terrible policy.” In his critique of campaign speeches made recently by Hillary Clinton, the likely Democratic nominee, and Ted Cruz, a GOP contender, Kinsley argues that it makes little sense to focus on the plight of the middle class. In particular, he scoffs at the notion that soaking the rich to fuel a middle-class recovery is a plausible strategy:

Listening to the candidates’ rhetoric, almost every voter in the country could be forgiven for thinking that he or she would benefit from whatever re-distribution of wealth and income the candidate is promising. This is the ambiguity, if not dishonesty, at the heart of Cuomo-ism: Is a politician talking about taking from someone else and giving to me, or taking from me and giving to someone else? And if the answer is: “Neither — I’m talking about economic growth for everyone,” then what does that have to do with the specific problems of the middle class?

We can’t rely on transfer economics to solve the problem, Kinsley writes. “There aren’t enough rich people to provide windfalls of extra cash…If you took a million from each of the rich households [with assets of at least $100 million] and divvied it up among the 24 million poor households, each of them would get only about $208.” Kinsley is right in his observation that a very wide swath of the American public considers itself “middle class,” but his Robin Hood reasoning is rather passe. None of the candidates are talking about old-fashioned redistribution, where the rich are taxed at higher and higher rates to enable a transfer of wealth directly to the lower orders.

Instead, Clinton is proposing public investments intended to build a more robust and supportive commons in which all workers would have greater opportunities. She wants to invest in improvements to the nation’s crumbling infrastructure, faster broadband access, expanded scientific and medical research and investment in alternative energy sources. She proposes easing the transition to work for women with children by guaranteeing child care and expanding public pre-kindergarten programs. She urges companies to adopt profit-sharing programs to give workers a bigger stake in the fruits of their labor. All of these proposals may require higher taxes on the wealthy, but they are not simple hand-offs from billionaires to paupers.

Kinsley asks another provocative question:

What justification is there for concerning yourself with the middle and ignoring the people at the bottom? Especially when people in the middle already receive most of the government dollars to begin with. (Think of Social Security and Medicare.)

The measure of a civilization is how it treats its most vulnerable, the old adage goes, not how it treats its median earners. For John Rawls, the great political philosopher of the 20th century, a just society is one that maximizes the well-being of its least-well-off citizens. So Kinsley is right to ask this question. But the fact is that “poverty” is a proven loser as a campaign issue. Democrats in recent years have been loath to be seen as the party of the poor, and Barack Obama avoided mentions of poverty in his re-election campaign in 2012.

Rhetoric is one thing, though, policy another. Most of the programs Clinton discussed this week in her major economic policy speech are designed to benefit everybody, to lift all boats. But as Eduardo Porter writes in The New York Times, her package of proposals “isn’t enough” to address the magnitude of the problem and the deep causes that contribute to it. To truly attack the crisis of the middle class, Porter suggests, the workforce needs training to address its profound skill deficit, corporate culture needs an overhaul, and voters need to realize “the vital role of government in their lives.” None of these transformations are easily spurred by a presidential candidate. But the conversation is at least pointing in the right direction.

Image credit: kisa kuyruk / Shutterstock.com

Follow @stevenmazie on Twitter