A dozen ways to eliminate the middle class

In cleaning out my files, a year-end ritual, I came across some notes that I wrote in early 2002 on a dozen ways that America’s middle class could be diminished by the activities of government and private industry.  After jotting down the notes I must have put them away because it did not seem possible that these things could all come to pass.   

How silly of me to have doubted my instincts. This week’s publication of the Rockefeller Foundation’s “Standing on Shaky Ground, Americans’ Experiences with Economic Insecurity,†(on-line at rockefellerfoundation.org) documents that over the past decade, more than 90 percent of American families experienced severe economic shocks and that the damage was particularly bad in households earning between $60,000 and $100,000 per year.  

Here’s my list:  

1. Suppress unions.  From the 1930s on, unions have been the principal route out of poverty for tens of millions of Americans. Since 1983, membership has been declining and is now around 12 to 13 percent of the workforce.

2. Substantially reduce dividends paid by public companies.   Many stockholders used to rely on dividends to build a nest egg that would provide a downpayment on a home or a fund for sending kids to college. When the average dividend dropped below the rate of inflation, accumulation by dividends became impossible.   

3. Lower effective bank interest rates on bonds, deposits and CDs to laughable levels.  

4. Fire middle managers and at the same time raise compensation for upper-level managers.   Decades ago, the top manager made 40 times the salary of the factory floor worker; now the multiple is 500, and the growth has been provided mostly by firing the managers in between the top and bottom levels.  

5.  Shift the burden of health-care costs from businesses to employees. It isn’t medical costs alone that cause people to fall out of the middle class; it is the cost of buying health care.  

6. Underfund pension plans and don’t punish companies that fail to do their part. When an employer does not adequately fund the employees’ pension plan, employees in the middle class may fall out of it when they retire because the money they had counted on has vanished.   Or the government, meaning our tax monies, will have to pay part of the shortfall.  

7. Raise college tuition to the stratosphere. Even public college costs today are so high that almost no middle-class families can pay for college out of current income and are forced to take out second mortgages so that their children can obtain a sheepskin, which, they believe, is the only sure route for them to become middle class themselves.  

8. Make greed more attractive.  When the upper ranks of earners are not taught to be satisfied with, say, a million dollars a year, but insist on making 10, rather than being content to share the extra 9 million with fellow employees or in other ways to pursue civic and charitable goals, everyone else loses.  

9. Make debt attractive.  Making it easier for the middle class to spend money through credit and debit cards and extending credit to people who are less credit-worthy (and thus driving up credit-card rates) is one of the fastest ways to impoverish the middle class. In the past decade, many people used easy-to-obtain second mortgages to ramp up spending, only to find, when the values of their houses declined, that their debt had soared to the point that they could not handle it.  

10. Allow the economy to become over-dependent on consumer spending by encouraging citizens to buy disposable consumer items. The middle class used to be known for its affinity for real property and big-ticket items.  But when you don’t buy the refrigerator and instead buy suits, pairs of shoes and electronic toys (all made in China), not only don’t you have the refrigerator, but the U.S.-based refrigerator-manufacturing plant shuts down for lack of customers, throwing a couple of more thousand people in Michigan out of the middle class, too.  

11.  Embrace a tax policy inconsistent with the growth of the middle class, for instance, not permitting tax deductions for such usual middle-class-boosting expenses as life insurance premiums, school tuition payments and commuting expenses.  

12. Facilitate and protect a bought-and-paid-for Congress beholden to the wealthy for their campaign expenses.   

 

Salisbury resident Tom Shachtman has written more than two dozen books and many television documentaries.

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