The formula was simple, it was genius, and it built the “American Dream.”
Employers and employees in America had an economic agreement. As employee productivity went up and added value to the company then wages would also increase in proportion. This worked well, this worked astoundingly well, and the middle class in America prospered as did the nation itself.
As Henry Blodget writes:
“Back in the 1940s, 1950s, and 1960s, income gains were more evenly distributed. The top earners did well, but so did everyone else. There was a universal sense — an accurate one — that we were all in this together. And the idea that rich companies should share more of the value they create with the people who created it — their employees — was well-established.”
Our nation became prosperous and capable of great things. We were an example to the world. The phrase “The American Dream” was known in every corner of the world. We were an economic powerhouse. This is the nation conservatives recall wistfully when they talk about American greatness. Nothing could stop the American economic juggernaut!
Nothing except for greed.
The Killing Of The American Dream.
Corporations, led by conservative economists, discovered that they could chip away at wages and not suffer consequences. They could pocket the value of that productivity, add it straight to the bottom line, and American workers would not only NOT reduce productivity but they would keep INCREASING it. American workers are amazing!
In spite of being screwed American workers kept increasing their productivity, their value to corporations (which was the standard for compensation). Their contribution to the bottom line grew and grew from the 70’s until now even as their wages failed to increase in real dollars. While previous generations would get a part of the money their increased productivity earned a company in their wages this generation got nothing. Wages stagnated. Not just at the bottom but also in the middle. Especially in the middle. And America suffered.
The arbitrary cutting of wages in real dollars by corporations helped lead to the decimation of the American middle class which once made this nation great. The real economic engine of a nation is the middle class. When the middle class does well, as in post WWII America, the nation does well. Period.
Of this system venture capitalist Nick Hanauer said, “Rich businesspeople like me don’t create jobs. Rather, they are a consequence of an ecosystemic feedback loop animated by middle-class consumers.” When the middle class thrives, he said, “businesses grow and hire, and owners profit.”
If, as had happened in the past, wages kept pace with production we would currently have a minimum wage of over $21. We would not hear the cry of “Make America Great Again,” America would still be great. Families, the backbone of society, would be healthier and so would the overall economy. More money to spend means a booming economy and all that goes with that. The diverting of these huge sums of money from workers to the rich and to corporations has done nothing good for America.
Corporations Inherit (Steal) The American Dream.
Because of this arbitrary and short-sighted grasping for money American corporations now have the “highest profit margins as a percent of our economy in history” but “pay the lowest wages in history as a percent of the economy.” And the shocking fact is that “all of the income gains in this country over the past three decades have gone to the top 10% of American earners — the ones who own and control our largest businesses. These top earners — especially the top 0.1% of earners — now take home more of the country’s national income than at any time in the past century, including the “Gilded Age” of the 1920s.”
All of the income gains. Not some, not most, not a fair percentage, but ALL of the income gains have gone to those who were already wealthy. The middle-class and the poor got nothing. And this does great harm to American workers, to their families, to their communities, and to our nation as a whole. America only prospers if all Americans prosper from their labor.
Since the 70’s the American middle class has virtually disappeared. As wages were effectively cut so too were benefits. Corporations learned that they could now pit people who were becoming economically less stable against one another. Or they were able to hold the prospect of sending jobs to foreign countries over workers heads as they demanded more and more cuts to wages and benefits. They didn’t do this because they were not profitable but because they wanted more and more profit. They were not driven by any concern for our nation, its economic health, or the best interest of workers and their families – they wanted money and damn the consequences to American families. The more money they got from robbing workers for increased production, the more they plowed into laws that made what they were doing easier and easier rigging the game even further.
At one time the labor and productivity of one person could earn enough to support a family, by the 1980’s it took double that productivity to barely get by. Corporations were getting increased productivity from workers and were not paying for it as they had when America was an economic powerhouse. They learned how to manipulate people and used legislation they lobbied for with their new wealth to get and keep as much as possible even if it meant harming America. They, the politicians they bought, and the economists they financed told us over and over that things would get better and better as they prospered. Eventually, we were promised, it would all trickle-down. But more money in the pockets of corporations and the rich did not, in spite of the boastful economic theories of conservatives, make American workers prosperous. It greatly harmed them. It killed the American Dream.
Families Deserve The American Dream
American families suffered, and continue to suffer, because the system that they had been equal partners in was rigged against them. It became increasingly common and necessary for both parents to work to maintain a reasonable standard of living. The same people who call themselves champions of “Family Values” are mostly the same people who become indignant when it is suggested that American workers both need and deserve a large increase in the minimum wage. While they point to everything from music, to TV, to clothing styles as contributing to the breakdown of the American family they will not blink and will keep insisting that this massive economic shift had nothing to do with this. But parents who need to work multiple jobs and dedicate less time and money to families, food insecurity, and stress are the real killers of American families.
The great America they remember fondly was built by American workers. And these workers need us to change the rigged system.
As Blodget succinctly puts it: “If we want to get our economy humming again, we need to remember that the economy is an ecosystem and that healthy ecosystems are balanced. We need to encourage our companies to maximize value, not profit. And we need to encourage great companies and managers to serve three important constituencies — customers, owners, and employees — instead of just one.”
This, and only this, will restore economic prosperity and the American Dream.