PEOPLE ON THE EDGE by Al Usack
I was reading our local newspaper a couple of months ago and ran into an editorial called “Too Many Live on Financial Cliff” which talked about a speech at by Florida Chamber of Commerce CEO Mark Wilson at a recent meeting which got me to thinking about the plight of those working people who make enough money so they do not or cannot receive financial help from our government institutions but who are one misstep away from dire poverty. For example, I have a niece who after 4 years of college needs financial help to just pay for daily necessities even though she has been working full time for several years. And, if she gets a small raise, the financial aid is automatically cut off. Somehow, this just doesn’t make sense. Or does it? What has happened to the middle class? And who is doing anything about the huge decline in the number of people who are now classified as “Middle Class”.
United Way of Florida reports the residents living paycheck to paycheck that they designate as ALICEs (Asset Limited, Income Constrained Employed) make up 31% of the 134,900 households in Manatee County. If you add theclick here for more
12 % who live under the poverty line, 43 % of households in the County suffer from financial stress. And the percentages are considerably higher in other parts of our State. The annual income threshold is $20,000 for a single adult and $56,000 for a family of four. Low wage jobs monopolize the Florida economy – two thirds of the jobs pay less than $20 per hour and only 5% pay more than $40 per hour.
Of course, definitions change over time, but any way it is measured, the percentage of people who are considered middle class (those who have a decent standard of living and can withstand at least some unexpected financial liabilities) has declined greatly over the past 35 years or so and along with this phenomenon, income inequality has skyrocketed. And, there are varying explanations of how and why this happened and what should be done about it. In this paper I will look at some of the evidence and talk about solutions to the problem.
So why is the middle class population declining so much and what can be done about it. In previous Issues of the Month and Quarter, I have addressed some issues that have had a great impact on the decline such as in Issues of the Quarter on income inequality and on the minimum wage in 2015. One thing is clear, the middle class has been declining for many years now and income inequality has been getting greater and greater.
So, why is this happening? After World War II, the economy was booming and many programs were implemented which helped to expand the middle class and to minimize income inequality. This included a steep rise in tax brackets as income rose, military veterans benefits especially the GI bill providing advanced education at little cost, farm programs to modernize the agricultural sector, ease of purchasing middle class housing, etc. With the catching up on infrastructure, the conversion from war-time goods to civilian goods in industry, and opportunities to export goods to war-torn areas around the world opportunities abounded for employers and employees. Added to this, unions continued to be strong and workers were able to negotiate with industrial leaders to improve their benefits.
So how did all of this fall apart beginning probably around the late 1970’s and early 1980’s. Even with the high tax rates for the rich, wealth was accumulated by many through technical changes, a dissatisfaction developed among those whose income was only slowly rising, international competition rose as the developed countries got back on their feet and the cheap labor available in many countries motivated businesses (especially manufacturers) to invest outside of the country. And, a masterful propaganda effort was unfolded to make people believe that big government is bad and that economic growth would be much faster if the rich could only be unfettered by lowering taxes, reducing the power of unions, and by moderating financial regulations. The expansion of their productive efforts would then result in greater growth and the increased wealth would lead to a better standard of living for everyone.
Despite some ebbs and flows, the changes in the last 40 years have led to a large decrease in the percentage of people in the Middle Class and much greater income inequality. Labor unions have all but disappeared and those that are left have much less power than they had in the past. The effects of technological change where much less labor is required to produce goods is having a greater and greater impact on the manufacturing sector. The cost of labor continues to be affected by cheaper labor available from less developed countries. And, no one seems to have addressed the effects of these changes in putting together programs that will solve the problem for working folks.
Throughout America’s history there has been a lot of tension between the workers and the accumulation of wealth by the owners of the capital and the place of government in this relationship. What are the rights of workers and the capitalists and what does the government do to protect these rights. At various stages in our history, it appears that one or the other gained the favor of the government but underlying it all was an optimism that we would somehow muddle through and that things would improve over time. Of late, however, the disagreements in approach to solutions have been so divisive between the two major political parties that this optimism is in danger of disappearing. Therefore, I feel that we must find ways to agree on our goals and reestablish some sort of compromises if we are going to be successful in reaching these goals.
So what are some of the goals that we should be striving to attain in order to have more balance in the income of our population?
I would list the main goals as:
- A government commitment to guarantee a decent standard of living for all
- Guaranteed health care for all
- Government support for those who are unable to compete in the market place
- A reworking of our institutions to guarantee fairness between the owners of capital and the workers
- A fair taxation system that supports the above goals
- Some enlightened thinking about the place of work in our daily lives. Perhaps the work week should be shortened for example. Or, is mental labor (such as bookkeeping) really worth more than physical labor (such as garbage collection). Who and what determines the difference in pay. And why does anyone really need a salary of tens or even hundreds 0fmillions of dollars annually such as many CEOs get? I am sure one could find numerous other differences that might be considered.
So what can we do about the mess we are in. We can certainly look at our UU Principles and the many resolutions our religion has addressed in the past and try to live by these guidelines. And, we can become active in assuring that equality is pursued and that those who have less than we have are treated fairly. And, for those of us who are in a position to do so, we can help to motivate others to help solve the problems I have addressed or others that may be present in the murky areas of inequality and justice for all.