The Murder of the Middle Class

This is an excellent, fact-filled, analysis of the gradual murder of the middle classl. It also covers the surge in the fortunes of rich individuals and corporations.



"Sorry, we're cutting hours this week." These words are heard often in the retail industry, most often by those who already get less hours than are needed to be able to pay rent and eat. When you're only scheduled for 18 hours, losing 5 hours can, and often does, mean there won't be any groceries that week. Is it any wonder that the middle class is shrinking, and that more and more people are slipping into poverty? The murder of the middle class is continuing, and it has to stop.

Murder is a strong word, but in this case it's also an accurate one. The middle class isn't dying by accident, it's dying because of the greed of American corporations. It's being murdered by the greed that caused the collapse of the housing market and threw the country into a recession, the greed that outsources well-paying American jobs to countries where companies can pay workers a fraction of what a US worker would earn, the greed that replaces full-time jobs with part-time jobs, and the greed that pays a CEO hundreds of times what the lowest paid worker in the company earns.

Even worse, a corrupt Congress has become an accessory to that murder; refusing to pass jobs bills and pandering to the corporations that have stolen the American Dream. Bills that would encourage job creation are blocked, bills that would increase penalties for violations of H-1B visa rules die, and bills that would eliminate tax breaks for companies that offshore jobs and eliminate American workers are quietly killed; while bills to bail out the banks that destroyed the economy pass with little trouble.

In 2010, according to the Census Bureau, 6.7% of Americans were living on incomes equaling half of poverty level, a jump of 1.5% from the beginning of the housing collapse, and an increase of 3.4% over the low in 1976. When you include everyone living at poverty level or below, the picture looks even worse, with 33.3% of all Americans living in poverty in 2010, increasing from 26.1% only 3 years earlier. How did we go from a quarter of Americans living in poverty to a third of Americans living in poverty? Where did all those extra poor people come from? They came from the middle class, and they got there because of corporate greed and partisan politics.

Too Big to Fail/Too Big to Jail -- The collapse of the housing market destroyed a huge percentage of the wealth of the middle class. Practically overnight, a family's net worth could drop by 50% or more, because most of a family's net worth was held in the form of their home. For those in underwater mortgages, the situation was even worse. The job losses and foreclosures that followed the crash left many families homeless and destitute, forced to move in with family members or live on the street.

On the other hand, those who caused the collapse were provided with government money to prevent the failure of their businesses. In addition, the government has refused to prosecute anyone for the violations of SEC rules, the predatory lending practices, or the illegal foreclosures that played such a large part in the recession.

Off-shoring, H-1B visas, and replacing full-time workers -- Off-shoring has moved thousands of jobs to other countries, where employees earn a fraction of what an American worker would be paid. In addition to these savings, companies are given a tax deduction to cover a portion of the cost of moving the jobs and equipment overseas.

The H-1B visa program provides even more profits for companies, allowing them to bring in foreign workers to fill high-tech positions in the US and displace even more US employees. These H-1B workers are paid less than American workers with the same skills, and are unable to change jobs because their visa is tied to the company they work for, turning them into no more than indentured servants who must do what they're told or risk being forced to return home when the company cancels their sponsorship. Abuses are rampant in the program, with companies claiming they can't find qualified Americans to fill the positions, while those Americans who are qualified desperately look for work in their field.

Lower unemployment rates and increasing job creation numbers make it appear that the economy is recovering, but that "recovery" is driven by part-time, low-wage jobs that have replaced the full-time jobs lost during the recession. In addition, those who are no longer actively looking for work aren't counted as unemployed, nor are the underemployed (those who want to work full-time, but have been forced to take part-time jobs to survive. This group includes approximately 8 million additional people, according to Jared Bernstein in this article.) The retail sector is one of the few areas that is adding jobs, and many of those companies have a policy of only hiring part-time employees to avoid the additional expense of providing the benefits required for full-time workers.

CEO Salaries -- CEO salaries have climbed, with an average increase of 13.9% in 2011 for CEOs of companies in the S&P 500; while the median income, relative to inflation, was lower in 2012 than it was in 1995. With CEO salaries averaging 380 times that of the average worker, and corporate profits higher (as a percentage of GDP) than at any time since records have been kept; company claims that they can't afford to add jobs or increase wages seem less than truthful.

As middle class Americans struggle or slide into poverty, Congress spends its time bickering over partisan issues and blocking bills that could lead to real economic recovery. The Stop Outsourcing and Create American Jobs Act of 2010 (H.R. 5622) was allowed to die in committee, and when reintroduced in 2011 as H.R. 3338, it met the same fate. The American Jobs Act of 2011 (S. 1549) has had no action taken since the second reading in September of 2011, and the Bring Jobs Home Act (S.2884) was referred to committee in May of 2012, with no further action taken.

Instead of encouraging job creation and retention; Congressional focus is on cutting government expenses by eliminating federal jobs and cutting Social Security, Medicare, and Food Stamps. Although this will reduce government spending in the short term, it will also reduce incomes even further and increase the unemployment rate again. Reduced income leads to less demand for products and services; reduced demand causes lower profits, even more job losses, lower tax revenues, and increased deficits; triggering another round of cuts and throwing the economy into a never-ending spiral of increasing poverty and unemployment.

It's time for Congress to stop playing politics with the lives of the people they're supposed to be serving. It's time for them to do something that will create jobs and increase incomes before it's too late to save the middle class. If they don't, and soon, they will destroy this country.

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