This is a summary of some notes I took from Robert Reich’s book “Saving Capitalism. For the Many, Not the Few” (2015), specifically chapter 13 “The Declining Bargaining Power of the Middle”.
Before the 1970’s there was a circle of fortune where the growth of the economy seemed to spurt the growth of the middle class, which meant more purchasing power, which caused the economy to grow, which then caused the middle class to grow.
When the 1970’s arrived, productivity and the economy were good, but wages leveled out. By the 1980’s median household income remained stagnant, job security decreased, along with the percent of the working age. The middle class became poorer.
Where we are at now? Average income of the lowest 90 percent dropped in the years following the Recession, median wages of young college graduates plateaued, and 35 percent of new graduates worked at jobs where they weren’t using their college degrees.
Reich considers why the demise happened so suddenly and why other countries didn’t have the same experience. The explanation is that the rules in how the market is organized were changed by the government, and those with the most influence over the government. This meant greater profits for large corporations and Wall Street while the middle class lost its power base.
I want to explore some of the changes that took place in the next post.