Gov Must Respond to Middle-Class

Some "reform conservatives" get it.

Some “reform conservatives” get it.

Liberals have long worried over the effects of income inequality.

Many conservatives are now starting to worry too. After all:

  • Low income means people lack money to buy, so:
  • Businesses lose sales and profits, so:
  • Increased business instability, and:
  • Worry over political instability (Peasants with pitchforks)

Solutions include:

  • CEOs share productivity gains with the workers who help create profits
  • A higher minimum wage
  • Don’t incentivize moving US jobs overseas
  • Enhance bargaining power for workers
  • Raise the Child Tax Credit
  • Raise the Earned Income Tax Credit
  • Don’t tax the rich at a lower rate than everyone else (e.g., capital gains)
  • Don’t allow tax shelters for the rich

Articles from conservatives and conservative sources, like the Wall Street Journal (WSJ):

 WSJ: Low income is squeezing business

The housing market illustrates how weakness among middle-class consumers holds back the U.S. economy. Homes are generally the biggest purchase Americans make. Housing dollars ripple through the economy by triggering spending on appliances, furniture and landscaping…. I worry that you can’t run our housing market, which depends on volume, on affluent buyers alone…

WSJ: Stagnant incomes have restrained the American consumer for years, creating a vicious circle that has left businesses waiting for stronger spending before they rev up hiring and investment.

WSJ: As incomes have stagnated over the past half decade… families (are forced) to cut back spending on everything from clothing to restaurants.

WSJ: The conservative IMF (International Monetary Fund) has warned:

A severely skewed income distribution harms the pace and sustainability of growth over the longer term. It leads to … a wasteland of discarded potential. Fed’s Yellen says extreme inequality could be un-American

The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority.

Standards and Poor (S&P):

If you look systematically at the international evidence on inequality, redistribution, and growth — which is what researchers at the I.M.F. did — you find that lower levels of inequality are associated with faster, not slower, growth.

Income redistribution is “robustly associated with higher and more durable growth.”

“The pitchforks are coming . . . for us Plutocrats”

Multi-millionaire Nick Hanauer warnsThe pitchforks are coming… for us Plutocrats

Goldman Sachs CEO and Chair, Lloyd Blankfein, worries that income inequality is destabilizing the economy and “responsible for the divisions in the country.”

Bill Gross, founder of the investment firm PIMCO, continues the theme: Eventually (income inequality) will be destabilizing.

Former Fed Chair, Alan Greenspancalls income inequality the most dangerous trend in America.

Billionaires to the Barricades. Some of the world’s wealthiest people are now worried about the gap between them and the working class.

Good pay + good profits

Companies that provide employees a decent living, which includes not just pay but also a sense of purpose and empowerment at work, can be every bit as profitable as companies that strive to keep their labor costs low by paying the minimum wage with no benefits.

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About BroadBlogs

I have a Ph.D. from UCLA in sociology (emphasis: gender, social psych). I currently teach sociology and women's studies at Foothill College in Los Altos Hills, CA. I have also lectured at San Jose State. And I have blogged for Feminispire, Ms. Magazine, The Good Men Project and Daily Kos. Also been picked up by The Alternet.

Posted on September 21, 2017, in politics/class inequality and tagged , , , . Bookmark the permalink. 6 Comments.

  1. With the Dow hitting an all time high, I’m not sure how valid the idea that business is squeezed is.

    Anyway, I took a bit of a glance at the statistics, and it looks to me like the middle class isn’t really shrinking, rather the lower class is expanding. In other words, the demographics of people who used to be middle class are probably still middle class. But a whole lot of Hispanic immigrants have bloated out the lower class. Therefore, the median income in a statistical sense goes down, but in terms of reality on the ground, it’s more the aberration of lots of poor people.

    You can’t just accept tens of millions of immigrants and expect the demographics to remain unchanged. People who come illegally tend to be the least educated, least successful, least employable on average. That’s why they did something illegal. Therefore they are going to drag down the numbers.

    • Well the middle class can’t help but get squeezed when you have automation taking their jobs and offshoring taking their jobs and then they end up working at McDonald’s for much lower wages. Even outsourcing hurts us financially because things like healthcare often aren’t covered, and often no sick days, etc.

      If the middle class isn’t being harmed by all this how do you explain the popularity of Trumps message: help ordinary Americans, not the elite! (a message I happen to agree with.)

  2. Wall Street doesn’t reward companies that provide a “sense of purpose and empowerment at work.” More and more the focus is on short- term profitability. Public companies in particular respond with cost-cutting, a much quicker route to moving the profit numbers than developing quality products, building strong customer relationships or creating a dedicated, empowered work force.

    • Yes, unfortunately our companies are set up to think in terms of the short term instead of the long term, which will end up hurting businesses in the long term. The only way around that is for government to do something to encourage a long-term view.

  3. Very true. After the 2008 crisis, the inequality gap has widened, and in fact it is widening. The Middle class is feeling the pinch. This phenomenon is common in the world over. Governments must act soon to reverse the process to avoid hitting another crisis.

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