The decline of America’s middle class can be attributed to three distinct (though related) policy failures, writes EricLevitz
The American Dream didn’t die of natural causes. Photo: Spencer Platt/Getty Images The United States has never been richer. In 2018, American households boasted a collective net worth of over $98 trillion. If that wealth were divided evenly across the U.S. population, every human being in our country would have roughly $298,000 to their name — and every family of four would be millionaires.
But then, times changed. Between 1973 and 2013, America’s labor force became 74.4 percent more productive — but the median U.S. laborer’s paycheck grew just 9.2 percent fatter. There are a lot of problems with this argument. But the most fundamental is that America’s workers have suffered a far greater setback than their Western European peers. Between 1995 and 2013, labor’s share of national income in the U.S. dropped by 8 percentage points, a steeper decline than in any other nation except for South Korea and Poland, according to a 2018 OECD report.
Chart: The New York Times The neoliberal era has scored American households cheaper groceries and electronics. But it’s also enabled extractive interests in the health-care, housing, and higher-education sectors to bleed middle-income families dry. Chart: People’s Policy Project In other words, the American middle class is already taxed like Europe’s. But instead of buying us universal health care and other forms of social protection, our paycheck deductions go toward sustaining redundant private-insurance bureaucracies, Big Pharma’s high profit margins, and American doctors’ extraordinary salaries. We aren’t choosing to put “small government” above social welfare. We are choosing to be ripped off.
Finally, restrictive zoning on the local level — and policies that favor homeowners over renters and foster asset-price inflation on the federal one — have enabled landlords to extract a rising share of middle-class workers’ earnings, especially in the nation’s most prosperous metro areas. As the Times notes, the average U.S. household now devotes 33 percent of its expenditures to housing, up from 27 percent in 1950.
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