Honey, I Shrunk the Middle Class

While some Americans luxuriate in thousand-dollar-a-night suites at Palm Beach Four Seasons Hotel and in $30,000-cars, those in the middle class—America's pride and joy—are struggling just to stay in the middle class.

During the last three years, there has been a massive loss of jobs, especially in the manufacturing sector, that had paid the bills for middle-class families. Out of the 2.9 million private-sector jobs that have been lost in the last three years, according to the Bureau of Labor Statistics, 2.8 million or 96 percent of them have been factory jobs. These were the unionized jobs in industries like auto and steel that paid good wages and created the middle class after World War II.

African-Americans have been hit especially hard. When discrimination in the auto and steel industries was curtailed by the federal government, many African-Americans were able to buy homes and send their kids to college. But now, with unemployment at 5.2 percent for whites, almost one in 11, or 9 percent of African-Americans are out of work—and out of the middle class.

If a laid-off worker finds a new job, chances are that worker will be taking a big cut in pay and benefits. According to the North American Alliance for Fair Employment, the jobs in industries that are growing pay 21 percent less than those in industries that are declining. In Delaware for example, average wages in downsizing industries are paying about $50,000 a year, while newly created jobs are paying less than $30,000. Family income has fallen in 39 states.

White-collar jobs are also on the chopping block. An estimated 14 million professionals will lose their jobs in the next few years as companies move these jobs overseas. For example, accountants making over $23 an hour in the US can be replaced by an accountant in India for little more than $6 an hour.

The problem is not only wages. Today, fewer and fewer jobs include health benefits. In 44 states, the percentage of people with employment-based health insurance decreased. Nearly 75 million Americans worried sometime in the last year that they would lose everything in case of an unexpected health crisis.
Older Americans are also on the middle-class endangered list. Employers have moved away from “defined benefit” pension plans that guarantee a worker a certain percentage of their yearly wages after retirement. Now, if a worker is lucky enough to have an employer-based retirement plan, employers generally guarantee only a “contribution” -- that is, dollars that are invested in the stock market. As seen with Enron, if the stock goes bust, so does a worker's retirement.

In the meantime, corporate profits are up 25 percent. CEOs of our largest corporations are paid 301 times more than an average worker's salary. Government policies helped create the middle class after World War II, when work and wealth were more widely shared. Today, government policies have divided people through massive tax breaks for the wealthy and erosion of the public services all but the very wealthy rely on. We need to revive the American dream of economic security for all.

Meizhu Lui is executive director of United for a Fair Economy, www.FairEconomy.org
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