Decline of the American Middle Class

The nation's middle class, pillar of the U.S. economy and foundation of the American dream, has declined over the last 38 years to the point now where it no longer constitutes the majority of the adult population. As families increasingly struggle to pay the bills from month to month the American middle class is continually shrinking. It has become exceedingly clear that “the American Dream” is dying and the future is dimming for ordinary hard-working Americans.

Republicans loudly tell American voters they want to “make American great again.” But it is the conservative trickle down Reaganomics agenda that has increasingly enriched the rich by relentlessly reducing the ability of government to provide a fair and level economic playing field for American middle class workers. Government now works for the wealthiest Americans and multinational corporations, not American middle class workers.

Over the last 38 years, Americans have been working harder, producing increasing levels of economic growth, but they’re not getting rewarded with any extra pay.

Between then and now, productivity, or the amount of economic output generated by an average hour of work, grew 72.2 percent. On the other hand, pay for the typical worker rose just 9.2 percent.

Things have gotten even worse since 2000: net productivity has grown 21.6 percent since then, yet inflation-adjusted compensation for the median worker grew just 1.8 percent.

And for many, work has disappeared. Between early 2000 and late 2016, America’s overall work rate for Americans age 20 and older plunged by almost 5 percentage points (from 64.6 to 59.7). For every unemployed American between 25 and 55 years of age right now, there are another three who are neither working nor looking for work.

In the most unequal advanced democracy on planet Earth — where middle-class wages are stagnant, 41 million people live in poverty, corporations celebrate record profits, and the richest one percent of individuals claim more wealth than the bottom 90 percent combined — the Republican Party has found a way, with their tax "restructuring" legislation, to raise taxes on working Americans to slash them for corporations and the wealthiest Americans.

The Republican tax bill is not just bad, it's a corrupt unfair and deficit-bloating hodgepodge written in secret. Here are the main reasons the legislation is bad for working people:

Rigging the rules. Big banks, hedge funds and other Wall Street firms are the biggest winners from this tax bill. The richest 1% of households receive 83% of tax cuts, and the richest 0.1% get an average tax cut of more than $148,000. The tax bill is full of complex tax gimmicks that encourage tax dodging while enriching lawyers and accountants.

Job-killing tax breaks for outsourcing. The Republican tax plan lowers the U.S. tax rate on offshore profits to zero, giving corporations an incentive to move American jobs offshore.

Medicaid and Medicare benefit cuts. Republican leaders in Congress already have signaled that once they’re done increasing the deficit with their wasteful tax boondoggle, they plan to use the deficit as an excuse to cut Medicaid, Medicare and Social Security. The Republican budget already cuts Medicaid and Medicare by $1.5 trillion—the same price tag as the tax bill.

Tax increases for millions of working people. The average household making less than $75,000 will pay more in taxes by the year 2027. In all, 70 million households making less than $100,000 eventually pay more.

Partial repeal of the Affordable Care Act. By partially repealing the Affordable Care Act (Obamacare), the tax bill means health care premiums in the individual market will rise by 10%, at least 13 million people will lose health insurance, and as many as 15,000 or more people will die every year.

Cuts to public education. By limiting the state and local tax (SALT) deduction, the Republican tax bill will reduce state and local funding for education, infrastructure and other essential public services we all depend on. A new backdoor school voucher program gives tax breaks for tuition at private K–12 schools. Republican leaders in Congress also plan to use the deficit they created as an excuse to cut federal funding for education and other essential services.

Taking sides. While corporations may still deduct their payments to lawyers to fight unions, working may people no longer deduct union dues or such work-related expenses as travel, work clothes, work-related education, work tools and work supplies.

The Republican Party's “Tax Cuts and Jobs Act” title is a cruel joke. Most of the tax cuts go to corporations that have made it very clear their savings will go to their shareholders and executive pay, not their workers. Further, in industries where jobs can be automated, Republicans gave companies a tax incentive to buy machines and automation technology to replace their workers.

In 2018, Democrats must support congressional candidates most able and prepared to passionately take this message of Republican sponsored economic inequality to the voters.