The rich got richer by leaving the middle class in the dust – but it doesn’t have to be this way

July 26th, 2013 | Maggie Humphreys

As the U.S. climbs out of the Great Recession, Wall Street and big banks are enjoying record-high profits, at the expense of middle and low-income families still struggling to gain an economic foothold since the economy’s collapse.

This economic “recovery” is one for the few, not the many. According to a study by Berkeley economists, all gains in real income in 2010 and 2011 went to the top 1 percent of earners. Incomes actually shrunk by 0.4% for the bottom 99%. Put another way: in the first two years since the official end of the Great Recession officially, 121% of income gains went to the top 1 percent of earners.

The accumulation of wealth (and power) at the top isn’t a recent phenomenon. Years of lobbying by wealthy interests for changes in tax and labor law have inexorably forced millions of middle class families down the income ladder into poverty.

Between 1978 and 2012, CEO compensation, with options included, increased by almost 875%. Over the past 34 years, typical worker pay grew only 5.4%. And the pace of inequality is accelerating: CEOs out-earned workers 20-to-1 in 1965, 29-to-1 in 1978, 122-to-1 in 1995…and an astonishing 273-to-1 in 2012!

American families have been devastated by these public policies, which are designed to favor a wealthy few at the expense of the many in the middle. In 1992, journalist Bill Moyer began following the economic ups and downs of two middle-class families, the Stanleys and the Neumanns. Twenty years later both families are burdened by low wages, no retirement security, health care costs and few opportunities for stable employment:

Watch Two American Families on PBS. See more from FRONTLINE.

It wasn’t always this way. But for America to find its way back to a strong and thriving middle class, we need to redefine win the debate over economic policy. Eric Liu and Nick Hanauer have recently proposed a provocative strategy do to just that:

If…Americans accept…that fairness and prosperity are in zero-sum conflict, then progressive polices are intuitively and inherently unfriendly to economic growth. When they say prosperity and we say fairness, we are arguing from a position of weakness…

If middle-class people do not begin to think of themselves as job creators, then they will never intuitively embrace the policy ideas that we support. Only when middle-class voters begin to see themselves as the center of the economic universe will they begin to mobilize against the various elements of trickle-down policy that dominate this country’s political and policy agendas.

It’s time to activate that awareness and the agenda that flows from it by framing the debate between trickle-down and middle-out economics as a choice. It’s time to seize the middle-out moment.

Decades of research – and the experience of other nations around the world – show smart policies that support families and a strong middle class aren’t partisan, they’re common sense. Paid family and medical leave, a fair tax structure and world-class education systems support a growing middle class –and that is what stimulates growth, innovation, entrepreneurship, and ultimately widespread prosperity.

EOI is working to advance progressive public policies in Washington and across our region. We’re building toward a middle-out moment for Washington’s working families – join us.

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Posted in State Economy

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