Globalization and the technology revolution are increasing productivity and prosperity. But those rewards are unevenly shared – they are going to the people at the top in the United States, and enriching emerging economies over all. But the American middle class is losing out.
To Americans in the middle, it may seem surprising that it takes a Nobel laureate and sheaves of economic data to reach this unremarkable conclusion. But the analysis and its impeccable provenance matter, because this basic truth about how the world economy is working today is being ignored by most of the politicians in the United States and denied by many of its leading business people.It’s becoming increasingly clear that capitalism by itself is no guarantee of the kind of large, prosperous middle class that used to define Americans as a land of opportunity. Businesses in this world can find poor grunts to work long days under terrible conditions for enough food to keep from starving. Businesses should remember that working customers will spend more if they're paid more.
Do people work for the economy or does the economy work for people?
The middle class was brought to us by those who fought for a combination of government policies and labor contracts: compulsory education and the schools that needed to be built, the Land Grant College Act, child labor laws, the minimum wage, workers compensation, social security, unemployment benefits, Medicare, Occupational Safety and Health Administration (OSHA), the eight-hour day, weekends, collective bargaining, anti-discrimination laws that were all passed despite fierce opposition from conservatives and corporations.
And they’re still at it.