During these three decades of post-World War prosperity wages rose in line with increased productivity. As the chart above shows the portions of national income shared by the rich and the rest was constant. Government expanded needed social programs while maintaining progressive tax rates. Unions bargained strong contracts in all sectors of the economy. Growing majority of families achieved a middle-class standard of living that included a home, health insurance, family vacations, retirement security, and the belief that this was the way it should be– the American Dream.
“We now see that rather than being capitalism’s final destination, the era of redistribution in the 20th century (1945-1975) was an exceptional period when war, depression, and threat of revolutionary change led to a more equal spread of income and wealth.” Prof. Paul Starr, New York Review Books (May, 2014)
We now face an existential crisis for working families and the middle-class: Unemployment, stagnant real incomes and extreme indebtedness are leading to bankruptcy, business failure and the home foreclosure crisis. Most importantly Americans have given up on their long held belief that the future will always be better than the present– that children will do better than their parents.
“Capital no longer willing to negotiate with labor as the “junior partner” in the social contract of post-war west. Corporations boldly demand one-sided concessions without any commitment to shared growth and less unemployment. Economy and workers must be whipped into shape to compete globally. Accept lower wages, harsher conditions, and continued sacrifice.” Prof. William K. Tabb, Critical Sociology (2014, v.40)