U.S. middle class RIP
The United States has long been touted as the middle class society par excellence. During the Cold War, in this country and elsewhere, laymen and economists alike saw the development of this broad-based middle class in the decades after WWII as the definitive refutation of Karl Marx. While Marx had predicted increasing class polarization, the trend here and in Western Europe was going in the opposite direction.
That’s history now. The American middle class especially has been slowly bleeding out for at least a generation. That process has been accelerating in recent decades, especially during Republican rule but to a significant extent under Democrats as well. It’s no exaggeration to say that today the middle class is in critical condition. There are reams of academic studies and millions of personal narratives that prove it.
There’s even worse news, incredibly. There is an emerging consensus that the progressive evisceration of the middle class will continue as far as the eye can see. The man in the street senses that. More revealing perhaps is the fact that the “job creators” plan to create far too few jobs to stop, much less reverse, the vanishing of the middle class.
From a recent AP story: “U.S. workers face a dim future, with stagnant wages or falling pay and fewer openings for full-time jobs. That’s the picture that emerges from a survey of Harvard Business School alumni.”
As economist Thomas Piketty writes in his celebrated book, “Capital in the Twenty-First Century,” there is nothing that makes increasing inequality inevitable. This is not an ineluctable fact of nature, like the burning out of the sun or human mortality. It is the combined product of economic decisions made by businesses and individuals and policy decisions made by politicians.
For instance, there ought to be a law that makes companies and wealthy individuals pay their fair share in the taxes that provide the human and physical infrastructure on which their success depends. There isn’t. In fact, current tax laws do the opposite. That’s one important source for the decline of the middle class. The middle class is poorer today in part because it is forced to pay a disproportionally large share of the public goods–things like roads, bridge, police protection and education–that benefit most the corporations and the rich, who refuse to do their part. The latest example is in our own backyard. Miami-Dade-based Burger King wants to move its headquarters to Canada in order to avoid paying higher U.S. corporate taxes. So much for community spirit and patriotic pride. They call this “tax inversion.” I call it perversion.
Robbing the middle class in this way is legal mainly because of the influence of those doing the robbing over politicians who make the law. But there is yet another layer to the story of why the middle class is going “poof.” Businesses by the droves have become increasingly inventive in using illegal means to cheat their employees and the government without getting caught. In a phrase, they are getting away with murder.
Credit McClatchy and the Miami Herald for a recent investigative series on some of the illegal practices used by employers to more intensively exploit workers and evade taxes.
The most pervasive of these is called “misclassification.” This bit of jargon distorts. It makes it sound like an innocent error like misidentifying a sea mammal such a dolphin as a fish called mahi mahi which in Florida is better known as a dolphin. Instead, it’s a ruse used by employers to redefine some portion of their regular workforce as “independent contractors.” Bingo, there go the protections of the labor laws. This way they can underpay their workers, demand overtime without paying it, and even extract a portion of the worker’s pay as a kickback as a condition for continued employment. And employers don’t pay taxes on contractors.
These unlawful practices are widespread because (a) the government almost never enforces the law (b) workers, many of whom are immigrants, are too scared to complain and (c) business that try to obey the law find they can’t compete with the cheaters and either go under or adopt illegal practices. These practices are most common in anti-union states with lots of immigrants and public officials hostile to federal regulators. Florida is paradise for cheaters.
“Misclassification” makes it nearly impossible for a construction worker or an employee for a plumbing company to make enough money to achieve a middle class standard of living. It’s another hammer blow to the middle class, which is being chipped away bit by bit like the Berlin Wall.
A federal official interviewed for the series, formerly charged with enforcing the relevant laws, gave so many excuses for not doing it that it was almost comical. He scarcely knew about misclassification, and certainly those above and below him never mentioned it as a big problem. He also gave one valid reason: underfunding for enforcement. These type of agencies are deliberately underfunded by conservative legislators in order to minimize enforcement. There is no cop on this beat, and that’s no accident.
To end on a personal note, although I was aware of many of these things, I was enlightened by the wealth of data and detail in the series. Yet, I was not surprised by the lackadaisical attitude of the non-enforcing official.
I used to frequent a “Cuban” restaurant (owned by a South American) and became friendly with some of the staff, many of whom were recent arrivals from Cuba. One confided in me that their employer was not paying them any salary, zilch, nada. They had to scrape by on their meager tips alone. I went through stages of disbelief, surprise, outrage, and finally action. I knew it is legal for restaurant employers to pay wait staff a much lower salary than the minimum wage. I also knew that the number was not zero.
I immediately went to my computer and found the information for the local office of the U.S. Labor Department Wage and Housr Division. Two workers went there to complain. They told them they could or would do nothing for them. I never got to the bottom of it, but now I have a hypothesis. Maybe they were “independent contractors.”
As for me, I never went there again. But I know it’s only a tiny pebble thrown against a vast fortress of exploitation in this city and this country.
