Business

February 23, 2014

The rich get richer while the middle class suffers

Sam Lewis knows he’s one of the lucky ones.

During the Great Recession, the Dalton metropolitan area, which includes Whitfield and Murray counties, lost some 13,100 jobs and saw its unemployment rate rise from 4 percent in May 2007 to 10.9 percent in November 2008.

It did not drop below double digits Oct. 2013, when it was 9.9 percent.

Lewis, however, held onto his job with a local floorcovering company.

“But I was always wondering if I was next,” he said. “And I haven’t gotten a raise in over seven years. It seems the price of everything I buy has gone up, but I’m not making any more.”

Lewis is one of millions of middle-class Americans feeling squeezed even as the economy improves, and he’s not the only one wondering when things will get better for him.

On Thursday, Dalton State College hosted a special screening of “Inequality for All,” a documentary starring economist Robert Reich, who served as U.S. Labor Secretary during the Clinton administration. He argues that with consumer spending representing almost 70 percent of the United States economy, there’s no way to sustain economic growth without a healthy middle class.

But he said the gap between rich and poor has grown significantly since the late 1970s.

For instance, he notes that, after adjusting for inflation, the average worker’s annual  income dropped to around $34,000 in 2010 from $48,000 in 1978. While that occurred, the income of those in the top 1 percent almost tripled to about $1.1 million from $394,000.

Reich argues that globalization has put downward pressure on wages, as workers must compete with those from around the world, while tax policy has tended to reward those at the top with cuts.

Rocky Face resident Jane Kirby said she and many others feel that pressure.

“When we were younger we thought we could get ahead in life. Now, everyone I know is just trying to keep from falling behind,” she said.

Reich said there is no “magic bullet” to reviving the middle class, but in the movie he pointed towards several policies he believes could make a difference, such as strengthening unions, raising tax rates on the top and investing more in education and training.

The film provoked a wide range of comments during a discussion held on campus after its showing.

Matthew Hipps, an assistant professor of political science at the college, said he wasn’t sure it’s correct to say people are poor because they have made bad choices in life.

“There are people all around us, I know them and I’m sure many people in this room do, who have done everything that they are supposed to do, and they are still poor,” he said. “We say you should get an education if you want to get ahead, but there are people with master’s degrees waiting tables because that’s the only job they can find.”

Dalton resident Joan McGovern said growing inequality reflects a failure of values as much as a failure of economic policy.

“It’s a spiritual problem,” she said. “The problems that occur can’t be solved by government or by the distribution of money. It has come from people’s hearts changing and treating people differently. You can’t look at people who are suffering and say, ‘That’s their problem.’”

Austin Wade, a student at Dalton State College and volunteer for community organizing group Organizing for Action, said he’s glad that issue of inequality is “finally gaining some traction.”

“Cutting taxes and lowering the safety net for the average American is not good policy,” he said.

Greater Dalton Chamber of Commerce President Brian Anderson said he agrees that America fares best when “there’s a rising standard of living for a large share of the population.” He said he isn’t sure that middle class wages have been stagnant simply because those at the top have been growing.

“If workers were really being taken advantage of as much as that implies, you’d think that the share of the workforce that is unionized would be growing,” he said. “Instead, it is shrinking.”

Anderson said one reason wages may be stagnating is the mismatch between the skills demanded by many well-paying jobs and those possessed by many in the workforce.

“We need to look at the education system and what we can do to get workers the skills employers need,” Anderson said.

But more education does not necessarily mean more college.

“I was talking to one employer who gets plenty of résumés from people with liberal arts degrees,” he said. “They have a degree, but they still don’t have the skills that employer needs.”

 

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