America’s middle-class origins were central to our success as a nation, but our future greatness is in grave jeopardy because the middle class is now so weak.
When the United States declared its independence from the British, it was the most middle-class society in the world. America’s carpenters, shopkeepers and farmers enjoyed a higher standard of living than workers in other parts of the world and economic inequality was lower than any place else, according to research by Jeffrey Williamson and Peter Lindert, economists at Harvard and the University of California-Davis.
In part because of this economic equality, ordinary citizens in the United States had significant political influence, which led to investments in infrastructure and public education that helped fuel our future growth. In contrast, former colonies in other parts of South and Central America were highly unequal, which meant that the wealthy controlled their governments and used their control to maintain power rather than invest in the development of the entire country.
Unfortunately, over the past four decades, middle-class America has come undone as wages have stagnated for most workers and the rich have captured the majority of economic gains. As a result, we are starting to resemble less-developed countries more than we might wish to admit.
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Like the former colonies in South and Central America, the United States is failing to make investments in public goods like education and infrastructure that drive future growth because the middle class lacks the political power to translate its preferences into policy.
Polls clearly show that most Americans would strongly prefer greater spending on education and infrastructure. But these public goods generally aren’t as important for the wealthy as they are for the middle class. Though the wealthy often support spending on schools and roads, they have less interest in paying taxes to support them and often can afford private alternatives to these public goods. When push comes to shove and priorities are set, the wealthy have held greater sway.
In the United States, less than 40 percent of expenditures on higher education now come from public spending, compared with almost twice that for other advanced countries. Similarly, total federal, state and local spending on infrastructure has fallen by about $60 billion per year compared with the mid-1970s.
These failures of government have had clear consequences. As recently as 1995, the United States was still ranked first in the world in the percentage of the population with a college degree, but now ranks only 15th. Similarly, U.S. infrastructure has deteriorated from being top-notch to ranking behind Barbados, Oman and Bahrain, among many others, according to surveys from the World Economic Forum.
The weakening of the middle class is a concern not just for those who are suffering, but for all of us. A strong middle class is the source of our greatness and the driver of our economic growth. To get our economy and our government back on track, we need to return to our roots and rebuild the middle class.
David Madland is the author of “Hollowed Out: Why The Economy Doesn’t Work Without a Strong Middle Class,” and managing director for economic policy at the Center for American Progress.