How would you feel if you did not get a real raise in 46 years? Well, this is exactly the situation the American Middle Class found themselves in between 1973 and 2019! Don’t believe me, just take a look at the chart below. Yep, it shows that real wages in 1973 and 2019 were exactly the same at $23.24.
The blue line is the actual pay that people take home once you adjust for inflation. You’d never know this by looking at your paycheck though. Most people would simply concentrate on the orange line, which is what they see on their paycheck and think they are making more money per year. Inflation takes into account that things get more expensive as time goes by (another way to think about it is that your money is worth less in the future).
Real wage is just the nominal earnings (what you see on your paycheck) adjusted for inflation. What does this mean? It means that if inflation is 3% per year, then just to earn the same amount as the previous year, you need to get at least a 3% raise. Otherwise, you are actually earning less in real terms.
What’s the first reason people are pissed? It is because they haven’t gotten a real raise in their life!
To make matters worse, productive in the same time period (1973 – 2019) has gone up by 62%. In other words, workers are getting more stuff done (either through sheer effort or by leveraging the latest technology) but they are not seeing the benefits in their pay. What do you call it if you are working harder and harder, producing more and more, but you don’t see any benefits at all. Some call it unfair…other people might call it slavery by another name!
What’s the second reason people are pissed? It is because they have actually earned a raise but not given!
Good and honest hardworking Americans have been slaving away at their work only to make the executives at their companies richer and richer. How much richer? Well in 1979, the average CEO made 35 times more money that the average worker. That has now ballooned up to more 275 times the average worker with estimates to date putting it closer to ~300 – 500 times.
What’s the third reason people are pissed? It is because all their hard work is only lining the pockets of people of a few!
While the Middle Class did not understand this, what they began to see is that they just couldn’t afford things no matter how hard they worked (this is because rising real prices were cutting into their stagnant wages). The issues facing the Middle Class has gotten so bad that even smokescreen & mirrors that usually cloud the wage issue such as: (1) blaming the poor for taking away their benefits (2) Laziness (3) Undocumented immigrants (lowering wages) (4) Politics (5) The people at the top are just too smart and deserve it (5) Fear of losing your job (6) Add you own…are no longer working.
What’s the fourth reason people are pissed? The people realize they’ve been lied to!
People in the UAW are beginning to say: Wait a minute! If these guys are able to offer a 20% raise across the board, doesn’t that mean that they have been holding back on my pay for a few years now? How did the money magically appear?
More and more people in the Middle Class are beginning to say: Wait a minute! Something is wrong here! I am making 6-figures and still need to penny pinch. I can’t afford what my parents used to comfortably afford, and I can’t seem to get out of the financial hole!
Why is this happening now? Perhaps it’s because the folks at the top got too greedy. Shafting the smaller poor population is one thing, but shafting the huge middle class is quite another (If the middle class feels shafted, then America feels shafted). Why did the people at the top get too greedy? Perhaps it’s because Wall Street continues to demand more and more of companies in this insatiable drive for increasing profits. Are profits bad! Heavens no! But profits that are not fairly distributed is bad for the society as it creates a class system that leads to social unrest and unraveling.
What can fix this? Just pay people fairly. It has taken the American Middle Class almost 50 years to see what wrong (a testament to resilience of the American people). Let’s not explain these concerns away with some political ideology. Let’s not take another 50 years to solve the problem. The society would have torn itself to shreds and the American dream would have become a nightmare!
SuperChamp 