In 1967, I took an entry-level job with a large manufacturing company with a starting salary of $600 per month. That was enough for my wife and I to buy a home (helped by the GI Bill). My wife was able to stay home to raise our children until they were both in school, so we had no child care costs. My job provided free family health care and a company-paid pension plan that was later supplemented by IRA and 401K plans. After 30 years I retired with company-paid health care to bridge me to Medicare.
We lived a middle-class life — and the key to that was not a high salary but the benefit package provided by my job, combined with government retirement programs. My benefits were similar to those provided to thousands of company employees represented by the Teamsters union at that time.
Jobs like that are rare nowadays. The reasons for that are complicated. Some were economic trends and pressures that were beyond anyone’s control. Others were business and political decisions that favored management and shareholders over workers. Whatever the reasons, the current situation is straightforward: Workers themselves are required to pay some (or even all) of their health care, child care, and retirement costs, and that contributes to the difficulty of maintaining a middle-class lifestyle.
When jobs no longer allow workers to afford the housing, health care, child care, children’s education, decent retirement, etc., that they want, there are only two options. One is for workers to go without: Forego children’s higher education and/or don’t save enough for retirement. Or we can have a system where governments provide some of the benefits that a job used to provide. There is no third option of union jobs with full benefits of the kind workers had 40 years ago, nor the prospect of them coming back in large numbers.
Politically, Democrats say they want government to help strengthen the middle class by raising taxes on the wealthy to fund the cost of certain benefits for workers. This seems logical since there has been a massive transfer of wealth (in the trillions of dollars) directly from workers to business leaders and shareholders since 1980.
Republicans, on the other hand, say they believe the best way to help workers is to cut taxes on the ones who are already getting wealthy. All three Republican administrations since 1980 have passed massive tax cuts for the rich. And they have blocked virtually all attempts to increase government-backed benefits for workers, claiming they are “socialist.”
Strangely, enough of the workers themselves have backed Republicans in blocking the Democrats’ plans. In effect, these workers have opted for the “go-without” option. Presumably, these workers do not see the direct correlation between the increasing wealth of the rich and the declining wealth of the lower 50%.
But they are linked. In capitalism, all business profits belong only to a business’ owners and shareholders. Anything that reduces a company’s costs, such as moving a factory to a lower-cost area or reducing benefits for workers, directly increases the company’s profits and directly raises the wealth of the owners. In business, a dollar in new revenue may or may not increase profits, but a dollar of reduced cost will go directly to profit. The same things that have made shareholders richer have made workers poorer. They have transferred wealth upward.
The main thing that government can do to offset this is to tax the increased wealth that is going to owners and return it to the harmed workers in the form of benefits — or use it for other expenditures like building infrastructure using American workers. And the main thing that workers can do is to help them do that, instead of opposing it.
John Sedgwick of Duluth is a retired marketing director for Honeywell.