When almost all the gains from growth go to the top, as they have for the past 30 years, the vast middle class doesn’t have the purchasing power necessary to keep the economy growing and generate lots of jobs.
Once the middle class has exhausted all its coping mechanisms – wives and mothers surging into paid work (as they did in the 1970s and 1980s), longer working hours (which characterized the 1990s) and deep indebtedness (2002 to 2008) – the inevitable result is slower growth and fewer jobs.
Slow growth and few jobs hit the poor especially hard because they’re first to be fired, last to be hired and most likely to bear the brunt of declining wages and benefits.
A stressed middle class also has a harder time being generous to those in need. It’s no coincidence that the tax revolts that began thundering across America in the late 1970s occurred just when middle-class wages began stagnating.