Reagan, Blue Jeans and the End of the Middle Class

We spend a great deal of time trying to figure out whether to blame the rich or the poor. But as the debate rages on endlessly, the middle just keeps getting squeezed. Which matters for one incredibly significant reason: the middle class is the single most important engine powering the US economic train and has been for at least a hundred years.

There have always been rich and there have always been poor, just like now. But there has not always been a middle class and the sad reality is that both its growth and needs have exceeded its capacity. And make no mistake about it: a middle class is not a guarantee.  There is absolutely no evidence to prove it can survive for any longer than it already has.

I often argue it started in the 80s, when Reagan’s pro-private sector policy agenda led to a fundamental change in not just our economy, but how we thought about it. There are three main underlying factors to this cultural shift:

• Union busting. Destroying the air traffic controllers union was the final, definitive statement on how the public would henceforth think about the one thing that actually helped create the middle class, the union movement.
• Deregulation. Reagan didn’t just believe in and implement deregulation, he instilled henceforth into the public psyche the concept that regulation and jobs were mutually exclusive concepts.
• Trickle down.  Reagan didn’t just believe in trickle-down economics and he didn’t just promote policies to accomplish it. He did something far more astonishing: he created a new economic “law” that said corporate power, increases in profit, and belief that the rich get richer were synonymous with economic prosperity for all.

It’s actually fairly simple. In the name of private sector profits and corporate growth, government has been saddled with the responsibility to do what the private sector once did. And that is too large a responsibility for taxpayers to bear for several reasons.


First, the shift in burden leads to commensurate and seemingly never ending tax hikes, which put politicians on the defensive and, in a sound bite political environment, makes intelligent policy debate on the issue entirely impossible.

The second reason is that middle-class-supporting programs are simply unsustainable after a generation long era of stagnant, and often decreasing, real wages.


For the middle half of the 20^th century, wages increased right alongside productivity. In the 1980’s, that all ended. We live in the most productive nation in the history of the planet, and yet our wages continue to mean less and less. Stock values increase in lockstep with exported (often quality) jobs and, their inevitable after-effect, layoffs. A successful economy simply cannot be built on principles that would allow that to happen.


That is the reality we have both created and nourished. So it may be time to face an ugly truth: wages in the United States are not going up again. First of all, there are simply not enough good paying jobs to match our population growth. Second, the only good paying jobs that remain require an advanced education.


Third, and, arguably worst of all, however, is that there aren’t even enough good paying jobs for people who actually do have an education. What that means is that graduation from a quality, four year college with a degree can often guaranty nothing. This is the first time in history that is the case.


Think about what that means for those who can’t access an education, regardless of the reason. It means they have virtually no chance to earn a family supporting wage.

And in the end, it all comes down to blue jeans.

There was a time when a pair of blue jeans was relatively expensive. Most people could afford one, maybe two pairs.  Someone made a decent living making those jeans. The goal of the buyer was to keep those jeans for as long as possible. The goal of the manufacturer was to make the jeans last as long as possible. The goal of technological advancement was to make the process more efficient, thus driving down prices, while simultaneously increasing or at least maintaining the quality.

Over time, the jeans got more accessible. More people could afford their first pair, or maybe their third. And one could argue that reality was starting to achieve an economic harmony, a balance in which buyer and seller shared some basic understanding that allowed both to flourish.

For the last thirty plus years, however, prices have plummeted right alongside quality and any expectation of such. It is commonplace to assume that ten pairs of jeans are perfectly normal, and that ten new pairs next year would be just as standard a practice; for every member of the family. But as we all know, a middle class cannot be paid sufficient wages to support those prices, so the jobs are gone.

In other words, it was not just the economic policies of the 80s. Those policies shaped our behaviors and we have essentially converted ourselves into a throwaway society insanely obsessed with low prices. Those assumptions and behaviors, I’d argue, have done just as much to destroy our economy as any economic policy. The two realities have fed each other, and there is no reason at all to assume we’re capable of change.

Consider this: the slow recovery from the Great Recession has actually seen the stock market work itself back to health.  This has occurred without the jobs and certainly without the wages. If the stock market can soar with fewer jobs and lower wages, what possible incentive would our market based economy have to create jobs or increase wages? Is there any chance of either coming back, without dramatic changes to all our basic economic principles?

So we’ll keep arguing about taxes, trade agreements, prices, inflation, savings, the stock market, and whether or not our educational system is failing because it’s not creating sufficient batteries to power the low wage / low benefit machines that power our economy. But none of that will matter in the end. In the end, we are simply not capable of buying $100 Made in America jeans in a ten pair per person world. Neither our behaviors nor our wages allow us to be capable.

Until we are willing to address that fundamental issue, the middle class will keep right on disappearing and government will keep right on struggling in its impossible mission to keep the crumbs afloat. Until we address this issue, we should not only assume that 200 years of growing economic prosperity, built entirely and quite uniquely upon a growing middle class, is no longer a guarantee, we should start preparing for the not so pleasant economic reality most likely to replace it.

Perhaps it’s not the future at all. Perhaps the seeds that were planted 30+ years ago, and nourished ever since, have already matured. Because here’s my tragic prediction: until we fundamentally break down the behaviors and economic assumptions that have led us here, and figure out an entirely different model, neither the wages nor the jobs are coming back.