All is not sunshine for local laborers in the workplace vineyards of sunny San Diego. Local employees at three of the nation’s largest grocery chains are threatening a strike over wages and benefits. California State University professors are threatening rolling walkouts because they haven’t received a pay raise in years. So what do college professors and supermarket checkers have in common? Both represent laborers left sinking in the same leaky economic boat. And both are indicative of the unprecedented rise in San Diego—and America—of an hourglass economy.
An hourglass economy is one in which there are lots of lower-paying (though not necessarily low-skill) jobs and higher-paying jobs but fewer of the middle-class, middle-income jobs that used to span the gap between skilled blue-collar and high-level, white-collar professional jobs. So what’s the big deal? Plenty. During the heyday of the American middle class (from the end of WWII to the stagflation of the 1970s), the country had a diamond-shaped economy: growing middle income jobs with fewer low- and high-end ones. Such an economy is essential to democracy: The broad, satisfied middle class is able to outweigh the more reactionary tendencies of both poverty and great wealth.
The triumph of the American middle class after the war resulted in a fundamental change in politics and society. In 1929, the top 1 percent of Americans controlled more than 35 percent of the wealth. By 1976, they controlled less than half that. The number of Americans living in poverty—especially seniors—fell by more than half. And the middle class grew fat and happy, owning homes and cars while sending their kids to affordable colleges, content in the knowledge that the political classes in Washington feared them more than any other power on earth.
Since then, poverty rates—especially among children—have climbed. Middle-class wage and wealth growth has decreased: Where it used to take a generation to double an average family’s standard of living, it now takes the better part of three. And the rich are richer than ever, with the top 1 percent controlling more than 40 percent of the wealth.
The most significant aspect of our emerging hourglass economy is that, even as the economic top is pulling farther away from the bottom, the tippy-top is pulling farther away from everyone. Stockbrokers, money-managers and CEOs become superrich while college professors, doctors and other professionals struggle to stay in the upper middle class. This ultimately ends in the classic pyramid economy of the pre-democracy era: a small group of the superrich organizes politics and economics to continue to feed wealth to them at the expense of everyone else.
We are in an age where capital—the saved value obtained from other people’s labor—is valued far more than the labor (or laborer) itself. Those who generate capital are venerated and rewarded disproportionately more than those who simply do the honest day’s labor upon which our day-to-day society is dependent.
The problem is, neither college professors nor grocery cashiers add much short-term capital to the system. Sure, both spend their paychecks in the local economy. Both add the value of their labor to the overall economy—educated students who become part of a more efficient workforce in the former case, efficient and cheaply distributed food freeing up wealth to be spent or invested elsewhere in the latter.
But in today’s über-capitalism, the rewards of the system increasingly go to those who make more money for a small number of other people, no matter what the long-term social or economic cost. That’s why CEO pay has gone from 40 times that of an average worker a generation ago to 500 times more today. Are CEOs now 10 times more productive than a generation ago? Of course not. But they do generate far more wealth for a handful of people than they did a generation ago. That’s why today’s star athletes and movie stars rake in such big bucks. Tiger Woods gets paid $80 million a year not because he can hit a little white ball oh so sweetly, but because he generates hundreds of millions in sales and profits for those who pay him.
Did SLM Corp.’s Thomas Fitzpatrick (highest compensated CEO in America last year: $39 million) work a thousand times harder than a single mother working full-time as a Vons cashier? Indeed, the most highly rewarded cannot even claim they do their jobs better than everyone else. Most studies of CEO compensation find absolutely no correlation between CEO pay and performance. Ditto many superstar athletes, who rake in big bucks in advance of delivering on the court or field.
What the highly rewarded can claim is that they make other people—the 1 percent of people who profit most from the system—megatons of money. College professors and grocery workers make their livelihood exchanging a skilled service for their daily bread, helping thousands to live their daily lives better but making no one rich in the process. Our current economy simply does not value such labor that much.
So the moral of our two-strike dilemma is simple: In today’s emerging hourglass economy, the American middle class is going down for the count.