The New Democrat

“The American middle class is facing an existential crisis. For more than three decades, declining wages, fraying benefits, and the rising costs of education, housing, and other essentials have stressed and squeezed middle-class Americans. But by far the biggest threat to middle-class workers—and to our economy as a whole—comes from the changing nature of employment itself.

Gone is the era of the lifetime career, let alone the lifelong job and the economic security that came with it, having been replaced by a new economy intent on recasting full-time employees into contractors, vendors, and temporary workers. It is an economic transformation that promises new efficiencies and greater flexibility for “employers” and “employees” alike, but which threatens to undermine the very foundation upon which middle-class America was built. And if the American middle class crumbles, so will an American economy that relies on consumer spending for 70 percent of its activity, and on a diverse and inclusive workforce for 100 percent of the innovation that drives all future prosperity.

This crisis is not unfolding in a vacuum. For more than 30 years, the Democratic Party has suffered from a crisis of identity, leadership, and vision on issues of political economy that has left it unable to either articulate or defend the true interests of the middle class. Democrats might tinker around the edges, arguing for more economic justice and fairness, but for the most part they have largely accepted, or at least failed to counter, the fictitious trickle-down explanation of what growth is (higher profits) and where it comes from (lower taxes and less regulation). And so, through Republican and Democratic administrations alike, corporate America has seen less regulation, lower taxes, and higher profits, while middle-class America has gotten the shaft.

This acquiescence to the conservative economic narrative has proven to be a political disaster as well. Progressives proudly back economic justice, but economic justice arguments alone are not enough to sway a majority of voters, many of whom value the promise of growth and employment over economic fairness. That is why progressives must reframe the economic debate by replacing the dominant trickle-down narrative with a new and better middle-out explanation of where growth and prosperity really come from—one based on economic inclusion.

In the technological economy of the twenty-first century, growth and prosperity are the consequences of a virtuous cycle between innovation and demand. Innovation is how we solve problems and raise living standards, while consumer demand is how markets distribute and incentivize innovation. It is social, civic, and economic inclusion—the full, robust participation of as many people as possible—that drives both innovation and demand. And inclusion requires policies that secure a thriving middle class.

The trickle-down theory—the one that lionizes the rich as “job creators”—insists that the American middle class is a consequence of growth, and that only if and when we have growth can we afford to include more people in our economy. But trickle-down has it exactly backwards: Properly understood, the middle class is the source of all growth and prosperity in a modern technological economy, and economic security is the essential feature of what it means to be included in the middle class.

Economic security is what frees us from the fear that one job loss, one illness—one economic downturn amidst a business cycle guaranteed to produce economic downturns—could cost us our home, our car, our family, and our social status. It’s what grants us permission to invest in ourselves and in our children, and to purchase the non-subsistence goods and experiences that make our lives healthier, happier, and more fulfilling. It gives us the confidence to live our lives with the realistic expectation of a more prosperous and stable economic future, and to take the entrepreneurial risks that are the lifeblood of a vibrant market economy. A secure middle class is the cause of growth, not its effect; in fact, our economy cannot reach its full potential without it. And a middle class that lives in constant fear of falling out of the middle class isn’t truly middle class at all.

From 1950 through 1980, during the heyday of the Great American Middle Class, a combination of New Deal programs, a corporate culture of civic responsibility, and a powerful labor movement provided a majority of American workers with health insurance, unemployment insurance, workers’ compensation insurance, pensions, job security, rising wages, overtime pay, paid vacation, paid sick days, a 40-hour workweek, and access to affordable, high-quality education. These are the benefits that provide the economic security of a decent and dignified life that defines what it means to be middle class, and that led to an unprecedented increase in living standards and economic growth. And under the old economy, they were, and still are, largely provided by one’s employer.

But in transforming the traditional relationship between employer and employee, the new economy is quickly stripping away these benefits. That is why it is essential that we imagine and adopt new policies that guarantee all workers the basic level of economic security necessary to sustain and grow the American middle class, and with it, the economy as a whole. We must acknowledge the radically different needs of a new generation of Americans—many of whom already have more employers in a week than their parents had in a lifetime—by adopting a new “Shared Security System” designed to fit the flexible employment relationships of the “sharing economy.”

Source:Democracy Journal

I agree with Nick Hanauer and David Rolf, that the American economy lacks economic growth and job security. That workers are constantly changing jobs, because either they lose their last job, or aren’t able to find that one job that would allow them to obtain that economic security. Where they’re not only making a good living, but able to put money away in a savings account and for retirement, have a good vacation and put money away for their kids education. But where I guess I disagree with Hanauer and Rolf, has to do with the solutions to these issues. That I don’t believe we need a Scandinavian welfare state to take care of everyone and provide the services that Americans workers use to get from a good job.

That what America needs more, is more economic growth, which leads to more good long-term jobs. You get that through things like economic development and new infrastructure and having a workforce with the skills to get those new jobs. What America should be investing more in, is education and job training for our middle class workers and our low-skilled workers as well. As well as infrastructure, small business development and more small business loans. Especially for workers who aren’t finding those good long-term jobs and instead give them small business loans so they can start their own new business. Perhaps even open up a new cooperatives and even open up these business’s with workers who are in a similar economic situation. As well give them educational and job training opportunities.

We have a huge infrastructure deficit. We have to close that in order to have the strongest economy possible and a modern first world infrastructure system.

We have a lower working class, that needs additional skills, so they can get themselves a good job.

We also have a struggling middle class, that has lost jobs that aren’t coming back. And they need new skills so they can get themselves a good job.

And we need new infrastructure as we as economic investment in underdeveloped areas both rural and urban.

This is what government can do jumpstart economic and job growth that leads to good long-term jobs. Empower people who are struggling to get themselves up and be able to move forward. By investing in infrastructure, opening up new education and job training opportunities and encouraging economic investment in underdeveloped areas.
The Next Deal: James Lockhart- The Social Contract Next Deal Economic Forum