The Urbanist Musings of Pete Saunders

The Rebellion of the Wage Class

Graphic showing the decline of middle skill jobs nationally between 1983-2012.  Source: deseretnews.com
I’m going to deviate a little from my usual urbanism focus to speak more broadly about our national and global economy, and its role in our present-day inequality and middle class demise.  Trust me, in the long run, cities play a pivotal role in the problem and the solution.

My mind was blown recently by a blog post by John Michael Greer, writer/publisher of The Archdruid Report.  I’ve read through many of his blog posts over the last few days (he’s a writer who’s published numerous books, and he’s been blogging for nearly ten years), and it’s probably fair to say he operates close to the fringes of our modern society.  As he says, he is a past Grand Archdruid of the Ancient Order of Druids in America and the current leader of the Druidical Order of the Golden Dawn.  As a writer, he writes frequently about peak oil and the future of our modern industrial society, and writes very thoughtfully about plausible near-future scenarios for our country.  I found him via Chuck Marohn of Strong Towns, who sent an e-mail to his many followers after reading Greer’s post and having a similar mind-blowing experience.

The post is called Donald Trump and the Politics of Resentment.  It is an absolute must read and I strongly encourage you to visit the blog and read it yourself.  In it, Greer explains the appeal of Donald Trump to a large segment of the American public.  Most of us know who Trump’s supporters are: they’re working class/middle class, often less-educated, not always involved in politics, but acutely feeling the squeeze of middle class contraction.  Thirty-five years ago they were “Reagan Democrats”.  They form the heart of today’s disaffected middle class.

But in explaining Trump’s appeal, Greer reframed — or rather, confirmed — my thinking on the culture war/inequality fissures in this nation:

“It so happens that you can determine a huge amount about the economic and social prospects of people in America today by asking one remarkably simple question: how do they get most of their income? Broadly speaking—there are exceptions, which I’ll get to in a moment—it’s from one of four sources: returns on investment, a monthly salary, an hourly wage, or a government welfare check. People who get most of their income from one of those four things have a great many interests in common, so much so that it’s meaningful to speak of the American people as divided into an investment class, a salary class, a wage class, and a welfare class…

Just as the four classes can be identified by way of a very simple question, the political dynamite that’s driving the blowback mentioned earlier can be seen by way of another simple question: over the last half century or so, how have the four classes fared?

The answer, of course, is that three of the four have remained roughly where they were. The investment class has actually had a bit of a rough time, as many of the investment vehicles that used to provide it with stable incomes—certificates of deposit, government bonds, and so on—have seen interest rates drop through the floor. Still, alternative investments and frantic government manipulations of stock market prices have allowed most people in the investment class to keep up their accustomed lifestyles.

The salary class, similarly, has maintained its familiar privileges and perks through a half century of convulsive change. Outside of a few coastal urban areas currently in the grip of speculative bubbles, people whose income comes mostly from salaries can generally afford to own their homes, buy new cars every few years, leave town for annual vacations, and so on. On the other end of the spectrum, the welfare class has continued to scrape by pretty much as before, dealing with the same bleak realities of grinding poverty, intrusive government bureacracy, and a galaxy of direct and indirect barriers to full participation in the national life, as their equivalents did back in 1966.

And the wage class? Over the last half century, the wage class has been destroyed.”

Greer goes on to discuss the destruction of the wage class, and we generally know how it goes.  Jobs shipped overseas, competition from immigration, and wages driven down due to both.   To the extent people try to place blame on any part of our society for middle class contraction and today’s inequality, most blame the “1%”, or the global elite.  Greer, however, repositions the fissure:

“The next point that needs to be discussed here—and it’s the one at which a very large number of my readers are going to balk—is who benefited from the destruction of the American wage class. It’s long been fashionable in what passes for American conservatism to insist that everyone benefits from the changes just outlined, or to claim that if anybody doesn’t, it’s their own fault. It’s been equally popular in what passes for American liberalism to insist that the only people who benefit from those changes are the villainous uber-capitalists who belong to the 1%. Both these are evasions, because the destruction of the wage class has disproportionately benefited one of the four classes I sketched out above: the salary class.”

This is absolutely key, and this is where my mind was blown.  The cultural and economic battle of the last forty years or so has not been between a global elite and the middle class, but between the salaried class (what used to be called management) and the wage class (labor), with the implied approval of the investment class.  Or, put another way, the salaried class has decimated the wage class, not only to maintain profits for the investment class, but to maintain their own way of life.

We — and I include myself in the salary class — have been indicted, and the rebellion of the wage class is gaining strength.

As Greer (I think) sees it, and as I see it, there are probably a couple of possible political and economic scenarios, both rooted in U.S. history.  One scenario is that we exit our New Gilded Age and enter a New Progressive Era and develop new policy solutions that can appeal and appease the wage class.  Or, the rift between the decimated workers of Middle America and the Coastal Elites continues to grow as proxy battles in national elections, and ultimately lead to something akin to a Second Civil War.  Out there, yes, but vaguely possible.  Especially if economic contraction forces more hard choices.

Here is where I bring this back to cities.  This battle was first waged in the Rust Belt, where the American middle class was first formed.  Manufacturing was the first economic sector to feel the pressure of globalization, and the first where pushing the cost of production down was first employed.  Rust Belt cities like Pittsburgh, Cleveland, Detroit and Milwaukee felt this first, and deeply.  Similarly, our nation’s coastal cities, prosperous on the strength of their salary class, likely lack any real answers for the rebound of the wage class.

That’s why I think the future of Rust Belt cities is so important.  Any re-creation of the American middle class is likely to come from our heartland, just as it did more than a hundred years ago.  The green-shoots successes of a city like Detroit, recovering from bankruptcy, and the policy failures of a city like Flint, with its water crisis, should be examined closely.

Our nation’s future might be found in the middle, not at the edges.

2 Responses to “The Rebellion of the Wage Class”

  1. DevinComments

    Interesting article. I enjoyed the linked blog post, but if you're interested in a substantiated explanation of the structural changes occurring, I would encourage you to read: http://www.nber.org/papers/w18334 \”the trend is the cycle.\” This paper, one of the more important econ papers of the last 10 years makes a similar, but far more empirical and impartial analysis of the underlying economic trend. The paper contains a much more accurate explanation of what's occurring, and isn't laced with flawed and odious nativist axioms.

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  2. D Holmes

    Looks like the salary class correlates pretty closely with the percentages of college graduates. I agree with your belief that the answers for the wage class (and I believe the welfare class as well) will be found in cities like Milwaukee. Some remarkable things occurring although still difficult to get too excited about it, with the bleakness of conditions in the concentrated urban poverty area).

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