The Indicator from Planet Money - Making the Middle Class Great Again

The argument that the key factor that boosted the middle class post WW2 — and could help the middle class again — is access.

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everyone is Cardiff. This is the indicator from Planet Money after World War II ended in 1945. The three decades it came next we're kind of Golden Era for the US economy when the economy itself grow super-fast. Yes, but more importantly the benefits of that economic growth were shared widely wages and salaries went up her pretty much everyone in there was a big and growing and prosperous middle class in so there's a lot of common theories for why those decades were so great for the middle class. For example, the unions were stronger back then or the tax code reduced in a quality or the troops were back from the war and benefited from the GI bill which gave the money for college but there's a missing element I missing story and all these theories Amazing Story That's now been told with a lot of new research in a book called The Riches of this land by Jim tankersley of the New York Times and understanding is missing story might also be necessary for understanding why they

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Golden Era for the middle class ended around the late 1970s and early 80s and crucially for understanding how we can get it back someday. So what is this missing story Jim tankersley joins us and he's going to tell us right after a quick break.

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Jim tankersley walking the podcast I am so thrilled to be here. Thanks for having me in your book The Riches of this land you put forward a kind of alternative. Thesis is really too complimentary thesis for why the middle class did so well in the post-war years tell us what it is you've heard in your history class and it's the thing that we don't hear much about which is this idea that before World War II most of the American economy as a very top end was restricted to white guys. Basically white men held they were the doctors. They were the lawyers there was a scientist in the engineer and after the war both by the necessity of the war effort and then by the hard work in protest of civil rights women and men of color and immigrants started to gain entry slowly, but they gained entry to those occupations and when they burst down the walls of an equality and were able to get in

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Do these high-skilled areas they were able to put their talents to much better use it turns out if you have a population that is normally distributed with Talent. You're not going to have 94% of the doctors actually be white guys in an efficient distribution. And so when you start to reshuffle that distribution and let the townspeople do the highest skilled work, they create more growth that growth creates jobs. And in the case of the post-war era it came with low unemployment, which that's the magic formula strong growth low unemployment or raising incomes for everyone. And what ends up happening is you add millions of people to the middle class idea of reducing barriers for for women women of all Races and for men of color, there's any conomic Shlesinger to about matching people to the best place for them to work the place that matches their talents and it turns out that it's not just good for them because then they make more money and they're doing their best for

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Actually turned out to be good for everybody. That's the great thing about an end and just to be clear about what we're talking about here. The first thing they had to do was get access to the workplace at all from 1950 and 1980 27 million women enter. The workforce would have been otherwise been working for the home or just not working at all. But then the second thing is you have to get actual access to jobs you weren't allowed to do and again, it just turns out when you get your entire operation better that list everyone it wasn't just incomes Rising for black men or fur for women of all Races. It was incomes rise. It wasn't for white guys and including like white guys who didn't go to college and so this was the Golden Era as I call it in the book of middle-class flourishing for everyone and it really speak to his idea. Then when all workers do well all workers, who do well together. Of prosperity last from roughly the end of the second world war and then into the 1970s, but since

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Something's Happened in the middle class has not gained in prosperity to the same extent that the overall US economy has grown. It seems like a lot of the games of economic growth since they have gone to people in Elite jobs and upper the upper upper classes. What do you think happened has happened first off. We left the work of civil rights on finished and in particular the elite white men who ran the country just decided to stop the work early in the Reagan Administration. They started to roll back several parts of civil rights and and there was this idea that in fact they were going to challenge affirmative action in court. For example, they prosciutto a War on Drugs that incarcerated black men those things serve to dampen the allocation of talent in the United States and then the economy changed and we didn't change policy to keep up with it and that didn't allow our best workers to fluorescent and so is it

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Example I can give it to you on that. Is it discrimination still persists dramatically in the economy and we can see it because the weight of the economy shifted toward him or service-based economy. And who's at the Sabres to go with college degrees over the last several decades should be a thing that rewards women because they are absolutely the most educated part of the US Workforce. But instead in the 2,000 we saw female labor-force participation plateau and move backwards. And the reason for that appears in the research is because we didn't keep up with child care policies. We didn't make it easy for women to have and raise children how much are societies to put the burden on them to do for large part? We didn't make it easy for them to do that and also contribute to the workforce and and be paid in the same way as man and so that policy failure the shift in the economy the allowing of discrimination to to linger and in some cases return all of that adds up to an economy where the middle class just hasn't done as well.

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I over that time. There's also a message of Hope in your book you end on a message of Hope, which is that if we have gone through an era before when we were lowering barriers to participate fully in the economy. And if we've gone backwards it means that there is room to make progress there again, we did it once before why can't we do it again? And again, I am hopeful I'm a cynical reporter, but I'm hopeful about the middle class and by the evidence of what's happening around us right now riding with the deaths of a pandemic recession. It's it's really really bad, but we have the raw materials right around us to create another room. You know, it's true that we're not going to have another post-war situation where the end of the rest of the world is depressed economically in and we're going to make all this stuff to sell them. But but we have this comparative advantage that you know,

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Really sets the part which is our ability to harness the power of our Workforce to if we could do again what we didn't Civil Rights era and and really finish the work of a rat eating discrimination, which I know is really hard o1 Dietrich. We're just going to end systemic racism and sexism. But if we could do that, we really would create another massive boom of the middle class that were all Americans including white men without college degrees and into a better more secure by themselves and their children interview. I'm going to put you on the spot just a little bit you get one policy. Okay that you know is going to be enacted and that would most would have helped realize division you put forth in this book. What would your policy be? I really think you have to invest in a policy that creates a working like super supportive child care system.

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Cross the United States for everyone that is both a supply-side policy that increases the amount of available childcare and reduces its cost but also a demand-side that helps people afford it if you could put a universal child care system in both of those levers and you'd absolutely free app for more women to work in the United States worth more and contribute more and get paid more at the other person their careers.

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This episode of the indicator was produced by James Snead indicators fact-checked by Brittany Cronin and edited by Patty Hearst and indicator is a production of NPR.

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