Americans are often sorted into three economic classes: poverty, middle class, and wealth. Last week we looked at how certain Americans gained wealth. Today we are discussing the rise of the middle class. In future articles we will compare behaviors, hidden rules, and language of each economic class to better understand the barriers unintentionally created for people who live in poverty.
Most people in America lived in poverty until World War II. We also had an upper class of super rich. How did we gradually move from the poverty v. wealth divide to create a large middle class?
Early Americans were primarily involved in agriculture. The New England states had small farms. Larger farms existed in the middle and western states, and large plantations were established in the South. In the northern states and cities, we found lots of craftsmen operating small businesses.
After the Civil War, Congress passed the Morrill Act, which allowed people to move to places like Nebraska and become landowners. Farms were usually a quarter section, and working the land wasn’t easy. The Morrill Act and the later Kincaid Act offered new opportunities for many.
Congress also passed the Morrill Land Grant Act, which created public universities. College had been available only to children of the wealthy, but was now offered to thousands more young people. Educated men and women entered the working world as managers, bookkeepers, and clerical workers. Or maybe they trained to become doctors, teachers, or lawyers. America developed public schools that all children could attend through at least grade 8, and later high schools were available to everyone. Education was the largest reason for the growth in the middle class.
By the late 1800s the United States’ industrial output and GDP were growing faster than that of any other country in the world. Small-scale craftsmen were replaced by large-scale production in factories during the industrial revolution.
The industrial revolution brought new jobs in cities and mass immigration. From 1865 to 1918, 27.5 million immigrants poured into the United States, looking for the opportunities afforded by the nation’s economic successes. Generally, these immigrants lived in poverty. Since most people in a community struggled economically, they didn’t really think about themselves being poor in comparison to others. Everyone worked to survive and to get ahead. Everyone expected their children to have better, easier lives than they had.
The labor movement grew out of the need to protect the common interests of workers, especially for safer working conditions and wage increases. Organizations like the railroad unions or brotherhoods, the Knights of Labor, and the American Federation of Labor were formed in the late 1800s. Unions gained more power with legislation passed during FDR’s New Deal.
Before 1913, federal government revenues came mainly from taxes on goods—tariffs on imported products and excise taxes on items like whiskey. The burden of these regressive taxes fell heavily on working Americans, who spent a much higher percentage of their income on goods than rich people did. In 1909 we passed the 16th Amendment to the Constitution, allowing the government to collect income taxes. Income tax was progressive, paid by Americans earning more than $50,000. In the 1920s and 30s average wages were less than $1500 a year, $25 a week for men, $18 for women for a 48-hour work week. Wages increased during World War II, and by the 1950s we had more people living a middle-class lifestyle than were living in poverty.
The advent of reliable birth control in the 1960s meant that women had the option of limiting family size and joining the labor force. This provided another opportunity to increase family income.
With more earnings, Americans had more money to spend on consumer goods and on leisure activities. Department stores and catalogs were developed in the late 1800s, and people could now purchase things that they formerly would have made at home. This created even more jobs in manufacturing and in retail. A whole new sector provided entertainment and more jobs.
The years from the end of World War II into the 1970s were ones of substantial economic growth and broadly shared prosperity. But in the 1980s this began to change as our tax structure changed and labor unions were weakened. Now we are seeing a decline in the number of people in the middle class and an increase of those in poverty.
On June 9, the Alliance Poverty Task Force will host a Bridges Out of Poverty program, the Community Lens. Our goal is to improve the lives of low-wage workers and those in poverty, to make Box Butte County an area where everyone can do well.