When Hedrick Smith first started researching his newest book, the working title he had in mind was The American Dream at Risk. A question he kept hearing during the political discourse was whether a person was better off four years ago. But what he found out indicated that a better question might be were you better off 16 years ago because that’s when the median annual household income of Americans peaked at $54,932. The latest Census Bureau data shows it has decreased by 9% since then.
"The middle class has stagnated," says Smith, former Pulitzer Prize-winning New York Times reporter and Emmy award-winning producer whose 26 prime-time specials for PBS explore the systemic problems of our country. "The average pay of a male worker in America was a little lower in 2011 than in 1978, that's three decades of going nowhere."
And so Smith changed the title of his novel to Who Stole the American Dream? (Random House 2012; $30) – an in-depth look at how over the past four decades political and corporate decisions have derailed the middle class.
Another surprise that made itself manifest during Smith’s investigations was that the loss of middle class power didn’t happen just a few years back when the market melted down in 2008. That mess he attributes to forces beginning back in 1971and underwater mortgages, the disappearance of our pensions, the loss of earnings in our 401 (K) as well as the exorbitant management fees that many don’t realize they’re paying, the vilification of unions and the housing collapse are all part of an extreme power shift.
“I didn’t know this and I don’t think many people did, but in 1971, attorney Lewis Powell, before he went on the Supreme Court, sparked the new economy, one widely favoring business, financial and corporate elites and stripping the middle class of their chance to earn the American dream,” says Smith. “The middle class had a very good life in America, particularly during the period when there were battles going on for civil rights and the environment, back in the ’60s and ’70s. We had an era of middle class prosperity and an era of middle class power, and by the way, those two things go together.”
With power and prosperity, Americans were able to maintain a solid middle class and that the government worked to produce it.
“What do we have today?” he asks and then answers, “We have polarized politics instead of working bipartisanship; we have gaping inequalities in our economy, just enormous wealth concentrated. It’s a fallacy that businesses can’t afford to pay workers more or the company would go out of business. Germany’s doing it. Daimler Benz, Mercedes, BMW, Siemens? These German companies are increasing worker pay in Germany five times faster than in America, and they’ve done well on the international market. They’ve had trade surpluses. They have 21 percent of their workforce in manufacturing, we have 9 percent.”
While it sounds grim and overwhelming, Smith believes there’s hope but the only way the middle class can regain their power and prosperity is to become smart, to read about what happened and then work and vote to overcome that.
“We have to pay attention,” he says.