Escaping Poverty Requires Almost 20 Years With Nearly Nothing Going Wrong
The MIT economist Peter Temin argues that economic inequality results in two distinct classes. And only one of them has any power.
A lot of factors have contributed to American inequality: slavery, economic policy, technological change, the power of lobbying, globalization, and so on. In their wake, what’s left?
That’s the question at the heart of a new book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, by Peter Temin, an economist from MIT. Temin argues that, following decades of growing inequality, America is now left with what is more or less a two-class system: One small, predominantly white upper class that wields a disproportionate share of money, power, and political influence and a much larger, minority-heavy (but still mostly white) lower class that is all too frequently subject to the first group’s whims.
Temin identifies two types of workers in what he calls “the dual economy.” The first are skilled, tech-savvy workers and managers with college degrees and high salaries who are concentrated heavily in fields such as finance, technology, and electronics—hence his labeling it the “FTE sector.” They make up about 20 percent of the roughly 320 million people who live in America. The other group is the low-skilled workers, which he simply calls the “low-wage sector.”
Temin then divides workers into groups that can trace their family line in the U.S. back to before 1970 (when productivity growth began to outpace wage growth) and groups that immigrated later, and notes that race plays a pretty big role in how both groups fare in the American economy. “In the group that has been here longer, white Americans dominate both the FTE sector and the low-wage sector, while African Americans are located almost entirely in the low-wage sector,” he writes. “In the group of recent immigrants, Asians predominantly entered the FTE sector, while Latino immigrants joined African Americans in the low-wage sector.”
After divvying up workers like this (and perhaps he does so with too broad of strokes), Temin explains why there are such stark divisions between them. He focuses on how the construction of class and race, and racial prejudice, have created a system that keeps members of the lower classes precisely where they are. He writes that the upper class of FTE workers, who make up just one-fifth of the population, has strategically pushed for policies—such as relatively low minimum wages and business-friendly deregulation—to bolster the economic success of some groups and not others, largely along racial lines. “The choices made in the United States include keeping the low-wage sector quiet by mass incarceration, housing segregation and disenfranchisement,” Temin writes.