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How Reagan Waged War on the American Middle Class

American Middle Class
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EDITOR NOTE: August 2021 marks the 40th anniversary of President Ronald Regan firing 11,345 striking members of the Professional Air Traffic Controllers Organization and barring them from ever working for the federal government. This was the first shot in a war between the U.S. government, directed by corporate America and the ultra-wealthy, and the working class that is still going on four decades later. This war is still going strong today, as demonstrated by U.S. Central Bank policies that are protecting the rich and powerful and crushing the American middle class. There is seemingly no end in sight to this battle so, for those that aren’t among the financial elite, doing things like protecting wealth with non-CUSIP gold and silver is more important than ever. 

Reagan’s firing of striking air traffic controllers was the first huge offensive in corporate America’s war on everyone else.

FORTY YEARS AGO, on August 5, 1981, President Ronald Reagan fired 11,345 striking air traffic controllers and barred them from ever working again for the federal government. By October of that year, the Professional Air Traffic Controllers Organization, or PATCO, the union that had called the strike, had been decertified and lay in ruins. The careers of most of the individual strikers were similarly dead: While Bill Clinton lifted Reagan’s ban on strikers in 1993, fewer than 10 percent were ever rehired by the Federal Aviation Administration.

PATCO was dominated by Vietnam War-era veterans who’d learned air traffic control in the military and were one of a vanishingly small number of unions to endorse Reagan in 1980, thereby scoring one of the greatest own goals in political history. It’s easy to imagine strikers expressing the same sentiments as a Trump voter who famously lamented, “I thought he was going to do good things. He’s not hurting the people he needs to be hurting.”

The PATCO saga began in February 1981, when negotiations began between the union and the FAA on a new contract. PATCO proposed changes including a 32-hour workweek and a big increase in pay. The FAA came back with counterproposals the union deemed insufficient, and on August 3, with bargaining at an impasse, most of the air traffic controllers walked out.

It was unquestionably illegal for PATCO, as a union of government workers, to strike. However, which laws are enforced is always and everywhere a political decision: Wall Street firms broke countless laws in the run-up to the 2008 financial crisis, yet almost no executives suffered any consequences. Reagan & Co. wanted to send a message that mere workers could expect no such forbearance. Just two days after the strike began, the air traffic controllers were gone.

The significance of Reagan’s actions is rarely discussed today in the mainstream, and for understandable reasons: It was the first huge offensive in a war that corporate America has been waging on this country’s middle class ever since. As Warren Buffett — current estimated net worth $101 billion — has said, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

The stunning victory of the wealthy over everyone else can been measured in several straightforward ways. During a speech last May at a community college in Cleveland, Joe Biden explained one of them:

From 1948 after the war to 1979, productivity in America grew by 100 percent. We made more things with productivity. You know what the workers’ pay grew? By 100 percent. Since 1979, all of that changed. Productivity has grown four times faster than pay has grown. The basic bargain in this country has been broken.

Productivity is a simple but extremely important economic concept. Over time, as technology advances and society learns how to use it, each worker can produce more. One person with a bulldozer can move a lot more dirt than one person with a shovel. One person with the latest version of Microsoft Excel can do a lot more math than one person with Napier’s bones.

The meaning of Biden’s statistics is that for decades after World War II, America got much richer overall, and average worker pay went up at the same rate. Then the link between productivity and pay was severed: The U.S. overall continued to get much richer, but most of the increased wealth went to the top, not to normal people. Corporate CEOs, partners at corporate law firms, orthopedic surgeons — they make three, five, 10 times what they did in 1981. Nurses, firefighters, janitors, almost anyone without a college degree — their pay has barely budged.

The situation is especially egregious at the bottom of the pay scale. Until 1968, Congress increased the federal minimum wage in line with productivity. That year, it reached its highest level: Adjusted for inflation, it was the equivalent of $12 per hour today. It has since fallen to $7.25. Yet the whole story is far worse. Even as low-wage workers have battled fruitlessly to get the federal minimum wage raised to $15, no one realizes that if it had continued increasing along with productivity since 1968, it would now be over $24 per hour. At that level, a couple working full-time minimum wage jobs would take home $96,000 a year. This seems incredible, yet there are no economic reasons it couldn’t happen; we have simply made a political decision that it should not.

Another way to understand this is to look at the other end of American society. In 1995, Bill Gates had a net worth of $10 billion, worth about $18 billion in today’s dollars. That was enough to make him the richest person in America. If that were all Gates had today, there would be 25 or so billionaires ahead of him in line. Jeff Bezos, currently in first place, possesses 10 times Gates’s 1995 net worth.

Then there’s the number of significant strikes in the U.S. each year. A confident, powerful labor movement will generate large numbers of strikes; one terrorized and cowed into submission will not. According to the Labor Department, there were generally 200-400 large-scale strikes each year from 1947 to 1979. There were 187 in 1980. Then after the PATCO firing, the numbers fell off a cliff. In 1988, the last full year of Reagan’s second term, there were just 40 strikes. By 2017, there were seven.

The direct causal relationship between the firing of the air traffic controllers and the crushing of labor is widely noted and celebrated on the right. In a 2003 speech at the Reagan Library in California, then-Chair of the Federal Reserve Alan Greenspan spoke glowingly of the “flexibility” of U.S. labor markets, by which he meant “the freedom to fire.” Greenspan said that “perhaps the most important” contribution to these flexible markets “was the firing of the air traffic controllers in August 1981. … [Reagan’s] action gave weight to the legal right of private employers, previously not fully exercised, to use their own discretion to both hire and discharge workers.”

Donald Devine, the head of Reagan’s Office of Personnel Management at the time, later wrote, “American business leaders were given a lesson in managerial leadership [by Reagan] that they could not and did not ignore. Many private sector executives have told me that they were able to cut the fat from their organizations and adopt more competitive work practices because of what the government did in those days.”

The question today is whether the U.S. will ever go back to being the middle-class society it once was. Many Americans have long believed and hoped that that was the norm, and we will naturally return to it without much effort on our part. But as the past 40 years have gone by, it appears more and more that Gilded Age brutality is the U.S. norm, and the years of an American middle class were a brief exception. That means recreating it will require the same titanic struggle needed to create it in the first place.

Original post from The Intercept

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