1Center or American Progress | The Middle Class and Economic Growth
The Middle Class and Economic Growth
A Project of the Center for American Progress
Michael Ettlinger
Over he pas 236 years, he Unied Saes has risen rom a backward band o peripheralcolonies o he greaes economic orce in he hisory o he world. Why? Has i been because an elie handul o wealhy Americans made brillian invesmens? Or has i been because hundreds o millions o Americans have worked hard, improved hem-selves, sared businesses, invened new hings, buil communiies, and consrucedan economy ha provides or he many and no jus he ew?Te Cener or American Progress’s Middle Class and Economic Growh projecexamines hese wo divergen views o how he economy works: one ha embraces hesupply-side, rickle-down dogma ha has dominaed policymaking or he pas 35 years,and he oher, which insead o atribuing he success o our counry o a scan ew a he op, ascribes he naion’s economic success o he role o he ens o millions o engines o growh who are he American middle class. Te projec does his hrough: –Economic analysis rom CAP and ouside economiss – An even series eauring prominen economiss, business leaders, journaliss,and policymakers –Mulimedia presenaions o he issues and he evidence –Policy proposals o address he challenges aced by middle-class Americans
Our philosophy
Te undamenal hesis o his projec is ha he middle class is he hearbea o he American economy. Te middle class is he indispensable workorce and he all-impor-an consumer. Te grea American enrepreneurs and invenors who have been vial oour naional success have come rom he middle class. I is he educaion and skills o he middle class ha have driven he rise in produciviy ha has underpinned our pros-periy. And i is a sable middle class ha has kep America ree o he urmoil o mucho he res o he world and has made vial invesmens in educaion, roads, and ohereconomically imporan inrasrucure. Te ascendency o America o being he riches
2Center or American Progress | The Middle Class and Economic Growth
naion in he hisory o he plane is undamenally a middle-class achievemen. For ourcounry o succeed going orward, we need o ge back o he undamenal ruh haour success hinges on he srengh o he middle class.Te proo o his can be ound in: –Te clear ailure o supply-side economics as an economic sraegy
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– A growing economic lieraure as documened in our paper, “Te American MiddleClass, Income Inequaliy, and he Srengh o Our Economy,”
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ha shows how asrong middle class is vial, and how excessive income inequaliy is harmul o ournaional economic success – A look back a our naion’s economic hisory Te reason he middle class is so imporan isn’ complicaed:
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Businesses need middle-class cusomers. I you ask business owners wha moivaeshem o make invesmens and creae jobs, hey’ll ell you is cusomers. From wheredo he majoriy o cusomers come? Te middle class.
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Te economy depends on he skills o he middle class. I you look o wha has beena he roo o economic growh over ime, i has been growh in worker produciviy and he inveniveness o our people. Who among us has had he exibiliy o pospone jumping direcly ino he workorce aer a minimum level o educaion and inseadavail hemselves o he opporuniy o enhance skills by pursing higher educaion?Te children o hose securely in he middle class.
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Innovaors, invenors, and enrepreneurs come rom he middle class. Why is his so?Unlike hose wih lower incomes—who, by necessiy, are consumed wih issues o day-o-day survival—middle-class individuals have he ime and capaciy o come up wih inno- vaive new business ideas, o inves in hem, and o develop and oser hem. Moreover,scary hough i may be, middle-class Americans can aord o ake he risk o leaving a jobo sar a business. I you look a he orunes o he Forbes 400, hey were mosly sared wih a risk, an invenion, or an invesmen by someone rom he middle class.
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Te middle class creaes sabiliy and invesmen in he economy. I’s also he middle classha has he bigges sake in seeing he U.S. economy succeed. Te rich are largely immunerom he success or ailure o any paricular counry’s economy—he quesion or hemis he exen o heir wealh, no wheher hey are going o be able o live lives o comoror wheher hey can aord o send heir children o college. Te res o us, however, are very dependen on he success o our counry’s economy. Tis doesn’ mean ha herearen’ wealhy individuals who care deeply abou he naion’s economic well-being, bumiddle-class voers are hose who orm he backbone o suppor or public invesmensin educaion, inrasrucure, and he oher building blocks o a srong economy.
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The Middle Class and Economic Growth
CAP's Middle Class and Economic Growth project looks to provide a better understanding of the relationship between middle-class strength and the nation’s economic health.
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