Tuesday, March 07, 2006

Musings 119--Death of the Middle Class. Part I

I can't put a finger on the exact day I fell out of the middle class. I think it was somewhere around the turn of the century--whether that was 2000 or 2001 is still up for debate.

All I know is that the cost of day to day living has eroded my income each year since. I may make a few dollars more, but the costs that I have no control over just keep on rising. For most of us, living the American dream meant having a steady job and owning a home. If by chance we could save a few bucks for a vacation at Disney World once a year, so much the better.

Middle class folks were the ones that had health insurance and pension plans. Both of these things were usually controlled by the companies that we worked for. In many cases, the wages were not the best, but the benefits enabled us to think that we were doing better than our parents. Our parents had their meager savings and nothing more than what social security paid them at age 65.

When I hit the job market in the late 1960's, minimum wage was $1.25 an hour but you could buy into things called profit sharing accounts. Wealthy companies were starting pension funds for their workers. Many of them matched dollar for dollar the employee's monies. If you worked 30-35 years, you could retire with a pension that was about 80 percent of what you were earning when you were working. Plus, the companies had good health care programs that were locked into reasonable premiums for the rest of your life. All you had to do was reach age 65 and sit back and enjoy the good life.

During the 1990's, companies were flush with investment cash. There was a lot of merging and emerging. Multi-Corporations were the name of the game. Buy one and consolidate and buy another. It was a buyers market. Computers began to really take off, and tech stocks were the hot item. Corporations invested their employees pension funds into these "can't miss" operations. It was the wave of the future. Well, the wave was the start of the wave to the good-by of a way of life. We did not know it, but things were about to take a turn for the worse.

Greed is the thing that makes capitalism work. Now I truly believe in a capitalistic economy. But, I fully realize that the "love of money is the root of all evil." Less than honorable men began to make obscene amounts of money by merging and buying up smaller companies. The Federal Government allowed it, because we believe in the free market system. However, there must always be restraints and oversite. During the 1990's there was very little of either.

Sometime around the year 2000, after a decade of rising stocks and dividends, corporations decided to fudge a bit on the balance sheets to ensure that the good times continued to roll. The Enrons and the World Coms were the ones that we all are familar with. However, there were many others that were a bit over-valued, and they hoped to weather the down turn in earnings and profits by pecking away at those pension funds they had established for their employees. It was a simple idea, really. Just take a bit from the pension fund, since it was doing nothing but laying there and making money, and firm up the business. When the good times began to roll again--as it always does--then the pension funds could be repaid. Well, that was the start down the road to good intentions that truly ended up in Hell.

More tomorrow in Part II.


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