We hear a lot out of Washington these days about the “job creators.” We can’t raise taxes on the wealthiest Americans, or on small business, because they are the job creators. Income tax rates are the lowest they’ve been in decades, but that hasn’t resulted in many jobs being created. So, who are the REAL job creators?
The US economy is driven, ultimately, by consumer spending. And more importantly, by middle class spending. When middle class incomes have remained stagnant over the past generation, consumers were faced with the choice of going without or purchasing on credit. But credit purchasing cannot continue permanently. Eventually, the bills must be paid. And when the bill collector comes calling at the same time that housing prices tank, spending on consumer goods grinds to a near halt. It’s not surprising that when credit tightened in the fall of 2008, consumer spending ran off a cliff. And when consumers quit spending, employment fell precipitously as the entire economy contracted.
Businesses won’t resume hiring until they have a market for the goods and services they produce. And consumers can’t resume purchasing until they have money to spend. So, if we truly want to help create jobs, the best and the only solution is to get more money into the pockets of the middle class. We cannot expect the 1% to carry the economy. Sure, they have a lot of money to spend. In fact, they have more money than they can possibly spend. Putting even more money into their pockets won’t have the needed stimulative effect on the economy. Putting more money I to middle class pockets, on the other hand, will create demand for consumer goods. And increased demand will mean more hiring. So, in reality, it’s the middle class who are the real job creators. It’s time that Congress got the message.
More Light Than Heat 