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Statement of Chairman Tom Harkin at Committee Hearing to Examine Shrinking of America's Middle Class

*As Prepared for Delivery*

“As I have traveled through Iowa and across the country, I have heard from more and more hardworking middle class families who feel that the American Dream is slipping away. I recently received a letter from one of my constituents, who wrote:

My own disposable income has disappeared, and I am not alone. Where I once joined friends occasionally for a lunch ‘out,’ that no longer happens. I don't buy new clothes. I don't travel. My friends and neighbors, formerly middle class all, are in the same boat. We're the new poor.

“Unfortunately, as she said, she is by no means alone.

“Take, for instance, the town of Webster City, Iowa. Webster City is a town where middle-class families work hard, play by the rules, and sacrifice for their children.  But it is also a town where our decent, middle-class way of life is threatened. 

“Recently, in Webster City, the Electrolux plant that had been the town’s economic engine for 80 years closed its doors. Production was moved to Juarez, Mexico. In the final round of lay-offs, in March, 500 Iowans lost their middle-class jobs. This most recent factory closing comes on the heels of 222 plant closings just in Iowa last year, destroying nearly 12,000 jobs.

“Sadly, stories like these have become all too common across the country.  

“The American Dream used to mean something – that if you put in a hard day's work, you could expect good American wages, decent benefits, and a better life for your kids.  Today, we’re in danger of losing that Dream -- and our middle class with it.  For the first time in history, the majority of Americans believe their kids will have fewer opportunities than they did.  Americans don’t expect to be rich or privileged, but they do expect to be treated fairly, and they deserve to have the opportunity to build a better life for their children.  Today, these middle-class aspirations are in jeopardy.

“It wasn’t always like this.  In the decades after World War II, a rising tide lifted all boats. Worker productivity and family income grew together, at over 2 percent annually. In those years, the middle class fully shared in the nation’s growing wealth.

“But, in recent decades that shared prosperity has come to an abrupt halt.  As productivity has continued to climb, and as Americans have worked harder than ever, middle class family incomes have stagnated.  In the Bush years, wages and salaries fell to their lowest share of total national income since 1929.  Corporate profits have skyrocketed, and the income and wealth at the very top has surged, but ordinary Americans haven’t shared in this prosperity.  In fact, over the last decade, the average income of working Americans actually declined

“Families in Webster City and across the country are under enormous strain because of these changes in our economy.  Daily, parents sit around the kitchen table worrying about how to make ends meet.  Their paychecks aren’t keeping pace with the soaring costs of everyday expense like education, health care, housing and gas. Their jobs are insecure, their savings and pensions have disappeared, and they are profoundly worried about the future.

“Beyond the struggles of individual families, our economy has also suffered as the middle class has declined.

“When I talk to business owners today, one of the things I hear is that they aren’t hiring new workers or ordering new products because they don’t know whether consumers have the resources to buy what they are selling. These are smart business people. They will readily expand and invest if they sense demand.  But demand is weak.  Unless middle class families have the resources available to purchase gas, pay rent, and buy groceries and clothes for their kids, our economy is going to suffer and be driven by boom and bust cycles on Wall Street. Let me state a simple truth:  We can’t have a strong economy unless we have a strong middle class to make and buy the everyday items a family needs to live a decent life.

“It’s true that our economy has undergone fundamental changes in recent years, but I don’t think these changes should be viewed as the inevitable result of forces beyond our control, things like new technology and globalization.  While those forces have presented challenges, we’ve also made deliberate policy choices that have hurt the middle class.

“Ordinary Americans know that this is true.  As one of my constituents recently put it in a letter to me, “Why is Washington determined to make the rich richer, and to turn its back on the middle class?”

“For years, our economy has operated on the flawed premise that if we let the powerful corporations basically do whatever they want to reap huge profits – from shipping American jobs overseas to playing exotic games with our financial system – everyone will prosper.  Many people here in Washington bought into this vision – that if corporate profits surged and the rich got richer, they would magically create jobs, and prosperity would trickle-down to everyone else. 

"Instead, what we got was the Great Recession, falling real incomes, and a real unemployment rate close to 16 percent.

“We can’t keep moving down this same failed path.  If we do, frankly, we may not have a middle class two decades from now.  We have to look closely at what went wrong, and how we can make smarter policy choices to restore the fundamental promise of the American Dream – that if you work hard and play by the rules, you should be able to build a better life for your family. 

“One of those smarter policy choices is to restore the voice of working Americans by strengthening workers’ rights, and defending the agency that protects those rights – the National Labor Relations Board.  Recently the dedicated career employees who impartially administer the law at this important agency have come under vicious and unfair political attack for carrying out their duties under the law.  This attack is part of a larger political campaign that we are seeing across the country to unfairly scapegoat workers and their unions for our nation’s problems.  Something is seriously out of whack when a Midwestern governor vilifies teachers as other public employees as “the privileged elite.”  These attacks on workers are, at best, an unfortunate distraction.  They certainly won’t help the people of Webster City, or any of the middle-class communities that are suffering across the country. 

“The fact is, unions played a critical role in building the middle class in this country by standing up for good, American wages, decent benefits, and the 40-hour work week.  By giving workers the opportunity to negotiate their pay and benefits – the same opportunity that corporate executives already have – unions will help to restore and rebuild the middle class. 

“But strengthening unions is only one of many steps to putting our country back on track.  I look forward to hearing more from our witnesses today about the causes of the crisis facing the middle class and how we can move forward to build new and better opportunities in the future. 

“One thing is certain – there can be no sustainable economic recovery without the recovery of our middle class.  I hope today’s hearing can help start us down that new path.   I look forward to a lively discussion.”