Why is the Middle Class so Unhappy if "Life has Never Been Better?"

Oregon is considered one of the best states in the nation for economic development, yet there is growing evidence even here that the benefits of economic growth are not very evenly distributed.

The Corporation for Enterprise Development, a private non-profit organization in Washington, D.C., ranks Oregon among the top five states in the country for strong employment, job quality, high levels of entrepreneurship and capacity for future growth. Oregon ranks fourth on the list behind Colorado, Utah and Minnesota and just ahead of Georgia.

The same week this laudatory report on Oregon was made public the U.S. Census Bureau released figures showing the top 20 percent of Oregon households are taking in 55 percent of all Oregon's pre-tax income in 1994. That is up from 49 percent from the previous decade. The rich are getting richer, and the poor are falling behind.

Median income of the top 20 percent of Oregon income earners jumped from $40,442 in 1984 to $60,175 in 1994. The median income of the lowest 20 percent was up from $2,676 to $3,981 in the same period. Not to worry, we are told, the wealthy deserve it. They just work harder and smarter for their money. This is the kind of simplistic reductionist argument that could only fool a Libertarian.

There are some long term economic forces influencing these statistics. When the timber industry sawed up a 400-year-old log 10 years ago, its released eight generations of wealth in an instant. There was plenty of money to go around for stockholders, management, retained earnings and labor, including relatively high pay for low-skilled work. Logs that go to the mills today are nearly 40 years old. There is less wealth in the wood. There is less money to go around. Most low-skilled mill jobs have been replaced by automation. Many of Oregon's newly created jobs are in service industries that pay less than industrial and professional jobs.

The gap between the wealthy and the poor is growing and will continue to grow. More than 60,000 service jobs -- clerks, cooks and child-care workers -- will be added to the Oregon economy in the next decade. These jobs average $17,000 a year. That is about half the average wages of the some 80,000 new professional and technical jobs state officials estimate will materialize in the same period.

The premium for a college education -- already substantial -- will continue growing. In 1979 males between the ages of 25-34 with a college degree earned 13 percent more than the same males without a four-year degree. By 1984 that gap widened to 38 percent and continues to grow. Ironically, there are 9,000 fewer Oregon students in Oregon's public colleges and universities because of budget cuts and tuition increases since voters approved a property tax limitation initiative in 1990.

Part of the problem in Oregon is the constant stream of newcomers looking for work. This labor surplus drives down wages. But "market forces" are not the only forces depressing Oregon wages. The Oregon economy is subjected to political manipulation in the state legislature.

The business lobby persuaded the Oregon legislature to repeal the eight-hour day and is relentlessly trying to repeal the 40-hour week, ending mandatory overtime behind the fashionable facade of "flexibility." The legislature and Congress passed laws restricting unemployment compensation eligibility and forcing single mothers on welfare into the work force to compete with low-skilled workers, further driving down wages.

Many businesses, especially companies bought out by conglomerates, pay less in wages because the "parent company" now demands double-digit returns on investment in businesses that historically earned single digits. Workers find their noses rubbed in the lavish lifestyles of executives preoccupied with the value of stock options instead of the production of useful products by their companies.

Land once occupied by manufacturing industries that closed because their jobs were shipped offshore are now occupied by retail chains whose "units" suck tens of millions of dollars out of the local economy and leaving behind their piddling wages, as few tax dollars as they can get away with and only enough charitable contributions to keep from getting run out of town.

A growing number of employers no longer hire hourly wage employees. They contract for "temporary" workers with a labor contractor. Many business make a practice of redesigning work for part time employees. Both practices are designed to avoid the expense of full time workers.

The throwaway employee is not the creature of vague, abstract "market forces." This underemployment is the careful creation of legislatures and congress over the last decade giving one group of people advantages at the expense of others. The results of this deliberate political manipulation of the economy is now showing up in wage, employment and business and Census Bureau statistics.