Ari Goldfarb is communication director with Buffalo-based Goldfarb Financial, and published novelist whose works include Just Under the Sky. His series with Buffalo Rising comments on the intersection between finance, economics, and pop culture.

There has been a growing concern brought up by politicians for decades about the shrinking, American Middle class. It is no secret the strongest economies in the world are bolstered by a strong middle class, while nations with the worst income inequality find themselves in stagnant or shrinking economic scenarios. All one has to do is look at struggling countries like Russia, Greece, and Brazil to see the importance of a middle class. Urban unemployment was almost 8% in Brazil last September. No new jobs were created, inflation rose, the income inequality spiked and now the nation’s economy is in shambles.[1] Bloomberg Business reports that Russia’s middle class population could halve since its 2008 peak, bringing it down to numbers matching its 1998 financial crisis.[2] In March 2015 the Moscow Times wrote the average monthly income in Russia was equivalent to $500 in America.[3]­ The United States has been the strongest economy in the world, in part because it had the strongest middle class. In 1980, America was the only country in the world with a median income over $15,000.[4] The next closest was Canada at 14 thousand. This success was built on both a boom in productivity and proportional hourly compensation.

In his book Saving Capitalism , Economist Robert Reich writes how a typical salary for an employee at General Motors in the 1960s could reach around $35 an hour when adjusting to the dollar amount today (note this was not the minimum wage, but it was a wage many workers ere able to achieve through internal advancement). However, despite a continued increase in overall productivity, one can see on the chart from the Economic Policy Institute (also used in Reich’s book) that hourly wage compensation flattened around 1973. Even more interesting is that hourly compensation has only increased 9.2% since 1973, while productivity has gone up by 74.4%. In fact, despite the slight bump in hourly compensation, when adjusting for inflation the minimum wage in 1973 was higher than it is today ($8.42 per hour).[5]

To combat the need to raise wages, some argue these minimum wage jobs are placeholders for individuals until they graduate college. This may have been a valid argument at some point in time but college degrees no longer guarantee the same wages they could less than 20 years ago. Time Money reported in April 2015 the median salary of all college graduates was around 45 thousand a year. This number changes based on gender. According to the Economic Policy Institute, the hourly wage of young college women in 2014 was $15.29, which only adds up to a little over 30 thousand a year.