Robert Reich: Middle Class Stressed, 'Stagnating,' Despite Market Gains

Monday, 14 Apr 2014 11:07 AM

By Wanda Carruthers

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The gains generated from the stock market in recent years are not reaching the middle class, which continues to feel stressed out, said Robert Reich, former Secretary of Labor under President Bill Clinton.

Reich said myriad causes were to blame for "frustration" in the middle class. Specifically, he pointed to the lower labor participation rate and the drop in median household income as primary reasons why many Americans are struggling.

"Add the two together, and the middle class is under huge stress," Reich told MSNBC's "Morning Joe" on Monday.

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"The middle class for the past 30 years has been stagnating," Reich said. "Ninety-five percent of the gains from the economy are going to the top 1 percent, which is what it's been since the start of the recovery."

The labor participation rate, which Reich said is at a "35-year low," presents a "tremendous problem" impacting Americans. He said median household income that "continues to drop, adjusted for inflation," has also stymied the middle class.

The problem is so severe that it is affecting businesspeople as they look to the future buying power of consumers, Reich said.

"I was talking to a CEO not long ago who said he is worried about the future of his sales because there's not enough purchasing power in the middle class to continue to generate the kind of sales that he needs.

"And we're going to hear more and more from businesspeople who are worried about widening inequality," he said.

Reich suggested raising the minimum wage and expanding earned income tax credits were two remedies to aid the middle class. In addition, he said the concept of an "ownership society" could help address economic inequality.

"We really do have to spread seriously ownership, because if most of the gains are coming from stock gains, the whole country ought to be part of that," he said.

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