America could be flying high with The Jetsons. But instead, we’re stuck hoofing it with The Flintstones.
Back in 1966, TIME magazine published an article that looked ahead toward the future, and discussed what the rises of technology and automation would mean for working-class Americans.
From the time of George Washington until the presidency of Ronald Reagan, with a few blips for wars, as American workers became more productive, their wages went up or their working hours went down, or both.
We went from sixty-hour work weeks and poverty wages in the early 19th century, to the fifty-hour work week at the turn of the 20th century with better wages, to solidly middle-class wages and a forty-hour work week by the 1950’s.
Whether it was the steam revolution of the early 19th century, the industrial revolution of the late 19th century, or the machine revolution of the early 20th century, as workers were able to make more things – and more profits for their companies – with fewer hours, they shared in the prosperity that was produced by their increased productivity.
So, TIME magazine simply assumed that from 1966 to the year 2000, as computer and advanced mechanization made American workers more productive, that their wages would go up and their work week would go down.
The article concluded that, “By 2000, the machines will be producing so much that everyone in the U.S. will, in effect, be independently wealthy. With government benefits, even nonworking families will have, by one estimate, an annual income of $30,000-$40,000. How to use leisure meaningfully will be a major problem.”
That $30,000-$40,000 by the way is more like $215,000 – $288,000 in today’s dollars!
And it wasn’t just TIME magazine predicting such a luxurious future for America.
Back in the 1960s, it was a common belief that the rise of technology and automation would mean increased productivity in America, which in turn would mean more money and fewer hours worked for American workers.
After all, it had always been that way in America.
The rationale behind that belief was pretty simple.
With increased technology, companies would be able to produce more and be more efficient on a per worker basis.
Revenues would soar, and profits would be passed along to those workers, who’d be making more and working fewer hours.
Back in 1966, everyone thought that by the year 2000, America would be “The Leisure Society.”
They thought that our biggest worries would be how to use all of our time off, where to go on our many vacations, and what sort of intellectual and artistic pursuits the middle-class would choose to explore in the 21st century.
But that logic all hinged on the top marginal income tax rate remaining at 70 percent, where it was in 1966.
After CEO’s had earned their first million or two, they started hitting that top tax bracket, and simply stopped taking more pay.
After all, who wants to pay 70 percent income tax?
This is why, for about 50 years, CEO’s earned about 30 times what their average workers earned.
That high income tax rate thus encouraged CEO’s to keep money in their businesses, invest in new technology, pay their workers more, and hire new workers so their businesses could expand.
As businesses became more profitable thanks to investments in automation and technology, workers saw more of those profits, and increasing standards of living and more leisure time.
And TIME magazine, in 1966, assumed that that trend would continue right through to the beginning of the 21st century.
But then Reagan came along, slashed income taxes, and everything changed. The idea of “The Leisure Society” blew up.
In 1981, Ronald Regan introduced his Economic Recovery Tax Act, which slashed the top marginal income tax rate from 70 to 50 percent, cut estate taxes for wealthy businesses, and slashed corporate-profit and capital gains taxes too.
And just a few years later, Reagan again lowered the top income tax rate to 28 percent, a level that hadn’t been seen since the early 1920’s, a low tax rate is blamed by many economists for causing the bubble that led to the Great Depression.
So, how did the Reagan tax cuts doom today’s working-class Americans’ opportunity for a life of leisure that TIME magazine foresaw?
When the TIME article came out in 1966, working people’s wages had stayed even with productivity levels since 1900.
So, people thought back then that if productivity continued to rise, which was likely, thanks to increases in automation and gains in technology, wages would rise too.
Thanks to Reagan however, although businesses did become more profitable, there was less of an incentive to share the wealth. Because of historically low income tax rates, CEO’s pulled profits out of their companies and filled their Swiss bank accounts, all at the expense of working-class Americans.
All the new profits that were created by gains in automation and technology, from the 1980’s to today, and that were supposed to be shared with working people, giving us all higher paychecks and more time off, instead went to the wealthy elite.
Productivity continued to rise as it had for more than 200 years of American history, but for the first time, wages stalled since 1980.
The connection between wages and productivity, which had been tied together since 1900, disappeared.
Worker productivity continued to increase thanks to constant improvements in technology, but their wages stayed flat.
Working people’s paychecks didn’t increase, and neither did their time off.
Back in the 1950’s, the average American working in manufacturing worked around 42 hours per week.
Today, an average American working manufacturing is working around 40 hours per week.
Even though productivity has increased 400 percent since 1950, Americans are working, on average, just two hours per week less, and are paid the same or in many cases even less than they were paid in 1950.
If productivity is four times higher today than it was in the 1950’s, then Americans should be able to work just ten hours per week to afford the same 1950’s lifestyle when a family of four could get by on just one paycheck, own a home, own a car, put their kids through school, take a couple vacations a year, and retire comfortably.
That’s the very definition of “The Leisure Society”: ten hours of work a week, and the rest of the time spent with family, with travel, with playing golf, with going to the movies, with whatever you want.
But “The Leisure Society” was doomed the minute Ronald Regan decided to slash taxes on the rich in America.
It’s time to undo the damage done by Reagan, and roll-back the Reagan tax cuts for the rich, that have let the wealthy elite prosper, while working people got screwed.
Only when the Reagan Revolution is reversed will every American again reap the rewards of increases in productivity in technology.
Let’s step out of the Flintstone age, and hop on-board with the Jetsons.