In his autobiography, written before the Great Depression, Henry Ford wrote of earlier periods of income inequality and its closure with the creation of new and more rewarding jobs. He was almost certainly writing about the shift away from agricultural employment that saw the birth of the Populist movement. By the time of the Great Depression income and wealth inequality reached record levels to which today’s commentators point to as an economic millstone that is repeating itself. The same commentators often fail to acknowledge the low unemployment and the post-Populist peacetime prosperity known as the “roaring twenties.”
Steven Brill, in his book Tailspin, identifies a period of four decades that followed the start of the Great Depression during which middle-class incomes grew. Over this period, the top one-percent of income earners, who’d accounted for 24 percent of all income in the US, fell to around 9 percent. This, Brill credibly asserts, was the consequence of F D Roosevelt’s New Deal and post-World War II growth that extended through the 1950s and 1960s. In 1971, however, the share of middle-class income began to reverse. By 2007 the top one-percent of earners returned to pre-Great Depression levels and now exceeds 30 percent.
The significance of the middle-class is that it is largely the creation of the industrialization era. There is popular belief that the decline of manufacturing industries is at the core of America’s income and wealth inequality. Between 1880 and 1970 manufacturing’s share of total output consistently oscillated around 40 percent of total output. Since the 1970s manufacturing’s share has declined to little over 10 percent of total US output. Over the same period, unemployment has averaged between 5 and 6 percent during the onset and maturation of a new economic era in information and telecommunications.
The overwhelming majority of jobs are now in services which attributes for around 85 percent of total US economic output. A significant issue with services labor, as nineteenth century hand-loom operators in Britain experienced, is its relative unproductiveness compared to large-scale factory production. Economists measure this in terms of a labor-to-capital ratio. Simply put, productivity is maximised when mechanization replaces the quantity and quality of workers required. To maintain competitiveness, therefore, the quality of labor needs to improve. And this is exactly what has occurred to empower today’s knowledge worker.
Between 1970 and 2020 the percentage of the US population with at least a 4-year college degree has roughly doubled. More than 40 percent of America’s working age population are tertiary qualified. They have risen to the challenge foreseen by the late economist Joseph Schumpeter. Schumpeter theorized that high unemployment arises when the decline of old industries intersects with the emergence of new industries. There is no denying that older workers, particularly those who were skilled on the job, have become part of a hidden unemployed. This has occurred over the last 20 years, and not 50, which anti-capitalist commentators express their discontent. Sadly, the bell has tolled on the market for their wares.
The flip-side of the educated coin is that more graduates, with relatively undifferentiated qualifications, has reduced their early career annual earnings at a faster rate than the general workforce. That is fact and contrasts with a 2016 study by Stanford, Harvard, and Berkley professors who found that only 50 percent of graduates expected to earn more than their parents. This is not an indictment of capitalism. Rather, it is an “expectation” for a fact that has not occurred. Other surveys, based on factual income performance, found that 70 percent of America’s highest income earners did not come from high-income households.
 S. Brill, Tailspin: The People and Forces Behind America’s Fifty-year Fall–and those Fighting to Reverse it, (New York, Alfred A. Knopf, 2018), 24-25.
 1. L. D. Johnston, ‘History Lessons: Understanding the Decline in Manufacturing | MinnPost’, (2012), < https://www.minnpost.com/macro-micro-minnesota/2012/02/history-lessons-understanding-decline-manufacturing/ >
 K. Amadeo, ‘Compare Today’s Unemployment with the Past’, The Balance (n.d.), < https://www.thebalance.com/unemployment-rate-by-year-3305506 >
 ‘College Graduation Statistics : Total Graduates Per Year’, EducationData (n.d.), < https://educationdata.org/number-of-college-graduates/ >.
 S. Brill, Tailspin: The People and Forces Behind America’s Fifty-year Fall–and those Fighting to Reverse it, (New York, Alfred A. Knopf, 2018), 25.