We Traded Good Jobs for Cheap Crap, but Now the Crap Isn’t Cheap
Low pay and easy imports kept the economy afloat. That deal is collapsing, and the fallout won’t be evenly felt.
Back in the 1980s, America struck a devil’s bargain: stagnant wages in exchange for cheap goods. It was a bad deal then and it’s about to get worse.
Even the poor could afford to stuff their homes so full of stuff that we had to launch whole new businesses dedicated to decluttering. We had to get rid of all our old shit so we could buy shiny new shit.
It’s true that millions struggled to afford housing, healthcare and education, but we could often borrow the money and interest rates dropped in the early 1990s (until the last few years) so we could pile on debt to get the things we wanted or needed. Many couldn’t tell the difference between those two things.
We ultimately concluded we didn’t need no education anyway because we could always become a plumber. It was easier to decide college was a bad deal than to worry about paying for it.
How’s that working out for us now?
I would say not so good. Not everybody realizes yet how much more expensive the ordinary daily stuff will be very, very soon. It’s going to be a severe shock to some people who don’t follow the news because they don’t like all that political stuff. Weirdly, people are affected by things whether they pay attention to them or not.
Way back when, America had many more factories. Our peak was in 1979, when 22 percent of us worked in manufacturing, and the numbers have declined ever since. In what is no doubt a complete coincidence, Ronald Reagan took office in 1980 and began dismantling unions.
Other than those directly affected, it took a little while for people to understand the flip side of an underpaid workforce. Some people smugly enjoyed watching “overpaid” factory workers lose their jobs and have to take new ones in the low-paid service industry.
I’m not an economist, but I feel comfortable pointing out this amazing fact: Poorly paid people cannot afford to participate in the economy the same way well-paid people do.
For the wealthy, the post-Reagan years must have been awesome
You could pay your workers very little and you could enjoy low prices for the ordinary things in life! Such a deal! Who cared if the middle class shrank and the poor and working classes struggled to pay for even the cheap goods we brought in by the boatload?
Families did what they could to cope. More moms went to work, and it wasn’t just after the kids got a little older and it wasn’t just for extras. It was when their babies were 6 weeks old and it was because their partner’s pay wasn’t enough to cover the rent.
People who already owned houses tapped their home equity. People ran up their credit cards. They started side gigs. Bankruptcy rates soared. So did homelessness.
I blame Reagan for a lot of this
Reaganomics was disastrous for the poor and middle classes but fantastic for the wealthy. Nothing Reagan did, however, can hold a candle to what the current Oval Office occupant is doing. His name will be said with a scowl and a spit for decades.
And I am not so sure the wealthy are going to fare well ultimately, other than the top 1 percent, who are killing it (and us.) But your average comfortably well-off family that has enjoyed good returns on investments feels a lot of fear right now as they look at their statements.
And they should.
Every cash cow eventually goes dry
The poor and middle classes have been a vast herd of cattle that the owner class has milked for decades. Our productivity level skyrocketed but our wages did not.
Between 1979 and 2024, productivity rose 86.5 percent but hourly pay increased only 31.7 percent.
The working class has nothing more to give. The shrinking middle class is not in much better shape. What will it take for people to wake up and realize they can smell no coffee at all because it’s almost all imported and nobody can afford it?
Tariffs don’t cause factories to pop up by magic
It takes many years to plan, finance and build a new factory. If you do not know anyone who works in a factory, you may not understand how complicated supply chains are. Covid turned “supply chain” into a household term, but understanding one takes more than watching ships idle at ports.
But I do know people who work in factories. Let me explain it to you this way: Even the factories we currently have need to import some of their materials. If you’re making widgets here in the U.S., great! I bet you source some of your key materials from China, and I bet some of your markets are overseas.
Good luck, American factories! You can’t make anything out of pure air. And while the theory that nations that trade together wouldn’t go to war because they could make more by selling to each other than by invading each other isn’t looking 100 percent true right now, I have to believe it helps keep the peace.
So no, high-paying factory jobs aren’t going to magic themselves into being
I will be surprised if we don’t lose factory jobs. Why would you pay your workers to come to work and do nothing if you can’t source the raw materials they need to keep the assembly line going?
Answer: You won’t. You are running a business, not a charity, and you will lay off your idle workers until you can get the raw materials you need. And then, if the tariff madness doesn’t abate soon, you will close the factory. And then all those unemployed factory workers will not be able to participate in the economy much at all.
What happens when the working class is all dried up and the cheap stuff stops coming? We’re about to find out.
About Michelle Teheux
I’m a writer in central Illinois. If you like my work, subscribe to me here and on Medium. I also have a new Substack aimed at authors who want to self-publish books, called The Indie Author. My new book is Strapped: Fighting for the soul of the American working class. And yes, those are my husband’s actual boots on the cover! My most recent novel is The Trailer Park Rules. If you prefer to give a one-time tip, I accept Ko-fi.
I was in business school from 1979-81, just on the cusp of the switch from regional economies to international economies. I don’t think that the revolution in computing power gets enough attention as a driver for the disintegration of local and regional economies.
I am not sure Reagan could have made (waves hands) all of this possible. Public policy can only do so much. Prior to cheap computing, automation and consolidation was expensive—you had to hire armies of clerks, or you had to make a significant investment in “big iron” mainframe systems and then invest in a small army of programmers and systems people to keep it all going.
The kind of intricate, international, “just in time” fragile supply chains that everybody depends on are only possible because of a breathtaking level of cheap data storage and data integration.
Having lived though all of the ups and downs of the U.S. economy since tricky Dick Nixon, I'm well aware of what's coming. There's no stopping it now. All we can do is hang on as bests as we can as the economy heads for the river rapids and hope there's no big water fall down river somewhere.
So many people are going to wake up someday soon and go, 'What happened?" Most of them Trump voters. This has been coming for decades and Donny boy is just a symptom of the culmination of decades of bad ideas for the working class.