The Unmaking of the Black Blue-Collar Middle Class: Economic Shifts, Racial Inequality, and Corporate Financialization

This podcast episode, featuring Bill Lazonick, delves into the historical rise and subsequent decline of the black blue-collar middle class in the United States. Lazonick argues that the post-World War II era saw the emergence of a robust middle class, particularly for white workers, built on the foundation of large, productive business enterprises that invested in employee capabilities and shared productivity gains. This system, characterized by long-term employment, seniority, and company-provided benefits like pensions and healthcare, created a path to upward mobility. However, this structure was initially a "white man's world," with significant racial barriers to entry for Black Americans.

The critical turning point came in the 1960s and 1970s, when a unique confluence of factors—strong demand for blue-collar workers, low immigration, and the Civil Rights Movement—opened doors for Black workers to access these good, stable jobs. Lazonick emphasizes that Black Americans moved into this system precisely as it began to unravel. The "omission" of the Equal Employment Opportunity Commission was its failure to anticipate and address the dismantling of the very employment system that made upward mobility possible. This decline was driven by corporate financialization, the rise of shareholder value ideology, and a shift away from reinvesting profits in the workforce towards stock buybacks and dividends.

The consequences of this economic transformation were profound. While white working-class individuals eventually also suffered downward mobility, experiencing "deaths of despair" as documented by others, Black workers were hit first and hardest by plant closings and job insecurity in the 1980s. The episode also highlights the erosion of public goods, particularly affordable public higher education, which had historically served as a crucial rung on the ladder of upward mobility. The increasing cost of education, coupled with the shift towards a globalized, high-tech labor force facilitated by policies like the H1B visa program, further exacerbated the challenges for the domestic workforce, including both Black and white Americans.

Lazonick suggests that the U.S. response to globalization, technological change, and new competition might have been different if the middle-class labor force had remained predominantly white and stable in those positions. The political divisions that emerged are seen as a consequence of two groups experiencing downward mobility. The discussion underscores the long-term societal costs of prioritizing short-term shareholder gains over sustained investment in human capital and public infrastructure, leading to widespread economic insecurity and deepening racial and social inequalities.

"The unmaking of the black blue-collar middle class."

"Eighty percent of the employment more than that in the United States is the business sector."

"The working class in the advanced economies actually did have a path to upward mobility if it worked in productive business enterprises and if those enterprises shared the gains with them."

"Post-World War II particularly you gotta trend toward more income equality because hot companies did not hire and fire people."

"That really was a white structured as a white man's world. It was not structured in a way that said oh we want to employ everybody in this system."

"When the change occurred blacks were able to move into a lot of these good jobs particularly at the blue collar level that required high school education the most that that whites had been in."

"The omission was that they should have said this will only work if this system of employment is kept in place and that's what changed."

"The shareholder value ideology became dominant which I started critiquing around the mid 1980s when I was at Harvard Business School... that was what it was destroying that notion of that people had once you worked for a company you had certain rights to be there."

"I think the U.S. response would have been very different if it if that labor force that middle class had been just white and and wasn't moving out of those positions."

"That was happening to blacks in the late 1980s because the blacks when when the plant closings occurred in the 1980s and nobody really did anything to say well what are we going to do about this how are we going to keep the middle class whole blacks were hit first."

"The infrastructure which you might call the rungs in the ladder public universities that were cheap when I was a senior in high school from the fall of 1975 to 1976 it cost say six hundred dollars a year to go to University of Michigan."

"It meant that it let all these companies off the hook for paying the taxes supporting the upgrading of of the American flag force and it wasn't just blacks it was whites but again if it had been whites who were hit just whites there might have been a different political coalition."