The Myth of the Wealthy Job Creator: Why the Middle Class is the Real Engine of Prosperity

By: Alan K. Yarborough

In a world where the rich are often venerated as the architects of prosperity, it’s time to debunk an insidious myth: the notion that wealth equates to job creation. This belief, held sacrosanct by many, has been the bedrock of economic policies for decades. But just as the Ptolemaic model of the universe was upended by Copernican heliocentrism, so too must we reevaluate our economic axioms.

Let’s begin by scrutinizing the oft-repeated mantra: “If you tax the rich, job creation will plummet.” This statement, a cornerstone of conservative ideology and rarely contested by the left, has shaped the economic terrain we navigate today. But what if this axiom is as flawed as believing the Earth is the center of the universe? A geocentric astronomer would produce shoddy science, and a policymaker swayed by this economic fallacy would craft equally detrimental policies.

As someone who has founded and nurtured multiple businesses, I can attest that the wealthy alone are not the linchpins of employment. If consumers lacked the purchasing power to buy the products or services offered, even the most promising business would crumble, and the jobs it provided would vanish. Ergo, it’s not the capitalist who is the true job creator, but rather the consumer — often a middle-class individual — who sets in motion a virtuous cycle of demand and employment.

The current tax system, which disproportionately favors the wealthy under the guise of job creation, only exacerbates income inequality. Since 1980, the income share for the richest Americans has tripled, while their effective tax rates have plummeted nearly 50%1. If this model were efficacious in generating employment, we would be awash in job opportunities. Yet, we find ourselves mired in a quagmire of unemployment and underemployment.

It’s also worth noting that the super-rich could never single-handedly sustain a robust economy. Despite earning exponentially more than the average American, their consumption patterns don’t scale in the same manner. I can only buy and use so much. I travel a little and dine out occasionally, not every meal. The stark reality is that the wealthy cannot compensate for the millions of Americans who, due to unemployment or stagnant wages, can’t afford even the basics.

Here’s a staggering statistic: if the average American family today earned the same income share as they did in 1980, they would have an additional $13,000 annually2. Imagine the economic vitality that such a scenario would unleash.

The language we employ to discuss these issues is telling. The term “job creator” is not merely an economic descriptor but also a claim to elevated status and privilege. The yawning gap between the 15% tax rate on capital gains for the wealthy and the 35% top marginal rate for regular income is a testament to this skewed perspective3.

In a capitalist society, the real job creators are the consumers, predominantly the middle class. Taxing the wealthy to invest in the middle class isn’t just equitable; it’s the most intelligent economic strategy for everyone involved.

So, what’s the remedy for this economic conundrum? It’s time for a paradigm shift, a renaissance in our thinking about how wealth circulates and grows. We must move away from the dogma that places capitalists on a pedestal as “The Creators,” a term that borders on the divine and serves only to further entrench their privileges.

The solution lies in a more equitable distribution of resources, facilitated by a tax system that doesn’t kowtow to the wealthy. It’s not about penalizing success; it’s about fostering an environment where success is within reach for a greater number of people. Investments in education, healthcare, and infrastructure are not mere expenditures; they are the seeds of future prosperity. These are the arenas where government intervention can be most efficacious, leveling the playing field and providing opportunities for all.

Consider the Scandinavian model, where higher taxes on the wealthy fund robust social programs. The result? Countries like Sweden and Denmark consistently rank high in terms of happiness, education, and — yes — economic competitiveness1. This is no mere coincidence; it’s the outcome of policies that recognize the inextricable link between individual well-being and collective prosperity.

Moreover, let’s not underestimate the power of consumer spending. In 2019, consumer spending accounted for approximately 68% of the U.S. GDP2. This is not a pittance; it’s a colossal force that drives economic growth. When the middle class thrives, they not only create jobs through consumption but also contribute to technological innovation and cultural richness, elements that make a nation truly great.

It’s time to castigate the nefarious idea that catering to the wealthy will somehow trickle down to benefit everyone else. Trickle-down economics has been tried and tested, and the verdict is clear: it’s a failed experiment that has only widened the chasm between the haves and the have-nots.

So, here’s an idea worth not just sharing but acting upon: let’s invert the pyramid. Let’s recognize that in a truly vibrant capitalist economy, the middle class are not just the backbone but the heart and soul. By taxing the rich to make strategic investments in the middle class, we’re not engaging in class warfare; we’re building a stronger, more resilient economy that benefits everyone, rich and poor alike.

It’s not the wealthy who are the architects of societal prosperity, but the collective efforts of a strong and empowered middle class. By shifting our focus and our resources toward policies that bolster the middle class, we’re not just making a moral choice; we’re making the smartest possible investment in our collective future.

Footnotes

1. “Income and Wealth Inequality in the United States: 1949–2016,” The World Inequality Database.
2. “The Productivity–Pay Gap,” Economic Policy Institute.
3. “The Buffett Rule: A Basic Principle of Tax Fairness,” The White House.
4. “World Happiness Report,” United Nations.
5. “Consumer Spending as a Market Driver,” U.S. Bureau of Economic Analysis.