Wealth and Class in the Modern United States
Why is the Ordinary Texan's Purchasing Power So Low?
If you've never heard the term, 'purchasing power' is a measure of people's ability to acquire goods. It gauges wealth in a much more accurate context than simply looking at income alone. The obvious answer to this question is that ordinary Americans across the board haven't gained enough income increases to keep pace with the costs of goods and services in this country. While lots of things contribute to these two quantities ('income' and 'costs'), economic research has found a few particularly major causes.
First, the rise of local monopolies has allowed companies in many areas to charge far beyond what's reasonable because they know they have no competition. Some of the more recognizable examples include small town utility and internet providers, who know their customers have no other options. However, it may surprise you to learn that housing is also suffering from monopolistic practices. All across the country, a small number of real estate investors have been buying up single-family properties to convert into rentals for years. This not only jacks up the prices of homes left over for actual families to buy, but also concentrates rental properties into the hands of a few companies intent on raising rent prices at every opportunity. And unfortunately, these examples are just the tip of the iceberg. The truth is, most of the inflated costs we see today are specifically a result of these monopolies going unchecked.
As if that weren't bad enough, even historically stable goods are now becoming less affordable. Throughout most of the past several decades, the relative affordability of automobiles has been relatively stable. Over the past several years, however, we've seen a substantial upward trend in how much work and money ordinary Americans need in order to purchase a vehicle. This is also true of even basic necessities, like food. In these instances, multiple factors seem to be at play. This includes a mix of genuinely innocuous complexities, like the effects of COVID-19 and supply chain disruptions, and more nefarious activities, like price-fixing and erratic tarrifs. While some fluctuations are naturally beyond our control, we can still legislate limited, specific protections against intentional and harmful increases to the costs of vital necessities.
On the flip side of the coin, wages for the majority of American workers earners have remained comparatively low for decades. In 1980, the minimum wage was $3.10 (though many companies offered higher starting wages than this), and it was raised to $7.25 in 2009. It wasn't until 2015 that companies like Walmart and Amazon started paying wages of $9 to $10 an hour. Today, in 2025, many large corporations have a starting wage of between $13 and $15 an hour. Yet, compared to corporate profits, wages as a percentage of GDP are almost lower now than at any point in history. Numerous studies show that, over the past several years, large companies have consistently directed massive amounts of profit to ward stock buybacks instead of increasing wages or hiring more workers. This is in addition to the general wage trends and lobbying against raising the minimum wage.
If we're going to fix this nightmarish scenario, we need to do two things: restructure business and tax law to prevent grievous abuses by large companies, and put mechanisms in place that encourage workforce investment and discourage obscene wealth funneling.
Restore Strength to the Federal Minimum Wage
When the Federal Minimum Wage was first implemented, working Americans saw the largest jump in prosperity in all of this country's history. It was in line with worker productivity and guaranteed a livable income that could reliably sustain hardworking families. Now, it's a pitiful shadow of its former self. Studies show that, if minimum wage had kept up with corporate profits and worker productivity, it would presently be around $25 an hour. If these massive companies want to benefit from the American work ethic, then they should be willing to pay for it. A fair day's wage for a fair day's work!
Reform or Repeal The 1982 SEC Rule 10b-18
While stock repurchases are great for investors, they're terrible for employees. Part of the reason wages have stagnated is that large businesses have devoted more and more of their profits toward stock buybacks to artificially inflate stock values, rather than employees' wages. The reason they're able to do that, in the first place, is because of SEC Rule 10b-18. This rule states that stock buybacks are an exception to the rules against market manipulation, despite the fact that buybacks are obviously used to manipulate stock prices. Reforming or repealing this rule would prevent these corporations from funneling profits away from hardworking employees.
Bring Order to Real Estate Investment
Today, somewhere between 23% to 25% of all homes are owned by investors, rather than private residents. The results are exactly what we're seeing now: housing prices rising sharply in the immediate short term, with rent prices soaring in the long term, all outpacing ordinary Americans' incomes. This collective, large-scale activity by 'small time' investors (defined as only owning between 1 to 9 rental properties) is causing catastrophic economic damage to our hardest working citizens. Given that roughly a quarter of all homes are presently owned by investors, the solution is clear: restrict the number of secondary properties any individual can own at once.
Allow Public Options Nationwide
Something many people might not realize is that there have been steady, consistent efforts to prevent local governments from introducing their own low-cost alternatives to existing monopolies. In many small towns outside Texas, municipal governments have been able to establish their own internet and utility options for a fraction of what the local monopoly was charging. In Texas and other states, however, this activity is expressly forbidden by state law. By passing a federal law to pre-empt state law on this matter, local communities can regain power over large businesses to develop their own cost-effective options in situations where the local monopoly flat out refuses to stop price-gouging its customers.
Break Up Monoplies And Oligopolies
Laws against monopolies and oligopolies are technically on the books; yet, the organizations tasked with enforcing them have been repeatedly and routinely defunded over the past several decades. On top of that, key provisions within these laws have often been legislated out to make breaking them up harder. Reverting these laws back to their original form and returning funding to these organizations will allow them to fight back properly. This is the only way we can get massive corporations to stop engaging in exploitative and coercive business practices.