The large, thriving middle class, which America used to have, didn't just arise out of the blue -- it was created, using an economic tool that was essentially socialistic. After WWII, our government taxed the rich heavily -- 91% on all annual income in excess of $3 million (as measured in today's dollars) -- and massively redistributed that money through the G.I. Bill, so that an unprecedented half of the US population suddenly started benefiting from (free) college, free job training, cheap mortgages, affordable medical care -- doctors actually came to your home when you were sick -- and much, much more. Yes, for a brief, shining, historical moment, we were in some important ways like Finland is today, as Bill Maher recently pointed out.
The result of this massive redistribution of wealth was that in the 50s and 60s, the average family needed only one breadwinner to get by, nicely, and the median-priced home cost only 2 years of the median salary, and men could even afford to pay for college for their kid(s).
However, a middle class is not the normal byproduct of capitalism. Ask any historian -- a thriving and expansive middle class is actually a fluke. Example: In 14th century Europe, a thriving middle class was created inadvertently after 1/3rd of the population died from the Black Plague. This resulted in a severe labor shortage, which greatly increased the bargaining power of workers. So that's one way to create a thriving and expansive middle class: greatly increase the ratio of available jobs to available workers, but hopefully not by way of a plague.
There are, of course, easier ways to increase the bargaining power of workers -- but not as long as the number of people looking for decently paid work is ever larger than the number of such jobs available. And today the number of such jobs keeps shrinking.
Why do the number of such jobs keeps shrinking in today's society?
It's really very simple: robots, computers and automation, as well as low-cost foreign labor, are doing ever more of the available work, thus leading to ever more Americans competing for ever fewer jobs that are decently paid -- just the opposite of the situation in the 14th century following the Black Plague, when a greatly reduced population of workers could suddenly choose from a great many jobs, and employers were desperate to find suitable applicants.
How should we define a "decently paid" job today? Perhaps we should define it by the standards of the 1950s when the holder of such a job could buy a median priced home with 2 years of salary and also afford to send his kids to college.
How could we significantly increase the ratio of available jobs to available workers?
would be to make unemployment insurance benefits larger and much easier to
obtain. This way, available work could
be shared by workers. While person A was
working, person B could be collecting unemployment insurance. And vice versa. For a closely related plan to reduce
unemployment by sharing the available work, go here and here.