S3 Ep 5 - The Temin Series - Chapter Three: The Low Wage Sector

The Unraveling American Dream: How Policy, Race, and Economics Shaped the Low-Wage Sector

This episode reviews Chapter Three, “The Low-Wage Sector,” from American economist and economic historian Peter Temin’s The Vanishing Middle Class. Temin argues that the low-wage sector in the United States was not an inevitable byproduct of technological advancement but was deliberately created and expanded through political, economic, and social forces.

He highlights how President Nixon’s Southern Strategy and the War on Drugs disproportionately targeted African Americans, setting the stage for policies that suppressed wages and limited opportunities for large segments of the population. The chapter further explores how shifts in business organization—such as subcontracting, the rise of finance, increased global competition, and immigration—eroded worker bargaining power and weakened traditional employer-employee relationships.

Ultimately, Temin contends that these systemic changes produced stagnant real wages, diminished social capital, and heightened hardship for both white and minority workers in the low-wage sector. The result has been the “criminalization” of poverty and the entrenchment of a deeply stratified American economy.