THE REAGAN REVOLUTION ★^106325 percent and unemployment was down to 5.5 percent. These were significant
accomplishments.
The Problem of Inequality
Together, Reagan’s policies, rising stock prices, and deindustrialization resulted
in a considerable rise in economic inequality. By the mid- 1990s, the richest 1 per-
cent of Americans owned 40 percent of the nation’s wealth, twice their share
twenty years earlier. Most spent their income not on productive investments
and charity as supply- side economists had promised, but on luxury goods, real-
estate speculation, and corporate buyouts that often led to plant closings as
operations were consolidated. The income of middle- class families, especially
those with a wife who did not work outside the home, stagnated while that of
the poorest one- fifth of the population declined. Because of falling investment
in public housing, the release of mental patients from state hospitals, and cuts
in welfare, homeless persons became a visible fixture on the streets of cities
from New York to Los Angeles.
Deindustrialization and the decline of the labor movement had a particu-
larly devastating impact on minority workers, who had only recently gained
a foothold in better- paying manufacturing jobs. Thanks to the opening of col-
leges and professional schools to minority students as a result of the civil rights
movement and affirmative action programs, the black middle class expanded
considerably. But black workers, traditionally the last hired and first fired, were
hard hit by economic changes.
During the 1970s, Jim Crow had finally ended in many workplaces and
unions. But just as decades of painful efforts to obtain better jobs bore fruit,
hundreds of thousands of black workers lost their jobs when factories closed
their doors. In South Gate, a working- class suburb of Los Angeles, for example,
the giant Firestone tire factory shut down in 1980, only a few years after black
and Latino workers made their first breakthroughs in employment. When the
national unemployment rate reached 8.9 percent at the end of 1981, the figure
for blacks exceeded 20 percent. Nor did black workers share fully in the recov-
ery that followed. Few had the education to take advantage of job openings in
growing “ knowledge- based” industries like technology and information ser-
vices. Overall, during the 1980s black males fell farther than any other group in
the population in terms of wages and jobs.
The Second Gilded Age
In retrospect, the 1980s, like the 1890s, would be widely remembered as a
decade of misplaced values. Buying out companies generated more prof-
its than running them; making deals, not making products, became the way
How did the Reagan presidency affect American aims at home and abroad?