These products were heavily advertised to the public to try to create product demand, however, consumer wages were too low to provide the purchasing power to sustain the economy therefore unsold goods began to pile up in warehouses all across the country. This over supply created cutbacks in production and workers were laid off, leading to a greater decline in purchasing. 4 .
During the 1920's there was a growing gap between the rich and the working class people and there was poverty in the midst of prosperity. Underpaid workers turned out record number of goods that they could only afford to buy on credit. The enormous output at bargain labor costs created wealth for people who already had far more than enough money, thereby widening the income gap without providing the worker with an sufficient wage so he could go out and purchase the products he was manufacturing. "From 1923 - 1929 the average output per worker increased 32% in manufacturing and during that same period of time average wages for manufacturing jobs increased only 8%" and "those with income in the top 1% enjoyed a 75% increase in income." 5 Like the old song from that era says, "the rich get rich and the poor get poorer". In addition as production increased, production costs decreased, and the benefit of the increased productivity went into corporate profits. "From 1923-1929 corporate profits rose 62% and dividends rose 65%." 6 .
Even the federal government through the Calvin Coolidge administration contributed to the growing gap between the rich and low income American. Andrew Mellon, Coolidge's Secretary of the Treasury, was instrumental in getting a tax cut approved which "lowered federal taxes such that a man with a million-dollar annual income had his federal taxes reduced from $600,000 to $200,000." 7 This tax cut was a boom to the wealthy. Even the Supreme Court played a role in expanding the gap between the socioeconomic classes by ruling the minimum-wage legislative unconstitutional.
