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Disappearance of the Middle Class

Introduction

Thurow wrote that is conventional wisdom is correct “and the middle class is really the social glue that holds society together, then America is in the process of becoming unglued”. Thurow could not have been more correct about the trajectory of the United States as his view is becoming increasingly clear in today’s society. Kotkin goes on to state that the decline does not have as much to do with “the power of the ‘one percent’ per se than with the drying up of opportunity amid what is seen on Wall Street and the White House as sustained recovery”.

I. Washington Administration’s Failure to Deal with the Problem

Despite the claims of President Obama that he would reduce inequality, the fact is that despite Obama’s “rhetorical devotion to reducing inequality, it has widened significantly under his watch. Not only did the income of the middle 60% of households drop between 2010 and 2012 while that of the top 20% rose, the income of the middle 60% declined by a greater percentage than the poorest quartile. The middle 60% of earners’ share of the national pie has fallen from 53% in 190 to 45% in 2012”.

II. Low-Wage Jobs Dominate Recovery

Plumer reported that the Federal Reserve Bank of San Francisco presents the situation with clarity stating that most of the losses of jobs during the recession were those of middle-income occupations which since 2010 have for the most part been replaced by low-wage jobs. Approximately 60% of the job losses during the recession were those in mid-wage occupations that paid between $13.70 and $21.36 per hour. Mid-wage jobs represent approximately 27% of the jobs reported gained in the recovery period. Dominating the recovery are low-wage occupations paying “…less than $13.79 per hour” also representative of the job gains from 2010.

III. Death of the American Dream

It is reported by Lucy Mangan that American is the land that today’s workers and their parents “thought would last forever. They thought that hard work, sensible saving and careful investment would provide comfort not only for them but for us, their children. But they were wrong”. Mangan reports that today’s middle class is “being squeezed and stripped – of jobs, income and security – like never before. The landscape ahead has been laid bare by winds of social, political and technological change”.

IV. Loss in Manufacturing Jobs Critical

The NAFTA Free Trade Agreement among others resulted in the loss of a high percentage of manufacturing jobs in the United States as companies made moves to employ low-wage workers in developing countries. Watson posits that if the middle class is to recover and resemble anything as it did before “American manufacturing must rebound”. Economists are reported to predict that the economy of China “is on track to overtake the U.S. by 2040” and that in only one more decade past 20940 that India will “outstrip America”.

V. Technology’s Impact on the Middle Class

Technology has had its own impact on the Middle Class many manufacturing jobs have been replaced by technologically enable manufacturing. Peck holds that the rise in technological applications should be accompanied by a harnessing of these technologies to create new jobs. Peck states that a higher national priority needs to be placed on ”investment – rather than consumption” in the near future which involves “substantially raising and broadening both national and private investment in basic scientific progress and in later-stage R&D—through a combination of more federal investment in scientific research, perhaps bigger tax breaks for private R&D spending, and a much lower corporate tax rate (and a simpler corporate tax code) overall”.

VI. Solutions

The removal of bureaucratic obstacles to innovation since that is just as critical as providing more public funding toward innovation. In addition, regulatory balance should be sought and while it is difficult to achieve this balance, less is more when considering emerging industries that might serve to make provision. There is also more noted in the work of Peck that should be addressed by the United States people and its government and that is reform of education so that students are better prepared to enter the workforce and enabling more students in the United States to continue their education and attain a college degree. Part of the problem in today’s educational system.

Summary and Conclusion

The American Middle Class is indeed disappearing and the reason for this includes the loss of mid-wage jobs that has been exacerbated by government regulations and failure to invest in public funding of innovation. In addition, the educational system needs a complete overhaul to align with the principles that drive innovation and creativity if the Middle Class is to continue to exist in America.