MIDDLE CLASS DECLINE

EVERYONE KNOWS that our middle class has been declining for decades, and that there’s no end in sight.  But despite much hand-wringing, no one really knows what to do about this.

The proximate causes of middle class decline have been globalization, automation and de-unionization.  These put an end to the post-war heyday of our middle class, when American corporations dominated the world and paid good domestic wages.

Sometime around 1980, US manufacturers began shedding higher-paid workers and replacing them with foreigners and machines.  Americans were told not to worry—white-collar jobs would fill the blue-collar void—but food servers, retail clerks and health aides were paid con­siderably less than their industrial counterparts.

A steadily tightening squeeze, with wages stagnating and prices of middle-class necessities rising, took hold.  And as this was happening, the richest 1 percent were extracting a rising portion of our economic gains.

Shares of Gains to Income Percentiles

 

JOBS DON’T PAY ENOUGH

DURING THE golden age of our middle class, jobs at IBM and Gener­al Motors were often jobs for life.  Employers offered decent wages, health insur­ance, paid vaca­tions and good pensions.  Workers’ pay and re­sponsibilities tended to rise with seniority.

In today’s global­ized and automated economy, however, good wages and long-term relationships are rare.  Workers are expendable—often they’re literally “temps”—and their benefits are shrinking.  And that’s unlikely to change.

It’s also unlikely that jobs of the future will pay more than today’s (adjusted for inflation).  In unionized industries like autos and airlines, two-tier contracts are now the norm.  This means that younger workers get paid substantially less than older ones for doing the same work.

Nor is the picture brighter in other industries.  The chart below shows the US Labor Department’s list of the ten fastest-growing occupations between now and 2020. Top Ten Growth Occupations

What these numbers tell us is that the middle class in 2020 will consist largely of nurses and teachers.  Never mind that these occupations depend in one way or another on public funding, which nowadays is shrinking.  The deeper question that leaps from these numbers is: Where are the mil­lions of good-paying jobs that are needed to sustain a large middle class?  The Labor Department doesn’t say.  Nor does anyone else.

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