Thoughts on the diminishing Middle Class in America

[Mags]

Much has been made, in the media, and even this board, on the diminishing middle class in America, and why it has not kept up with the upper class in terms of income growth, etc. It got me to thinking, other than blaming our political system, what could be the reasons behind it?

Here's is a theory - and I haven't done any "research", so I'm wondering what the folks think of this theory?

20-30 years ago, our country was focused on making things - much of our workforce was manufactoring orientated. In this environment, workers pay was heavily regulated by unions which helped equalize wages. In addition, since much of the labor was physical, there wasn't much emphasis placed on people's intellectual ability - a person with a 80 IQ could screw a bolt just as well as someone with a 140 IQ. And since the majority of jobs were manufactoring based, many people were really underemployed - they were much "smarter" than the job they did.

Today we live in the information age - where intelligence plays a much larger role in the position you hold - making it much easier to distinguish differences in talent among individuals. Where in the past, people of varying intelligence levels would end up making about the same amount of money, but now, since most of the manufactoring jobs have been moved out of the country (thank you Unions), we have now moved to mainly a professional and service economy.

The service industries (food service/agriculture) have always been the traditional lower paying industries. Many of the people either lack the educational opportunities or intellectual ability to compete in the info age - clearly it is some of both.

So, in a nutshell, the way our economy has evolved has created winners and losers. The high wage union factory jobs have moved out of the country, out of necessity. Many of the folks that made good money in those jobs don't have the education/skillset to compete in the professional sector.

And since the professional sector is much less likely to be unionized, and rewards people based on the skills/education they bring to the job individually, well, this creates many more "winners" and "losers" than our past economic model. Which creates a bigger gap in wages between those groups.

Maybe this was obvious arleady to some, but I guess this line of thought just became clear to me.

Maybe it isn't the poliiticans, but rather the unions, that led to the demise of all the high paying manufactoring jobs that many of our country need to have available in order to make a decent wage?

Or, we need to find a way to help make people smarter - which can be done for a lot of people, but clearly some people just have limited intellectual abilities (I"m sure that comment will lead to wisecracks).....

Anyway, intelligent discussion only please....

 

[ImFeklhr]

It's a combination of:

Corporate Greed: Doing ANYTHING to expand profits over the next couple of years, rather than long term planning or care about what is good for the country. Corporations are basically groups of people that can act without one single person being responsible morally or often legally. The bigger these get the more "mob mentality" can seep into the greed. The result isn't much different than the greed show by the barons of the gilded age the Rockefeller?s, Carnegie?s etc. Except now every single aspect of your life, and every interaction economically or socially is somehow related to one of a hundred or so huge corporations.

A World Economy where divisions of labor extend to entire countries rather than regionally. Toys made in China, Food Made in US, Oil from Middle East wasn't even a viable option with the technology available 40 years ago. Moreover competition has increased exponentially. 40 years ago we had ideological competition, but serious economic competition was limited to a handful of countries that could match our output.

Government socialism: Our safety net has increased to create an underclass that has less motivation to move up the ladder than in past generations. Basically knowing the government and society in general is now setup to make sure nobody starves to death and few people who really want shelter and clothes get them has removed the risk of underachieving. In order to work up from government sustained lower-class into self sufficient upper-lower class or lower-middle class takes a lot of work and the improvements in quality of life are moderate. So you get large swatches of people who grew up in this system and on a macro-level large numbers don't bother competing. (This safety net isn't solely the governments fault. Overall economic and technological advancements in America has resulted in a situation where the poorest of the poor have roughly the same access to sufficient food and the basic things that prevent you from dying (antibiotics etc).

All this has created a situation where the so called "lower-class" has more creature comforts than the solid middle class of the 1960's ever had, so they become docile and less likely to enact change.

We also have a political system that basically ignores the common man. One party is perceived at preserving services aimed largely at people who don't work much or pay taxes in the system, and one political party that focuses itself on preserving the mechanisms needed for wealth creation of the upper class. Both pay lip-service to the middle class, at most.

All of these things create a larger division of overall wealth. I am not suggesting we SHOULD, but we COULD create government policies that closed this gap, but I wonder if they would reduce our competitiveness Internationally or ultimately hurt the Economy. For now, given the choice I think most poorer people in this country would rather be lower-class in America than middle-class in Thailand or Cuba.