Remember the American middle class?

[bpwallace49]

..America’s Middle Class Crisis: The Sobering Facts

By Peter Gorenstein | Daily Ticker – Wed, May 4, 2011 10:19 AM EDT

 

Two recessions, a couple of market crashes, and stubbornly high unemployment are all wreaking havoc on America's middle class.

 

In the accompanying interview, The Daily Ticker's Aaron Task discusses the state of the middle class with Sherle Schwenninger, director of economic growth and American strategy programs at the New America Foundation. Schwenninger's recent report "The American Middle Class Under Stress" has some stunning facts that highlight the struggles the average American is having getting a decent-paying job and keeping up with rising cost of living.

Here are just some of the sobering facts:

 

-- There are 8.5 million people receiving unemployment insurance and over 40 million receiving food stamps.

 

-- At the current pace of job creation, the economy won't return to full employment until 2018.

 

-- Middle-income jobs are disappearing from the economy. The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010.

 

-- Middle-income jobs have been replaced by low-income jobs, which now make up 41% of total employment.

 

-- 17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor's degree.

 

-- Over the past year, nominal wages grew only 1.7% while all consumer prices, including food and energy, increased by 2.7%.

 

-- Wages and salaries have fallen from 60% of personal income in 1980 to 51% in 2010. Government transfers have risen from 11.7% of personal income in 1980 to 18.4% in 2010, a post-war high.

 

The bottom line is simple says Schwenninger: The middle class is shrinking, which threatens the social composition and stability of the world's biggest economy. "I worry that we're becoming a barbell society - a lot of money wealth and power at the top, increasing hollowness at the center, which I think provides the stability and the heart and soul of the society... and then too many people in fear of falling down."

 

Remember when America was thriving? Those were good times. Trickle trickle . . .

..

[muck]

I think "trickle down" works at least as well as involuntary redistribution.

 

I think that every nation throughout history has had rough economic patches before, and ascribing cause/effect to a particular taxation strategy may be a bit short-sighted and/or narrow-minded. I would lay far more of the blame to our decade-plus long woes on the backs of the housing rules passed by congress and banking regulations implemented and monitored by the federal government.

 

Had the rules been more sensible and the regulations more evently and consistently applied, our economy would look quite different than it does today. Some would argue, possibly, that it was these housing rules that were among the most meaningful non-trickle-down policies pursued by Washington DC over the last 30 years.

 

************************************************

 

Summary --- American needs a strong middle class to be a powerful nation. I'm not convinced that the anti-trickle-down stance is the appropriate place to blame our national shortcomings.

[BeeR]

-- Middle-income jobs are disappearing from the economy. The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010.

I'd like to know what he defines as "middle-income jobs."

 

-- 17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor's degree.

Which all sounds subjective and may have been the case anyway. And a lot of people end up in jobs/careers for which their degree helps little if at all...

 

I also have to wonder where he got all this info (not saying it's wrong per se).

 

Can't say but seems to me this middle income disappearing thing comes along every so often and yet I still see plenty of it around, comes off a bit Chicken Little-ish.

Edited May 8, 2011 by BeeR

[Clubfoothead]

trickle-don fail. You can defend it all you want despite the evidence to the contrary.

[tosberg34]

trickle-don fail. You can defend it all you want despite the evidence to the contrary.

 

What evidence? Or is "the evidence" really you just saying it doesn't work (ironically, without evidence)?

[bpwallace49]

http://growth.newamerica.net/sites/newamer...er%20Stress.pdf

 

Good slide show. It goes through historical trends, but doesnt offer a lot of solutions. Mainly pointing out indicators that could potentially be dangerous in the long term.

 

 

Muck, is there enough economic data to examine over time whether or not cuting tax rates for upper brackets has a real and direct relationship to job growth? And whether or not this should be pursued moving forward?

 

The decline of the American middle class is very real. Are there policies and paths to take that will rebuild this middle class for America? or is that now gone forever?

[bpwallace49]

What evidence? Or is "the evidence" really you just saying it doesn't work (ironically, without evidence)?

 

tosberg . . . you DO realize that our economy isnt doing all that great . . right? and you do know that economic policies in the past (trickle down) have direct relationships to what forms the economy of today . . . right?

 

To ignore that decisions of the past have influence on the world of today is like when you see the sunset, you dont believe or demand "evidence" that it rose in the east, and then still dont believe it.

[WaterMan]

tosberg . . . you DO realize that our economy isnt doing all that great . . right? and you do know that economic policies in the past (trickle down) have direct relationships to what forms the economy of today . . . right?

 

To ignore that decisions of the past have influence on the world of today is like when you see the sunset, you dont believe or demand "evidence" that it rose in the east, and then still dont believe it.

 

Seems pretty simple to understand.

[bpwallace49]

Seems pretty simple to understand.

 

trickle down is just one piece of the puzzle, and there are a lot of other factors, but trickle down tax cuts are by far the most heated lately with the Bush-era tax cuts under attack from Obama after the temporary extension . . .

[Ursa Majoris]

What evidence? Or is "the evidence" really you just saying it doesn't work (ironically, without evidence)?

The increasing proportion of total national wealth held by an increasingly small number of people would be very good evidence that trickle down doesn't work.

[Ursa Majoris]

I think that every nation throughout history has had rough economic patches before, and ascribing cause/effect to a particular taxation strategy may be a bit short-sighted and/or narrow-minded. I would lay far more of the blame to our decade-plus long woes on the backs of the housing rules passed by congress and banking regulations implemented and monitored by the federal government and none whatsoever on the frauds perpetrated by banks, insurance companies and Wall Street.

Completed.

[tosberg34]

tosberg . . . you DO realize that our economy isnt doing all that great . . right? and you do know that economic policies in the past (trickle down) have direct relationships to what forms the economy of today . . . right?

 

To ignore that decisions of the past have influence on the world of today is like when you see the sunset, you dont believe or demand "evidence" that it rose in the east, and then still dont believe it.

 

Why the condescending tone?

 

Okay, so every time the economy goes south it's always because of trickle down economics? Seems to me that's more partisan BS than it is actual fact. Many factors influence today's economy, not just the ones that fit your political ideology. All I'm saying is that to lay it at the feet of trickle down economics is ridiculous as well.

 

I agree with muck on this one.

Edited May 8, 2011 by tosberg34

[tosberg34]

Seems pretty simple to understand.

 

I'm sure you do think it's simple because it fits your political ideology.

 

Again, ignoring all the other factors and laying it at the feet of trickle down economics is folly as well.

[Pope Flick]

I'm sure you do think it's simple because it fits your political ideology.

 

Again, ignoring all the other factors and laying it at the feet of trickle down economics is folly as well.

 

 

 

Turn it around - 'trickle down' as promised NEVER worked, neither under Reagan or the Bushes. Clinton has the greatest stretch of job creation in some time, at least since 'tickle down' was floated and adopted by the gop in the 1980s.

[bpwallace49]

Why the condescending tone?

 

Okay, so every time the economy goes south it's always because of trickle down economics? Seems to me that's more partisan BS than it is actual fact. Many factors influence today's economy, not just the ones that fit your political ideology. All I'm saying is that to lay it at the feet of trickle down economics is ridiculous as well.

 

I agree with muck on this one.

 

1- Not being condescending, just honestly asking if you can get past the partisan blinders and look at economic policies for what they are

 

2- I now see that you cannot get past the knee jerk "everything the political right has done, or will ever do is A-OK"

 

As much as you desperately want to label trickle down as "partisan" is really isnt. Obama extended the Bush tax cuts, remember? It is about the system that time has shown has not necessarily benefited all, in fact, a case could be made that all it did was concentrate more wealth in the hands of a few . .

[muck]

Completed.

 

For the record, I object strongly to your insinuation that I think that banks (both commercial and investment) are innocent. I believe they are guilty.

 

I also believe that if the regulators have been more persistent in applying the rules that were in force, the (i) abuses would not have become more aggregious and the same time that (ii) the rules were becoming more lax. Combining these two things into the pot at once, simply made a bad situation exponentially worse.

[Ursa Majoris]

For the record, I object strongly to your insinuation that I think that banks (both commercial and investment) are innocent. I believe they are guilty.

 

I also believe that if the regulators have been more persistent in applying the rules that were in force, the (i) abuses would not have become more aggregious and the same time that (ii) the rules were becoming more lax. Combining these two things into the pot at once, simply made a bad situation exponentially worse.

If that's your belief, and I have no reason to think it isn't, it would have been handy to have stated it. Your statement:

 

I would lay far more of the blame to our decade-plus long woes on the backs of the housing rules passed by congress and banking regulations implemented and monitored by the federal government

would certainly lead one to believe you blamed the rule makers and the rule enforcers but not the rule breakers. What those law makers were doing was caving in to the relentless pressure from business to allow them to make more money by whatever means. This is why Glass-Steagall was repealed by Gramm-Leach-Bliley - not because it would be more efficient but because it would allow the banks to become even more of the bloodsuckers than they were already.

 

Blaming the police for a crime wave is the very antithesis of the doctrine of personal responsibility that the right talks about so much.

[gbpfan1231]

Why don't we just leave taxes where they are at and quit giving Pakistan money - get out of Afghanistan - quit helping countries like Libya - get out of Iraq and......

 

Roll back govt spending back to what is what in say 2005???

[matt770]

My company is shipping "middle income" jobs to Slovakia. The knowledge and work ethic is lacking, and they knock off at 11AM eastern, but they are dirt cheap. The jobs are slightly more involved than low-level order-entry -- they have to learn our products and a myriad of systems and understand pricing/billing stuff. They make low 20's where the people they replaced made $40-50k. We retained a few of the best people as SME's to help with training and mop up the messes the new people make, but even their days are numbered. It is sad not only to see your team disbanding and to say goodbye to really good people you worked with for years, but to recall all the failures and successes over a decade that led to solid processes and quality work. Things are so automated now that most of it is idiot-proof, and we're more than happy to hire idiots to replace the educated project managers and engineers that got us here.

 

I know my company is hardly unique in this regard, and the trend is only going to continue as technology advances. It's go big or go home -- either you're in the corner office or you're emptying the wastebaskets. Or you can move overseas and do your job for a fraction of your current salary.

[muck]

I believe my comparison was between the amount of blame to put on "trickle down economics" and "congressional action and regulatory oversight". You were the one that added the third option ("the bankers") and accused me of giving them a free pass.

 

I did no such thing.

 

I simply made a statement concerning the two things referenced.

[borge007]

My company is shipping "middle income" jobs to Slovakia. The knowledge and work ethic is lacking, and they knock off at 11AM eastern, but they are dirt cheap. The jobs are slightly more involved than low-level order-entry -- they have to learn our products and a myriad of systems and understand pricing/billing stuff. They make low 20's where the people they replaced made $40-50k. We retained a few of the best people as SME's to help with training and mop up the messes the new people make, but even their days are numbered. It is sad not only to see your team disbanding and to say goodbye to really good people you worked with for years, but to recall all the failures and successes over a decade that led to solid processes and quality work. Things are so automated now that most of it is idiot-proof, and we're more than happy to hire idiots to replace the educated project managers and engineers that got us here.

 

I know my company is hardly unique in this regard, and the trend is only going to continue as technology advances. It's go big or go home -- either you're in the corner office or you're emptying the wastebaskets. Or you can move overseas and do your job for a fraction of your current salary.

We are all so proud for you and your company.

[gbpfan1231]

We are all so proud for you and your company.

Wow - I really don't think he was saying that anything that company is doing is good???

 

I do think technology has a lot to do with the shrinking of the middle class. Technology has added jobs to the market but I assume at wages above what people are calling middle class and these jobs have created the technology that allows companies the ability to move "middle class" jobs overseas. I would have to assume if companies 25 years ago had the means to move jobs overseas and cut costs they would have.

[Ursa Majoris]

Why don't we just leave taxes where they are at and quit giving Pakistan money - get out of Afghanistan - quit helping countries like Libya - get out of Iraq and......

There's something deliciously ironic here...........wait, it'll come to me.

[SayItAintSoJoe]

Wow - I really don't think he was saying that anything that company is doing is good???

 

I do think technology has a lot to do with the shrinking of the middle class. Technology has added jobs to the market but I assume at wages above what people are calling middle class and these jobs have created the technology that allows companies the ability to move "middle class" jobs overseas. I would have to assume if companies 25 years ago had the means to move jobs overseas and cut costs they would have.

 

 

It kind of sounds like you're making the argument that Capitalism is failing the middle class.

 

http://forums.thehuddle.com/index.php?show...352026&st=0

[matt770]

Wow - I really don't think he was saying that anything that company is doing is good???

 Um, yeah, reading comprehension is a beautiful thing.

 

Was certainly not bragging about how wonderful my company's policies are.  Was just sharing my experience at a Fortune 10 company that shows just one of the causes of shrinking middle class opportunities in this country.  Whether we think it's "good" or "bad", it's reality and we all need to adapt.  I lament the loss of relationships and sense of team, but it's simple economics.  I'm sure Corporate fantasizes about all the money they could make if all the sales were made by the web site and the servers could handle operations/billing etc. with no human intervention required at all.

 

Technology has added jobs to the market

One of the main missions for our IT and process people is to figure out ways to reduce headcount.  It's explicitly stated.  Find ways for our systems and processes to work more efficiently so we can get rid of people.  You'd think that means IT is the place to be in our company, but they've been so successful that we need fewer and fewer of them each year too.  And of course, all help desk calls are answered by people named Srivinash or Venkatesh.  Software issues only though -- hardware issues now have to be reported online.  The level of service from our help desk has declined abyssmally over the years.  I've heard sales people say the same about our ordering and project management since we've been outsourcing so much of it, and ultimately our customers feel that too.  

 

That's the fallout from technology-driven efficiency -- fewer, more remote and less-qualified people doing the work, and providing the minimal amount of customer service.  Our customers choose us for our network reliability for sure, but the key driver is price.  And because cutthroat competition has slashed everyone's margins razor thin, service is what becomes expendable.  Which sucks when you're a conscientious individual who wants to please your customers -- your mission is volume, period.  You're busy putting out fires all day, finding little time for proactive follow-up.  The work becomes increasingly dehumanizing.