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Affluent Christian Investor | October 21, 2017

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What Destroyed America’s Middle Class

Middle class residence in Lewiston, NY.

At first glance, the U.S. economy seems to be doing quite well. The June report from the Bureau of Labor Statistics  indicated that America’s businesses added 222,000 jobs last month, a four month high. In May, the unemployment rate reached a phenomenal 16 year low. Another encouraging sign, though a small one: The job participation rate ticked slightly upwards as well. Those who had left the labor force entirely jumped back in greater numbers than at any time since 1990.

But dig a bit deeper, and troublesome indicators appear. Average hourly pay growth is anemic, and that backbone of the economy, middle income jobs, remains at seriously depressed levels. This is not the result of any cyclical downturn, or even the lingering effects of the 2007 recession. Rather, it is due to bad policy decisions over the past 18 years, as well as the impact of technology.

Bloomberg News puts in this way:

“A strange thing seems to be happening to the U.S. economy. On surveys, businesspeople and consumers say the future looks bright. But recent economic activity hasn’t appeared very robust…The University of Michigan’s Surveys of Consumers show confidence at the highest levels they’ve been since before the crisis…But again, some hard numbers tell a different story. Retail sales fell in May, and have been relatively lackluster for the entire year. Auto sales are falling as well. Since cars are expensive, long-term purchases, consumers often signal lack of optimism by holding back on the purchase of a new car, choosing instead to drive their old model for a little while longer. So this is another data point that belies rosy consumer confidence numbers. Pending home sales provide a third spot of weakness.”

Middle Class Loses Ground

The reality is, middle income Americans are losing ground. In December, 2015, Pew Social Trends  reported:

“…middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.”

In a subsequent report, Pew Social Trends noted that…

“The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally.”

In a 2011Forbes article, Jenna Goudreau reports:

“Are stable, well-paying middle-class jobs an endangered species? Economists say: Sort of. ‘The idea that one can have a single-earner family, get a good job, keep it for life and have a comfortable living is all but gone,’ says Kevin Hallock, professor of labor economics and director of the Institute for Compensation Studies at Cornell University. ‘Long-term job stability is declining, … Generally, jobs are disappearing where there’s been a technological advance …or a change in the way that organizations function, says Hallock. And not only are old-fashioned assembly line jobs on the decline, several white-collar office positions are also in jeopardy. ‘There has been some long-term decline in middle-income jobs,’ says Harry Holzer, Georgetown University economist and co-author of Where Are All The Good Jobs Going. ‘Specifically, it’s good-paying production and clerical jobs that are disappearing.’ …Because over 20 million people count on clerical work, the vanishing act is a major blow to the middle, but there are other more niche positions that are also on the chopping block. Internet travel sites have essentially erased the need for travel agents, an occupation which declined by 14% and 12,500 jobs in the last five years for which data is available. Similarly, proofreaders—generally highly skilled workers with a four-year college degree—were once vital to publications and communications departments. These positions shriveled by 31%, likely due to advanced software, Holzer says.”

Bipartisan Recognition

The plight of the middle class has been recognized by both those on the right, who agree with President Trump’s drive to protect U.S. manufacturing and stop illegal immigration, and those on the left, who are emphasize the need for ‘living wage’jobs.

In 2016, Common Dreams, a progressive publication, notes:

“Our middle-income jobs are disappearing…the evidence shows that living-wage, family-sustaining positions are quickly being replaced by lower-wage and less secure forms of employment. These plentiful low-level jobs have padded the unemployment figures, leaving much of America believing in an overhyped recovery…research is beginning to confirm the permanent nature of middle-income job loss. Based on analysis that one reviewer calls ‘some of the most important work done by economists in the last twenty years,’a National Bureau of Economic Research study found that national employment levels have fallen in U.S. industries that are vulnerable to import competition, without offsetting job gains in other industries. Even the Wall Street Journal admits that ‘many middle-wage occupations, those with average earnings between $32,000 and $53,000, have collapsed.”

 

 

Originally published on the New York Analysis of Policy and Government.

Frank Vernuccio serves as editor-in-chief of the New York Analysis of Policy & Government (website usagovpolicy.com). He is the co-host of the syndicated radio program, Vernuccio/Novak Report, and is also a contributor to Fox News. His columns appear in many newspapers. After graduating Hofstra Law School, he was a legislative editor for a major publishing company, then served in both Republican and Democrat Administrations. Following the 9/11 attack, he was appointed to run the hard-hit Manhattan branch of the New York State Workers Compensation Board.

 

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