General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhat's the Single Best Explanation for Middle-Class Decline?
http://www.theatlantic.com/business/archive/2012/08/whats-the-single-best-explanation-for-middle-class-decline/261355/***SNIP
Here's a graph of job creation by industry since 1939. The graph tells a lot of stories, but I'll call out two. Manufacturing -- a strong force for unions and median income growth -- really starts to collapse just as our current 12-year slump commences. That can't just be a coincidence. But now look at "Ed/Med" which is the education and health care industries. Uniquely among sectors, this segment defy the laws of cyclicality. It just goes up!
About half of the jobs created between 1990 and 2008 (before our current downturn) were created in education, health care, and government. What do those sectors have in common? They're all local. You can't send them to Korea. As Michael Spence has explained, corporations have gotten so good at "creating and managing global supply chains" that large companies no longer grow much in the United States. They expand abroad. As a result, the vast majority (more than 97%, Spence says!) of job creation now happens in so-called nontradable sectors -- those that exist outside of the global supply chain -- that are often low-profit-margin businesses, like a hospital, or else not even businesses at all, like a school or mayor's office.
It is both ironic and unavoidably true that the era of globalized profits has dovetailed with the era of localized job creation in low value-added industries, and that the upshot of this has been massive gains at the top and slow overall income growth for the rest of us.
banned from Kos
(4,017 posts)Accountants don't even produce financials anymore. They just adjust the results the software puts out.
randome
(34,845 posts)TreasonousBastard
(43,049 posts)long before we started massively exporting jobs but about the time automation was starting to have an impact.
Robotic welders have been putting cars together for years and the industry is coming up with "smart" robots that can pick parts from the right bin and insert them in a gadget at 10 times the human speed working 24 hours a day with no sleep or need to have lunch or pee.
I don't have numbers to back it up, but having seen warehouse robots, programmable milling machines, wave solderers, and other fascinating stuff, I'd guess automation has had more of an impact on manufacturing jobs than China and India combined. Even China is worried about job losses as they install more robotics.
banned from Kos
(4,017 posts)and factory floor execution as you note.
Plants used to be filled with expeditors and planners finding stuff to complete orders.
No more.
TreasonousBastard
(43,049 posts)there is no hope of major job growth unless The Next Great Industry appears. White collar jobs are disappearing as fast as decent blue collar ones and unless another huge growth industry like automobiles or personal computers shows up like they did in the past to suck up future employees, the only real growth will be in nursing homes and scooters for old fart Boomers like me.
There are lots of possibilities for growth in the third world, but they're just possibilities, and mostly exploitation for now. And we'll be going into space eventually, but who knows when...
The Soviets had an answer-- just build factories and order people to work in them. We saw how well that worked out.
Yavin4
(35,442 posts)We have a surplus of labor, and the best way to siphon it off is to allow workers to retire early. That would open up more jobs for younger workers.
rurallib
(62,423 posts)ananda
(28,866 posts)That explains it all.
liberalmuse
(18,672 posts)AngryAmish
(25,704 posts)I think countries have historically become wealthy and strong through a combination of size (lots of people to specialize in lots of things) and relative peace (so your best men don't get killed young and the nation/empire doesn't spend itself into bankruptcy paying troops and buying non-productive things).
In 1900 there were two wealthy places, Europe and the US. Both had the beginnings of a middle class. Europe then self-immolated in 1916. It kept burning through 1944. Since then they have rebuilt but learned the hard lesson and kept military spending low (western europe first then eastern Europe after the fall of the Soviet Empire.
In 1900 China still had not recovered from the Taiping Rebellion and was about to enter into a disastrous civil war, followed by Japanese invasion, followed by civil war, followed by ruled by communists, followed by the Great Leap Forward, followed by the Cultural Revolution and finally some sanity. Point? China, one of the great places on Earth for wealth and innovation, was absent from the 20th century.
Japan was burned to the ground during the later parts of WWII.
India was riven by war, civil war and still lacks modern infrastructure due to incompetent rule.
Africa is, and always will be, Africa.
The point of all this? After WWII America stood alone in making stuff that people wanted. Germany was destroyed and divided. France looked inward and also was badly damaged. Great Britain was broke and misruled. We alone had factories, trained workers, no big wars and we ruled ourselves in a non-suicidal way. This allowed America to get rich and demand a wage premium versus the rest of the world.
Eventually the much of the world straightened itself out. There are fewer wars. Germany has been reunited. Japan rebuilt and stopped trying to kill all their neighbors and instead make kick-ass cars. China realized that collectivism is suicide.
Our wage premium that created the middle class is no longer there.
That is why I think the middle class is going away.
And in twenty years robots will be doing about half of the jobs we have humans for right now.
The future is grim.
banned from Kos
(4,017 posts)randome
(34,845 posts)I think it's human nature to find something to do, even in the face of technology and automation. People are inventive and will find a way to thrive.
IMO.
AngryAmish
(25,704 posts)(or posting on DU, instead of working as I should be doing)
I am lazy by nature. I think most people are lazy. I worked very hard when I was younger learning my trade (90 hour weeks and all that). It burned me out and now I can barely work 25 most weeks. There are still weeks that call for 60 hour weeks but I have a staff for the real gruntwork now.
Yavin4
(35,442 posts)which is something that I argued just yesterday. We will always have a surplus of labor, and it's folly to keep re-training the work force for non-existent jobs.
My plan is cut military spending back to the Clinton years ($200 billion per year), and pass the savings onto workers aged 60 and above.
This allows younger workers to get experience and begin to create new industries and new jobs in fields such as renewable energy.
LongTomH
(8,636 posts)....in to the propaganda of the elite. See my comment down-thread, or just consider the greater equality and prosperity in the northern European countries that haven't succumbed to the 'austerity' propaganda.
The middle class society of the late 40s through the early 70s wasn't an accident. It was built by the progressive policies of FDR and Truman and decades of struggle by the labor movement. People today forget that workers died for the gains of the labor movement.
AngryAmish
(25,704 posts)Then compare that to everything else.
brewens
(13,596 posts)anything beneficial to earn it. They sell us out to benefit a very few at every opportunity.
These CEO's haven't done anything to justify the massive increase in what they take. Banks and Wall Street operators raking a big cut right off the top every day has robbed all of us. People need to understand we are all paid out of the same pot. If you let someone at the top just take billions for nothing, you come up short everywhere else. Add cutting their taxes to that and you can account for almost all of the hole we are in.
The decline in manufacturing jobs because of technological advances could have been adjusted for and we'd still be okay. As long as our leaders were looking out for us and not allowing all the shipping jobs overseas, it would never have gotten so bad. We have the worlds largest consumer market and they run it like we hold no cards at all.
xchrom
(108,903 posts)AnotherMcIntosh
(11,064 posts)After the abandonment of certain democratic principles by those politicians who no longer needed to represent the views of the American middle-class.
For 40 continuous years prior to the 1994 election, we had a rise in the American middle-class which coincided the control of the House by the Democratic Party. The loss of the 1994 election changed that.
(1) With respect to the 1994 election, in Bill Clinton's recently-released book "My Life," he wrote:
"On November 8, we got the living daylights beat out of us, losing eight Senate races and fifty-four House seats, the largest defeat for our party since 1946....The NRA had a great night. They beat both Speaker Tom Foley and Jack Brooks, two of the ablest members of Congress, who had warned me this would happen. Foley was the first Speaker to be defeated in more than a century. Jack Brooks had supported the NRA for years and had led the fight against the assault weapons ban in the House, but as chairman of the Judiciary Committee he had voted for the overall crime bill even after the ban was put into it. The NRA was an unforgiving master: one strike and you're out. The gun lobby claimed to have defeated nineteen of the twenty-four members on its hit list. They did at least that much damage...." (Pages 629-630)
(2) Clinton was right. But the pushing through the anti-gun legislation was not the only anti-Democratic action. After Bush I negotiated the terms of NAFTA but left office before obtaining Senate approval and signing it, Clinton continued with Bush's work, obtained the Senate approval, and signed it.
He did so in a manner that was contrary to traditional Democratic values while knowing that his signing of NAFTA was going to result in the transfer of American manufacturing jobs to foreign countries to the detriment of the American middle-class.
While the middle-class was being destroyed and given easy credit in lieu of a real increase in wages, the focus was shifted away from full employment and actual middle-class wealth increase to the increase in the stock market as measured by the DOW. While Enron was using Enron-type accounting to produce inflated, bogus profits, other corporations were inflating their stock value by also using creative accounting as well as shipping jobs to foreign countries. Some bubbles have now been exposed for what they were (stock bubbles, credit bubbles, housing bubbles), but there are leaders in DC who refuse to recognize the value of the middle-class while they represent the super-rich.
SOLUTIONS?
For one thing, it is time for those who are opposed to the private ownership of firearms for self-defense or other lawful purposes to act in a way consistent with Democratic values, learn from experience, and listen to the voices of Democrats and independents. This includes listening with respect to gun-owning Democrats and gun-owning independents who will never willingly give up the right to defend themselves. This is true no matter how many anti-gun people disregard home invasions and other criminal activities, as well as the underlying causes of mass murders, and talk about "100-round clips," "assault rifles," and "automatic handguns." This is just foolishness that will undermine the election of Democrats.
For another thing, it is time for all of us to remember that Obama campaigned in 2008 on a promise to revise NAFTA while recognizing that the shipping of jobs to foreign countries was destroying the American economy for the middle-class. It is too late for this campaign, but after the election is over and Obama signs the NAFTA of the Pacific which is being negotiated at the present, we need to push for the election of politic ans who will want a return of the middle-class more than they want to rub shoulders with and represent the super-rich.
datasuspect
(26,591 posts)CK_John
(10,005 posts)leftstreet
(36,109 posts)The working classes haven't been able to share the wealth increases that result from technology. The vig always kicks up.
deutsey
(20,166 posts)hifiguy
(33,688 posts)At least since 1981.
HopeHoops
(47,675 posts)Romulox
(25,960 posts)Romulox
(25,960 posts)ProgressiveEconomist
(5,818 posts)use the word "globalization", but does quote Nobel Prize-winning economist Michael Spence to the effect that 97 percent of US corporate job creation takes place outside our borders, where very low labor costs are competing down US wages and destroying labor unions and the middle class they built here.
xchrom
(108,903 posts)LongTomH
(8,636 posts)Time for Change addressed this in 5 Myths that are destroying America. He also provided a link to an archived article by Paul Krugman discussing The Disappearing Middle. Part III of the Krugman piece: Undoing the New Deal, discusses the most popular hypotheses:
The ''globalization'' hypothesis tied America's changing income distribution to the growth of world trade, and especially the growing imports of manufactured goods from the third world. Its basic message was that blue-collar workers -- the sort of people who in my youth often made as much money as college-educated middle managers -- were losing ground in the face of competition from low-wage workers in Asia. A result was stagnation or decline in the wages of ordinary people, with a growing share of national income going to the highly educated.
//snip
Read both Time for Change and Krugman for a better discussion of the collapse of the Middle Class.
librechik
(30,674 posts)If they had continued to raise wages along with inflation, the problem of no cash in the economy would be for less.
But no, it was far more important to boost executive wages suddenly into the stratospeher thatan it was to keep on paying a fair wage for fair work.
They are rich aristocrats who want slaves, not capitalists. Some capitalists actually value the workers contribution to products and services. Not these tax dodging paper pushers.
Populist_Prole
(5,364 posts)A huge part of trade is of multinationals trading with themselves by importing the stuff they make elsewhere and selling it here.
I put "Free Trade" in quotes just to make sure I'm not talking about some theoretical good idea that works in a perfect world. I'm talking about the way it has been practiced, the way it is practiced, and the way it will always be practiced. In case the pollyanna crowd hasn't noticed; it's the plutocrats that set policy, not well meaning citizens.
pampango
(24,692 posts)Just kidding.
Actually, I blame 'our' rich for rigging our system to benefit themselves at the expense of the rest of us. We should not be surprised that our middle class suffers when we make our tax system extremely regressive, slash our safety net to the bone, deregulate corporate America to an absurd degree, weaken our unions and have essentially no public health care system.
FDR knew that trade was good for the middle class. That's why he lowered the high republican tariffs of the 1920's and 1930 then pushed the creation of GATT to keep tariffs low to promote trade after WWII. Of course, he also knew that even more important to a healthy middle class are high/progressive taxes, strong unions, effective corporate regulation and, though he was not able to achieve it, an effective public health care system.
LiberalEsto
(22,845 posts)jorno67
(1,986 posts)All the money is paid to the CEO's while jobs are cut and people take out loans to get by.
Egalitarian Thug
(12,448 posts)And mass delusion.
nadinbrzezinski
(154,021 posts)the 1950s had fairly high taxes, well, people who had it could reinvest it in companies, or pay the tax man. They chose the former over the lastter many a times.
Taxes today are low, but taxes on earned income due to investments is even lower. It is rational to invest in stocks and bonds and not to recycle your money into your company.
It is one of the many reasons, but I suspect up there.
Technology and other things are part of it, but this... oh and yes NAFTA and the kids of NAFTA.