What’s Killing The Middle Class? (Part 1)
by Charles Hugh-Smith via OfTwoMinds blog,
ZeroHedge.com
May 8, 2017
The rising asymmetry of rewards within our economy has many drivers.
We all know the middle class that actually owns capital and wields political influence is shrinking. As I noted last week in Redefining the Middle Class: It Isn’t What You Earn and Owe, It’s What You Own That Generates Income, defining the middle class by household income alone is a misleading metric, as it leaves out the critical factors of debt and ownership of productive assets.
A household may have an income of $150,000 and appear well-off by that metric, but if they are mired in debt and own virtually no productive assets or wealth that can be passed on to future generations, they aren’t middle class--they’re well-paid proletariats.
So what’s killing the middle class? If you read the dozens of articles on the decline of the middle class in the mainstream (corporate) media, you soon discover there’s a short list of the usual suspects:
1. Globalization / outsourcing
2. Technological changes / automation
3. “Winner take all” asymmetry in rewards for specialized skills
Clearly, each of these has squeezed the incomes of all those between the jobless poor and the wealthy reaping the lion’s share of the rewards from globalization and technological change.
A worker at a steel mill who earned $28/hour plus benefits could, with frugality and long-term planning, eventually own a home free and clear and acquire a nest-egg of assets.
When that worker’s job was outsourced, and his next job paid $9.25/hour, the opportunities to amass capital fell precipitously.
A middle-skill worker replaced by automation had the same life-changing experience if he didn’t acquire much higher level skills and move to a stronger job market–both difficult tasks with highly uncertain outcomes. (No wonder secure government jobs from which jobholders can’t be fired are so sought after.)
The Rest…HERE
