Tag Archives: middle class jobs

Occupy Wall Street: Can the Middle Class be Saved?

OK. I know that elected officials, police and residents in the various Occupy Wall Street cities around the country are losing patience with the demonstrations and the demonstrators. And most likely we are going to see more arrests and violence like what happened in Oakland earlier this week.

So maybe it’s time for the protesters to roll up their sleeping bags and head for home. They have already accomplished what they can. They have focused national attention on the fact that many people — young, old and in between — are out of work and hurting in this country and that corruption on Wall Street has undercut our nation’s economy.

The protests have also highlighted a trend that has significant implications for this nation in the years ahead: the decline of the middle class and the elimination of jobs that provided middle class incomes and lifestyles.

Can the Middle Class Be Saved? Here’s from an extremely informative and comprehensive article in The Atlantic:

The Great Recession has accelerated the hollowing-out of the American middle class. And it has illuminated the widening divide between most of America and the super-rich. Both developments herald grave consequences. Here is how we can bridge the gap between us.

And more:

In October 2005, three Citigroup analysts released a report describing the pattern of growth in the U.S. economy. To really understand the future of the economy and the stock market, they wrote, you first needed to recognize that there was “no such animal as the U.S. consumer,” and that concepts such as “average” consumer debt and “average” consumer spending were highly misleading.

In fact, they said, America was composed of two distinct groups: the rich and the rest. And for the purposes of investment decisions, the second group didn’t matter; tracking its spending habits or worrying over its savings rate was a waste of time. All the action in the American economy was at the top: the richest 1 percent of households earned as much each year as the bottom 60 percent put together; they possessed as much wealth as the bottom 90 percent; and with each passing year, a greater share of the nation’s treasure was flowing through their hands and into their pockets. It was this segment of the population, almost exclusively, that held the key to future growth and future returns. The analysts, Ajay Kapur, Niall Macleod, and Narendra Singh, had coined a term for this state of affairs: plutonomy.

In a plutonomy, Kapur and his co-authors wrote, “economic growth is powered by and largely consumed by the wealthy few.” America had been in this state twice before, they noted—during the Gilded Age and the Roaring Twenties. In each case, the concentration of wealth was the result of rapid technological change, global integration, laissez-faire government policy, and “creative financial innovation.” In 2005, the rich were nearing the heights they’d reached in those previous eras, and Citigroup saw no good reason to think that, this time around, they wouldn’t keep on climbing. “The earth is being held up by the muscular arms of its entrepreneur-plutocrats,” the report said. The “great complexity” of a global economy in rapid transformation would be “exploited best by the rich and educated” of our time.

The Occupy Wall Street protesters can’t solve this problem. But they called attention to it and that’s a positive, especially if the Prez, members of Congress and other elected officials can lift their butts off their thumbs and actually accomplish something.

Now the Occupy Wall Street protesters need to follow the advice of Sergeant Phil Esterhaus on Hill Street Blues: “Hey, let’s be careful out there.”

The American Economy and Workers: A Lost Decade?

Maybe it’s just me opining here as a pajama-clad citizen journalist, but I sure don’t see much sense of urgency to spark the economy and get people working again. I know. The Prez came back from holiday and offered up the American Jobs Act and subsequently is doing what he does best: giving speeches on the road selling his plan. The Progressive Caucus in the House has offered up its own plan. And the Republicans say Obama’s plan is worth considering — as long as there are no tax increases to pay for it.

Any possibility that DC fiddles while the rest of the country burns? Snort.

The Census Bureau reported yesterday that more than 2 million Americans slipped into poverty last year — and what we are looking at is a lost decade in terms of economic and job growth. Here’s from the NYT, “Soaring Poverty Casts Spotlight on Lost Decade“:

WASHINGTON — Another 2.6 million people slipped into poverty in the United States last year, the Census Bureau reported Tuesday, and the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years the bureau has been publishing figures on it.

Economists pointed to a telling statistic: It was the first time since the Great Depression that median household income, adjusted for inflation, had not risen over such a long period, said Lawrence Katz, an economics professor at Harvard.

“This is truly a lost decade,” Mr. Katz said. “We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s.”

The bureau’s findings were worse than many economists expected, and brought into sharp relief the toll the past decade — including the painful declines of the financial crisis and recession —had taken on Americans at the middle and lower parts of the income ladder. It is also fresh evidence that the disappointing economic recovery has done nothing for the country’s poorest citizens.

The report said the percentage of Americans living below the poverty line last year, 15.1 percent, was the highest level since 1993. (The poverty line in 2010 for a family of four was $22,314.)

The report comes as President Obama gears up to try to pass a jobs bill, and analysts said the bleak numbers could help him make his case for urgency. But they could also be used against him by Republican opponents seeking to highlight economic shortcomings on his watch.

“This is one more piece of bad news on the economy,” said Ron Haskins, a director of the Center on Children and Families at the Brookings Institution. “This will be another cross to bear by the administration.”

And almost everyone has been touched in some way by this “lost decade” — unless you are in the one or two percent who have consolidated massive wealth. Among those hard hit are the working poor and many of those in the middle class who have moved into the ranks of the working poor.

Demos, a nonpartisan public policy research and advocacy organization in NYC has just issued an informative and comprehensive study, “The Great Unraveling: A Portrait of the Middle Class.” Here’s from the study:

THE AMERICAN DREAM used to mean that if you put in a hard day’s work, you could expect good wages, benefits, and a better life for your kids. But the kinds of jobs that can provide a solid middle-class life in return for hard work are in short supply—unemployment remains high, earnings are volatile, and hard-won benefits are being lost. For the first time, the majority of Americans believe their children will not be better off than them. The future of the middle class, which has been the backbone of our nation’s economy for more than half a century, is at risk.

America’s strong and vibrant middle class didn’t just happen. It was built brick by brick in the decades after World War II by hard work and workers’ strength in numbers that came from the unions that represented them. Unions made sure that as our nation’s wealth and productivity grew, so too did the income and benefits of the people who worked hard to create that wealth. For decades,
our nation’s prosperity was widely shared—wages increased and more employers provided their workers with health insurance, pensions, and paid time 0ff. The middle class was also built by government policies that invested in infra-
structure and basic science, supported home ownership and made a college education accessible to a new generation. Parents without higher education themselves saved to send their kids tocollege, made possible by affordable tuition at state universities and financial aid.

But all of this is changing and the middle class is now threatened. Median income is no higher than it was a decade ago and only workers with at least a bachelor’s degree earn more than their counterparts a generation ago. The nation’s once vibrant manufacturing sector—the engine that drove the growth of the post-war middle class—has gradually declined over the last three-plus decades. The bulk of recent job growth has been in the service sector, where unions are less prevalent, pay is lower, and benefits are limited or non-existent.

There’s been a dramatic shift in costs for health coverage from employers to employees as well as a rapid decline in the number of employers who even offer health insurance. Rising out-of-pocket costs mean that a family illness can lead to substantial expenses and medical debt.  And as employers replace traditional pensions with 401(k)-type plans—again shifting costs and risks to employees—middle-class workers can no longer count on a secure retirement.

The middle class has also been hit by trends outside the labor market as it has become more costly to raise a family. High-quality child care is expensive, yet parents face these costs early in their working years when their earnings are low. Housing is also more expensive relative to household income than it was decades ago. The need for most working parents to have their own vehicle and the high price of gas have further strained middle-class family budgets. The growing gap between incomes and expenses fueled skyrocketing family debt in the two decades preceding the Great Recession.

The threat to the future of the middle class can be seen most clearly in the economic prospects for the nation’s young people. Overall, young workers today are earning less than their parents did a generation ago, with substantial wage declines among men. Skyrocketing college costs are making it hard for middle-class students to stay in school and graduate. The average student debt for college graduates is well over $20,000 and growing. Close to a third of young workers do not have employer-based health insurance, and most young people will pay for the lion’s share of their own future retirement benefits if current trends continue.

And the point?

Now is the time for citizens, workers, employers, and policymakers to come together once again to rebuild
pathways to the middle class, create good jobs with fair pay and decent benefits, and ensure that prosperity is broadly shared for the next generation.

Gotta agree with that. And if we could approach this crisis with some sense of urgency maybe we can prevent another lost decade.

Just sayin’.

 

The American Dream and Middle Class Jobs

I know the heat is on the Prez and members of Congress to do something to stimulate the economy and create new jobs. And we’ll find out in the next few weeks whether the American Jobs Act makes it whole or in part through the legislative meat grinder.

In the meantime, many in this country are making the painful transition from middle class to working poor — at best. And in the long run this transition if unchecked will have big consequences for American families, our country and our collective standard of living.

Here’s an interesting and timely story in the NYT about what could become the “new normal” (as the policy wonks love to say) about manufacturing and other jobs, “In Detroit, Two Wage Levels Are the New Way of Work“:

DETROIT — They are a cornerstone of Chrysler’s unlikely comeback: 900 employees turning out a Jeep Grand Cherokee sport utility vehicle every 48 seconds of the working day at an assembly plant here.

Nothing distinguishes them from other workers at the Jefferson North plant, except their paychecks. The newest workers earn about $14 an hour; longtime employees earn double that.

With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries. The new jobs, which are seen as long term, are being watched closely by economists, executives in other industries and Washington policy makers eager to increase employment in manufacturing and other areas.

For many, the opportunity for steady employment is welcome, even at a lower wage and with no certainty when it might increase.

“Everybody is appreciative of a job and glad to be working,” said Derrick Chatman, who makes $14.65 an hour putting tires on Jeeps after being laid off at Home Depot, working odd construction jobs and collecting unemployment.

What was once seen as a desperate move to prop up the struggling auto industry is now considered an integral part of its future. The demand for $14-an-hour manufacturing jobs is providing Detroit’s Big Three automakers with a ready pool of eager new employees. Last year, Chrysler was flooded with inquiries about the jobs here. It froze the list after receiving 10,000 applications.

The companies say the two-tier wages are paying off. Despite the disparity, there is no appreciable difference in the Grand Cherokees produced on the shift dominated since last fall by the lower-paid workers, the plant manager says. At General Motors, savings from its two-tier workers are crucial to production that began last month of an inexpensive, subcompact car in suburban Detroit.

Two-tier wage systems have been tried in the airline industry and others with spotty success. Usually the lower wages disappear rather quickly when the economy picks up. But the arrival of vastly different wage rates in auto factories is a seminal event in an industry long influenced by a powerful union devoted to equal pay regardless of seniority.

“This is not going away,” said Kristin Dziczek, a labor analyst at the Center for Automotive Research in Ann Arbor, Mich. “It has allowed the Big Three to reduce labor costs without cutting the pay of incumbent workers. Is it good for the health and competitiveness of the companies? Yes. And is that good for job security? Yes.”

If I’m doing my math correctly, a $14-an-hour job gets you to about $30,000 a year. And I expect that this would put you at the bottom, or below, of what defines middle class — based solely on income. (This doesn’t address the other growing trend: That more and more households now depend on more than one wage earner.) Here’s from FactCheck.org:

There is no standard definition, and in fact, an overwhelming majority of Americans say they are “middle class” or “upper-middle class” or “working class” in public opinion polls. Hardly anybody considers themselves “lower class” or “upper class” in America.

It’s possible to come up with a definition of what constitutes “middle income,” but it will depend on how large a slice of the middle one prefers. If we look at U.S. Census Bureau statistics, which divide household income into quintiles, we could say that the “middle” quintile, or 20 percent, might be the “middle” class. In 2006, the average income for households in that middle group was $48,561 and the upper limit was $60,224. But we could just as reasonably use another Census figure, median family income. In 2006, the median – or “middle” – income for a family of four was $70,354. Half of all four-person families made more; half made less.

OK. If a two-tiered pay scale is a trend in auto manufacturing, could other industries — let’s say already lower paying retail and service — be next? We’ll see.

But the point of all this is that unless jobs are created with pay and benefits that allow people to live in the middle or above in terms of “middle class,” more and more people over time will fall out of this classification altogether.

For instance, Pew Charitable Trusts has just released a study — “Downward Mobility from the Middle Class:  Waking Up from the American Dream” — that shows that many children now fall out of the middle class as adults. Here’s from a news release about the study:

A middle-class upbringing does not guarantee the same status as an adult, according to a new report by Pew’s Economic Mobility Project. Downward Mobility from the Middle Class: Waking Up from the American Dream considers potential factors that cause a third of Americans who grow up in the middle—defined as those between the 30th and 70th percentiles of the income distribution—to fall out of the middle as adults.

“A variety of factors, including family background and personal choices, influence downward mobility from the middle class,” said Erin Currier, project manager of the Economic Mobility Project. “This report provides valuable information for policy makers who want to ensure that every child has the opportunity to achieve the American Dream.”

The report measures downward mobility among black, white and Hispanic men and women raised in the middle class in three ways: the percent who fall out of the middle class, the percent who fall 20 or more percentiles below their parents’ rank in the income distribution, and the percent whose income is 20 or more percent below their parents’. Across the three measures, the report finds:

  • Those who are divorced, widowed or separated are more likely to fall down the economic ladder than those who are married.
  • If men and women raised in a middle-class home obtain education after high school, they are less likely to be downwardly mobile.
  • Low scores on the Armed Forces Qualification Test (AFQT) correlate with downward mobility.

The report also finds a gender gap in downward mobility, but it is driven entirely by a disparity between white men and white women. Thirty percent of white women fall out of the middle class, but only 21 percent of white men do.

Additionally, race is a factor in who falls out of the middle class, but only for men. The report finds that:

  • Thirty-eight percent of black men fall out of the middle, compared to 21 percent of white men. In contrast, white, black and Hispanic women are equally likely to drop out of the middle class.
  • Differences in average AFQT test scores are the most important observable factor (of those considered in this report) that account for the large downward mobility gap between black men and white men.

So it’s not just the number of jobs that, with fingers and toes crossed, we will be able to create in the months and years ahead. It’s also about the quality of the jobs and the ability of this nation to maintain a vigorous middle class.