Economists are still trying to hash out how the country got to this place, where so many jobs pay less, comparatively, and so many workers are struggling to make ends meet. The work of the economist David Autor suggests that automation is partially to blame. His research finds that improvements in technology helped augment a certain class of jobs, making the people in them more productive, while also replacing the more repetitive jobs with computers and machines. That means that the top earners are able to make more money than they were in the past, and that there’s a growing need for people to fill lower-wage jobs that can’t be automated (think janitor or nursing assistant). But the jobs that once built the middle class—bookkeepers, assembly-line workers, call-center employees—have disappeared.
Other economists, such as Thomas Lemieux, argue that a shifting labor landscape is to blame for some of the decline in middle-class wages. As companies outsourced jobs to cheaper locations, U.S. jobs either disappeared or paid less, in order for companies to remain competitive. Additionally, declining union coverage means people who would normally get union wages no longer do, which also puts a downward pressure on non-union wages, since non-union plants no longer have to compete. And because the minimum wage has not kept pace with inflation, Lemieux and others argue, other wages haven’t either. If minimum-wage salaries remain low, other salaries up the income ladder—including those of managers—remain low too.
In addition, American companies have become very good at cutting labor costs, said Harry Holzer, a professor of public policy at Georgetown. They turn people who were once full-time employees into contractors, cut back on wages and benefits, and do everything possible to maximize productivity without sharing those gains with the workers. “Employers have become very good at taking the low road, minimizing labor costs, no matter what it takes,” said Holzer.
A strong middle class is, for many people, central to the American idea. There are other core values too, of course—freedom, political representation, individualism, etc.—but an economy in which families can feel economic security, live comfortably, and build up wealth is definitely on the list.
But that’s not the economy America has today. The middle class is getting smaller by the year: According to Pew, the percent of adults in solidly middle-income households has fallen to 50 percent in 2015, from 61 percent in 1951. And belonging to the American middle class doesn’t guarantee financial security either: 44 percent of Americans making between $40,000 and $100,000 say they can’t come up with $400 in the event of an emergency without borrowing money. For black and Hispanic middle-class families, that figure is 58 percent, compared with 40 percent for whites.
Good read on business’ responsibility to create work, not just profit, in order to prevent future Brexits:
To prevent such catastrophes from happening, business needs to play a more active, engaged role in creating the kind of thriving, vibrant economies that inoculate societies from self-implosion—because those implosions take businesses down with them, too. Brexits don’t happen in thriving economies; they only happen when the pie is shrinking. People who have good jobs — jobs that allow them to do something useful, that pay livable wages, that come with good benefits — who can educate their children, get the health care they need, and live lives that are decent and whole generally don’t blow up their own economies in a misguided bid for attention, justice, and vengeance.
In what is a brave and important piece of writing, Neal Gabler detailed what it’s like to live with financial insecurity. Want to how complicated this issue is? Try reading the comments.
I know what it is like to have to juggle creditors to make it through a week. I know what it is like to have to swallow my pride and constantly dun people to pay me so that I can pay others. I know what it is like to have liens slapped on me and to have my bank account levied by creditors. I know what it is like to be down to my last $5—literally—while I wait for a paycheck to arrive, and I know what it is like to subsist for days on a diet of eggs. I know what it is like to dread going to the mailbox, because there will always be new bills to pay but seldom a check with which to pay them. I know what it is like to have to tell my daughter that I didn’t know if I would be able to pay for her wedding; it all depended on whether something good happened. And I know what it is like to have to borrow money from my adult daughters because my wife and I ran out of heating oil.
You wouldn’t know any of that to look at me. I like to think I appear reasonably prosperous. Nor would you know it to look at my résumé. I have had a passably good career as a writer—five books, hundreds of articles published, a number of awards and fellowships, and a small (very small) but respectable reputation. You wouldn’t even know it to look at my tax return. I am nowhere near rich, but I have typically made a solid middle- or even, at times, upper-middle-class income, which is about all a writer can expect, even a writer who also teaches and lectures and writes television scripts, as I do. And you certainly wouldn’t know it to talk to me, because the last thing I would ever do—until now—is admit to financial insecurity or, as I think of it, “financial impotence,” because it has many of the characteristics of sexual impotence, not least of which is the desperate need to mask it and pretend everything is going swimmingly. In truth, it may be more embarrassing than sexual impotence. “You are more likely to hear from your buddy that he is on Viagra than that he has credit-card problems,” says Brad Klontz, a financial psychologist who teaches at Creighton University in Omaha, Nebraska, and ministers to individuals with financial issues. “Much more likely.” America is a country, as Donald Trump has reminded us, of winners and losers, alphas and weaklings. To struggle financially is a source of shame, a daily humiliation—even a form of social suicide. Silence is the only protection.