The Crisis of the Middle Class

[Bud]

This article written a year ago, is thought provoking.

 

I'm a product of the middle class of the 50's and 60's. I wouldn't be surprised that many members here share that experience.

 

If the US becomes a two class society, rich and poor, it doesn't bode well for any of us.

[Dave McReynolds]

Interesting article. I agree that having a strong middle class was a huge factor in making our country the success it has been, along with having a strong family structure. People say that the middle class had it good in the '50's because much of the world's industrial capacity, other than ours, had been destroyed during WWII, and so our middle class could be paid unrealistically high wages since we could sell everything we produced. That may be so, but it's not the whole picture.

 

I grew up in the '50's in a middle class family. We lived in a new home that my dad bought for $13,000. His house payments under the GI bill were less than we were paying in rent before he bought the house. It was spartan; most middle class families starting out today wouldn't consider living in it. But at the time, it was as good as most other families had, so it seemed fine to us. My mother didn't work outside the home, but we had only one car. Usually I had only one pair of shoes and two pairs of pants. My typical Christmas present would be one thing, maybe a football, which would be Sears "good" football, not Sears "best" football. But nobody I knew got a lot more presents than that, so it was fine with me. So one thing I'm saying is that people's expectations are higher now than they were then.

 

Society has gotten a lot more complicated since then. The building permits on a starter house now cost more, inflation adjusted, than the whole house did back then. There was a "can do" attitude then without so many "can't do's" standing in the way. I would compare the attitude of the whole society then with the attitude of the high tech industry now. Evidently, bureaucrats don't understand enough about high tech to regulate it very much, so they thankfully get out of the way. Both Germany and Japan woefully underestimated our ability to recover from Pearl Harbor and gear up for WWII. Companies and people just started making things that worked, without asking anyone's permission. That attitude carried over to the '50's in the construction of the highway system and many other things. By comparison, the tunnel system that is being proposed for the California delta will require $10 billion (yes, that's with a B) of soft costs before one shovelful of dirt is moved. We old timers marvel at how many generations of car seats for children have come and gone over the years, each with its own legal mandate. I remember buying my first motorcycle, a Honda 90. The guy took me out in the parking lot, explained the controls, and wished me luck. I'm pretty sure he didn't sell helmets. I know, we should have all been thrown in jail, but we had actual things that needed to be done, and we wanted to do them rather than fool around with bull$hit!

 

The best advice I could give a young person today with degree in hand and no job offers on the horizon is to become self-employed in a business that is small enough to fly under the radar of all the regulations that are crippling larger businesses and causing them to curtail their US operations. It is still possible to make good (not great) money if you learn how to get things done, whether it's maintaining swimming pools, trimming trees, cleaning carpets, or taking care of disabled people. Use that experience to learn what it takes to make a business successful. Make your mistakes on a small scale. Constantly look for opportunities to grow, not necessarily in the business you're already in, but into a more profitable business. If you're a good carpet cleaner and supporting yourself at it, you're in a lot better shape to take on something bigger than somebody with a year-old diploma who is getting discouraged looking for jobs that aren't there.

[Patallaire]

I am not sure what point was made. People have choices in life, two cars at $700 per month is a choice. Additionally, the cost of goods in society, consider a car or motorcycle as an example is higher because of technology built into them, who had ABS or disc brakes in the 50's? There were wealthy people in the 50s, while we were not among them we didn't have a climate that pointed this out to create a discontent. There is no longer an industry that supports millions of carriage makers, blacksmiths, punch cards for computers, vinyl record manufacturers, etc. Life changes.

The American dream is alive and well, it just has shifted in its needs and those who have not or can not adjust are feeling as though there is inequality. Perhaps rightfully so, there is inequality, but there has always been. Those who have been hit the hardest, it appears, are the union type workers, who through no fault of their own, had their contracts negotiated to a point of unaffordability by corporations, then the overseas markets and workers began to see the rise of their middle class as a result of work sent overseas. The wage parity issue is one of shifting sands, quality often dictates wage as we are now seeing as the middle class grows overseas and demands higher wages and we see the quality of work and the jobs move back to our country. I don't see a doomsday scenario here, I see a shifting of jobs, I see a shifting of skills and actually am very bullish on our economy and our ability to move people up the ladder.

 

[Selden]

I would put more weight than Dave on the artificially high standard of living in the USA following WW II. George Friedman writes, "The threat to the United States is the persistent decline in the middle class' standard of living, a problem that is reshaping the social order that has been in place since World War II." In 1948, George Keenan wrote: "...we have about 50% of the world's wealth but only 6.3% of its population." That is not a distribution that is sustainable in the long term. The rest of the world, especially Asia, has been catching up for the past 55 years. But, that's only part of the problem, as we have an economic system that disproportionately rewards some, with a growing disparity between rich and poor, and the middle class being squeezed.

 

Like George Friedman, people who are smarter and luckier than I am will have to craft the solution. I'm definitely in the lucky group (in 1980, I decided that computers were the future), and I have done quite well, partly because of my own efforts, but also through the simple, dumb luck of being in the right place at the right time. I am under no illusions about how much chance meant for my present situation; any number of tipping points in the past 40 years could have led to a completely different outcome.

 

My daughter, approaching 34 years old, has not been nearly so lucky. She has made some bad decisions, but so did I at that age; the difference is that it was a lot easier to recover from them in the 1970s.

 

[Smoky]

I'm 60, my children are in their early 30's. I see them, and their friends doing well, those with and without post-secondary education.

 

They are getting married, raising families, buying houses, and managing their lives. Getting ahead, as they would expect. As I look around my circle of middle class friends, for the most part, their children are experiencing the same thing. There are a few exceptions, but they are certainly the minority.

 

Its not all doom and gloom.

[Bud]

I would put more weight than Dave on the artificially high standard of living in the USA following WW II. George Friedman writes, "The threat to the United States is the persistent decline in the middle class' standard of living, a problem that is reshaping the social order that has been in place since World War II." In 1948, George Keenan wrote: "...we have about 50% of the world's wealth but only 6.3% of its population." That is not a distribution that is sustainable in the long term. The rest of the world, especially Asia, has been catching up for the past 55 years. But, that's only part of the problem, as we have an economic system that disproportionately rewards some, with a growing disparity between rich and poor, and the middle class being squeezed.

 

Like George Friedman, people who are smarter and luckier than I am will have to craft the solution. I'm definitely in the lucky group (in 1980, I decided that computers were the future), and I have done quite well, partly because of my own efforts, but also through the simple, dumb luck of being in the right place at the right time. I am under no illusions about how much chance meant for my present situation; any number of tipping points in the past 40 years could have led to a completely different outcome.

 

My daughter, approaching 34 years old, has not been nearly so lucky. She has made some bad decisions, but so did I at that age; the difference is that it was a lot easier to recover from them in the 1970s.

 

Our kids are doing fine. But that is not true of everyone.

 

The article was pointing out the possibility of a 2 class society as well as the potential problems that could bring.

 

 

 

 

[CVA-42]

I've thought about these issues for a long time and I still have mixed feelings, despite many years dealing with poorer communities and disenfranchised portions of our population. We read a lot about the decline of the middle class, income disparity, the "tough times" that we live in, etc., and yet I personally know few people who are suffering economically, although I know full well that they exist. Maybe I just don't get around much. I was born in 1947 and grew up in a two-bedroom apartment in the Bronx. My three older sisters and I shared one of those bedrooms for quite a long time. My dad, a member of the Teamster's Union, made a relatively decent living but there wasn't a whole lot left over. By the time I had my first job, I knew the value of a dollar. My wife and I have been married forty-four years and have never lived beyond our means. Ever. Still don't and never will. We've never even bought a new car and I wouldn't think of buying a new motorcycle to this day (buying a motorcycle of any type or age for recreation - - not exactly an economic problem, admittedly). Our two kids, now in their thirties, also live the same way and they're doing fine. Actually, better than fine, I would say. I'm proud that they absorbed the example we were trying to set. There are, of course, many people who are hurting economically through no real fault of their own. Some because of bad breaks and some because of health and other unavoidable issues. I've also seen some who are doing badly because they're lazy pure and simple and others who have made bad decisions. My neighbor was right-sided about ten years ago after a long career with A.T.&T. She was offered a pension or a lump sum. She took the latter and put it all in the stock market. Much of it evaporated and she didn't have the means to wait for the remainder to recover. Now she's a cashier trying to make ends meet and, somehow, holds the government responsible for her problems.

 

I'm not trying to minimize the overall issue. The economic downturn did hurt a lot of people and, economically speaking, we may now be facing a new normal in terms of available jobs and, perhaps, a decline in the middle class depending upon how one looks at it. The working poor? Yet another aspect. Many so poor they have to take a cab to the laundromat. It can be expensive to be poor. How is this cycle to be broken or mitigated? I don't have the answer. But I do believe there are many who can do more for themselves and, no, I am not a Libertarian by any stretch. $700 per month in car payments? On vehicles that are declining in value every single day? I don't think so. A couple of hundred dollars every month for smart phones that didn't even exist just a few years ago but which now seem to be so "essential"? Do you know anyone below the age of, say, fifty who doesn't have one even as they complain about the economy and the "tough times"? Who doesn't eat out at least once or twice a week? I can't say that I do. I find it fascinating to watch the program House Hunters on TV. Some people seem to show a lot of the old fashioned common sense but there is an alarmingly (to me) large number who will actually make a house purchase decision based on the fact that a particular house does not have the seemingly requisite granite counters. Granite counters!? Or the one that really gets me - - the kids might actually have to share a bathroom! Those folks definitely would have a hard time back in the Bronx.

 

Rant over. I could go on. My wife and I will continue to pay our taxes, volunteer where we can, give to the charities of our choice, re-cycle our trash, try to stay informed, write to our elected representatives, vote.

 

 

[FlyingFinn]

When discussing topics like this, and making comments along the lines of "When I look around I see..." or "Me, my kids and all out friends are doing fine..." I just have to remind myself that the average participants of BMWST board are hardly a good representation of all Americans in general.

 

Oh, my reply was not by any means directed to the OP. Just something that popped to my head based on the first few replies.

[philbytx]

Worry not, we'll have fallen off the perch by then mate .

[Bud]

When discussing topics like this, and making comments along the lines of "When I look around I see..." or "Me, my kids and all out friends are doing fine..." I just have to remind myself that the average participants of BMWST board are hardly a good representation of all Americans in general.

 

Oh, my reply was not by any means directed to the OP. Just something that popped to my head based on the first few replies.

 

 

I am the OP and your point is well taken.

 

I had all the advantages that an educated, tall, WASP male growing up in the 60's.

 

 

 

BTW I've met many of the the members of this board and they are not a "good" representation of any group.

 

[FlyingFinn]

BTW I've met many of the the members of this board and they are not a "good" representation of any group.

 

True dat.

[John Ranalletta]

Assume we define "middle class" as families making $XXXXX...

 

In the job market for middle classers, companies are tightening up. Whereas, in the 60's thru the 90's one could have a generalized resume coupled with some grey matter and succeed, today, companies are taking out the "slack"; measuring performance more narrowly; eliminating people who don't fit (average performers), etc. In short, middle classers without specific, valuable experience or talent are being ignored.

 

Jobs involved with making tangible objects are disappearing for the most part; thus fewer supervisors and managers are needed. Yep, I've heard about the manufacturing renaissance, but a lot of it is automated. The future will not belong to those who work with their hands or backs. That work won't go away, but it will be (again, for the most part) dumbed down and less likely to be that first rung on the ladder to middle class.

 

Education may not matter much either. Never have so many attained degrees while the middle class wanes. Thousands of PhDs are being dumped from pharma companies on the east coast.

 

Success, i.e. advancing to and thru middle class status will depend on a person's ability to make a defined, measurable contribution to an organization; intelligence, experience and propensity to take the right risks.

 

Twelve years ago, a client who employs 200 people in two factories said, "If I had it to do all over again, I'd start a business where the inventory is money and intellectual property." Who's really doing well in our economy? People who are creating, moving, managing money and intellectual property (consulting). That trend will not likely reverse itself.

 

If I were raising kids again, I'd be mindful of that as I prepared them for life.

[Selden]

...My wife and I will continue to pay our taxes, volunteer where we can, give to the charities of our choice, re-cycle our trash, try to stay informed, write to our elected representatives, vote.

That's pretty good advice for responsible citizenship.