Middle class continues to collapse into poverty - but here's how we can stop it
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The middle class is going extinct, according to another new study. The result confirms what many fear, changes in the economy are not favorable to those in the middle. We are not prepared for the changes that are occurring.
LOS ANGELES, CA (California Network) - The middle class continues to shrink. Over the next five years, the economy is expected to add 7.2 million new jobs. Most of those jobs will be low-paying jobs. Middle income jobs will are expected to grow at only 3 percent. That growth is so small as to result in a loss over time. High income jobs are growing at the rate of 5 percent.
These findings are the result of a study by CareerBuilder Economic Modeling Specialists International. The study defined middle-income as jobs that pay between $14 and $21 per hour.
The decline of the middle class is the result of two factors, diminished union representation and increased automation.
Unions used to improve working conditions for workers across the board. When unions won concessions for their workers, even non-union businesses were forced to improve pay and other conditions to keep their workers from seeking union work or representation. However, Unions have declined since the 1960s when 1 in 3 workers belonged to a union. Today less than 1 in 10 working Americans belongs to a union.
Unions have diminished for a variety of reasons. One of those reasons is automation. Automation is taking over repetitive jobs, especially in manufacturing. Many businesses have also relocated overseas to take advantage of lower labor costs.
As manufacturing and other trades have declined in America, service industry jobs have grown. The number of workers in the service industry and its low barrier to entry means wages in service jobs tend to start low. Many service professions are not unionized.
At the same time the middle class is shrinking and the lower class is growing, the upper class is doing well. Wall Street continues to post gains. Jobs which require highly specialized skills sets and do not involve repetitive work are growing. High paying jobs with a future include those in technology and management. Businesses continue to fare well, but there's a limit to how well they can do.
The American economy depends heavily on middle class consumption. But as the middle class shrinks, and middle class wages fall relative to inflation, businesses are likely to suffer a decline. After all, what happens to a business if there are no customers that can afford its products?
A lack of skilled workers can also hurt business in the long run.
There are solutions available. Affordable college is one solution. Well-educated workers are more valuable, producing a greater quantity of high-value goods an services. Linking wages to inflation would also be useful and would prevent the loss of purchasing power suffered by the middle class. A return of unions and collective bargaining could also help. A robust scheme of collective bargaining could help eliminate the need for minimum wage laws, providing more flexibility for businesses to hire more workers.
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Another solution would be to establish programs to re-skill workers. As people lose jobs to automation, they can learn new skill sets to allow them to be productive in the new economy.
Such a solution would be cheaper than putting people on welfare benefits, and would convert laid-off workers back into taxpayers faster than any other solution.
The arrival of new technology designed to save labor is already changing the labor market. But people still need to be able to work and support themselves. To accomplish this goal in a rapidly changing world, we need education and training that keeps up. That's missing right now, and as a result, we're losing the middle class.
Also problematic is the informal, one-sided alliance between the middle class and the upper. Middle class voters have a habit of repeating upper class mantras about things like work, wages, unions and government. The result is many middle class voters consistently vote against their own self-interest. They deride progressive proposals as "socialism" and object to the notion of higher taxes on those wealthier than they. Most middle class workers have unfounded fantasies about breaking into the upper class someday, which is why they align so quickly with the rich.
However, the upper class provides no reward for their loyalty, as the statistics prove. Middle class jobs are often eliminated at the slightest hint of a profit elsewhere. Middle class workers then find themselves among the poor with little notice. By the time they realized they've been used politically, it's too late.
The middle class is in crisis and most members will become poor over the next decade, if swift measures are not taken.
Despite the dire news, there are no concrete proposals to change anything at this time.
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