Common People….

Nobody wants to be called Common People, especially common people.” – Will Rogers, 21 June 1925

Ain’t that the truth Will, even in the 21st century. It is always surprising at how many people claim themselves to be middle-class versus those who really are. According to Wikipedia most researchers put the middle class in two categories:

Upper Middle Class – Those are folks who earn an annual income of between $75,000 and somewhere between $100,000 and $200,000 depending on the study. These folks are typically highly-educated (often with graduate degrees), most commonly salaried, professionals and middle management with large work autonomy

Lower Middle Class – This population earns between $35,000 and $70,000 and are semi-professionals and craftsmen with a roughly average standard of living. Most have some college education and are white-collar.

Working Class – These folks make between $20,000 and $35,000 and make up about 30% of the population. They are mostly clerical and most blue-collar workers whose work is highly routinized. Standard of living varies depending on number of income earners, but is commonly just adequate. High school education.

The two middle class categories make up around 50% of the population. The working class make up another 30%. But when you ask individuals if they are middle-class almost all of the above categories say “yes”. There are even some who make up to $500,000 think they are middle class.

No one wants to be common….

 

More Americans see middle class status slipping

WASHINGTON (AP) — A sense of belonging to the middle class occupies a cherished place in America. It conjures images of self-sufficient people with stable jobs and pleasant homes working toward prosperity.

Yet nearly five years after the Great Recession ended, more people are coming to the painful realization that they’re no longer part of it.

They are former professionals now stocking shelves at grocery stores, retirees struggling with rising costs and people working part-time jobs but desperate for full-time pay. Such setbacks have emerged in economic statistics for several years. Now they’re affecting how Americans think of themselves.

SOURCE: More Americans see middle class status slipping – Yahoo Finance.

Looking back on my life I can see now that I had it pretty good compared to many around today. I managed to work for one employer for thirty years and then retire with a fixed pension as well as a 401K. That along with Social Security has allowed me to live without much financial worries. Now don’t get me wrong, I don’t live a life of constant vacations or $100 meals. My life is pretty frugal and that is the way I want it.

I personally know one friend who was, like me, an IT (information technology) guy. He had a good paying job that is until he was laid off after 15 years of service. He went from there to managing a computer system for a small not-for-profit until that job also disappeared. He now works in a gas station as a “manager” at less than a third of his previous income.  I’m sure he no longer considers himself middle class. Given that he has no pension or much ability to save he will likely have to work his entire life.

Living today is much more of a struggle than it was in my working days. Of course a big part of that is because of all the wealth is now concentrated at the very top of the income ladder. Most people have gone a decade or more without any pay raises. Many now struggle with two and sometimes even three jobs to pay the bills.

As I mentioned in a recent post I believe that the time is coming where the “common man” will take back the power from the wealthy elite. When that happens I pray that calm and sensible minds are somehow able to restore the middle class that has evaporated without a lot of turmoil.

We must face the fact that our country will soon be driven by a much more diverse population. Those who presently control the masses with their rhetorical spin will lose their control. Hopefully, like many of our previous transitions, this will occur in a gradual manner. But with the American Dream so quickly disappearing that time will likely be sooner than many of our current leaders could ever anticipate.

The Middle Class….

Having grown up in the 1950s and 60s I am very much entrenched in the idea of a middle class society. That is where the average working person got a share of the prosperity of the times. But in looking back at history it now seems apparent to me that the “middle class”, at least as we knew it then  probably an anomaly of our times.

The middle class is a result of the Ford model for the economy. That is where the workers are paid a living wage and they would then build a community where they could afford to buy the products they make. We have much to thank Henry Ford for those times. Ford came upon the scenes shortly after the age of the “Robber Barrons”. The barons were Rockefeller, Vanderbilt, Carniege, JP Morgan, and Fisk.  These guys were mostly consumed by their desire for wealth and ruthlessly destroying their competition. They had little respect for the workers they employed.  They were a mere tool for their greed for ever increasing wealth. Their employees generally worked six to seven days a week for twelve hours a day. They often got a little than a dollar a day. If you got sick you lost your job. If you died because of an industrial accident your family was pretty much on their own. We learned that this is what you get with unbridled capitalism.

The Shrinking Middle Class….

I am adding a new category starting with this post. It is entitled “The Shrinking Middle Class”.

Here is one of the reasons why I am doing that. It is well into the Fall season here in the Midwest and soon all the outside work will be over. That means about five months of pretty much staying in the “cabin”. To ward off cabin fever I usually try to take on a special project for each in-door season. The project this year will be to learn as much as I can about the history of the middle class and the possible causes of its recent decline. ”

About Germany….

Why is it that Germany seems to be just about the only country in the world who is not struggling with a disappearing middle class? They are doing well in that regard because they are the most unionized country in the world and their increased wages drives their demand. How do they manage to keep their wages high in light of the pennies-on-the-dollar labor found elsewhere?  They do it by government regulations prohibiting companies from exporting jobs.  Of course this is something that the “free traders” among us say is impossible but it seems Germany didn’t know it was impossible and went ahead and implemented it anyway.

Could the same thing be done in the U.S.? Could we actually drive up demand by driving wages back to where they were twenty years ago. In the last decade the auto industry’s starting wage has gone from $28/hour to less than $15/hour and there are similar numbers throughout other industries in the country. The middle class is quickly disappearing as a result. And with the middle class disappearing so is the discretionary income and resulting demand. We are in a catch-22 until we can figure out a way to bring the middle class back to existence.

The conservative elements in our country insist that the door to the middle class is pretty much now closed and we must depend on trickle-down from the rich to maintain any semblance of prosperity in this country. I just don’t buy into that logic. If our once mortal enemy of Germany can maintain their middle class through corporate regulations prohibiting the export of jobs then certainly the biggest economy in the world can do something similar.

Germany is now pretty much bailing out all those other E.U. countries with their affluence.  And this is just a score of years since they incorporated the very destitute East Germany into their country! Maybe we should take a plan from their play-book and duplicate it here in our own American style. But like our healthcare debacle we can’t seem to learn that the rest of the world has pretty much learned to control their medical costs through a universal single-payer system so how are we ever going to learn how to bring back our middle class through lessons from elsewhere?

Now don’t get me wrong here; I am not saying that Germany is a better country than we are. They have some restrictions on their citizens that should never and would never be acceptable to us. We don’t have to become another Germany to learn some ways of doing things better. Pragmatism is finding what works and then using it regardless of where it came from.

But what do I know….

Jobs are coming back fastest in services sector….

Source:  Jobs are coming back fastest in services sector – USATODAY.com.

Service businesses are leading an uneven jobs recovery that has pushed sectors such as warehouse club retailers back to their pre-recession employment…

The starkest difference: More than 70% of jobs lost in service industries have returned three years after the recession’s end, while only 15% of jobs lost in manufacturing, construction and other industries that produce goods have come back. The analysis is based on Labor Department data from January 2008 — when total U.S. employment peaked — through last month

Is it a surprise to anyone that 85% of the manufacturing jobs have not returned since January 2008? Of course not. Many are now off-shore being paid pennies on the dollar. This is not a new trend. It started in the 1980s and will not likely end any time soon.  The construction industries thrived in the past because people employed in manufacture were making enough to be able to afford to buy homes. Now that the middle class has practically been eliminated construction jobs will be slow to return if they ever do.

I have been studying the history of the Roman empire for my blog at RedLetterLiving.net to try to see parallels between it and church history. In that study it is pretty clear to me that throughout history there has really never been much of what we today call a middle class. There have been artisans and tradesmen throughout history but they usually make up less than 10% of any society. The vast majority of people were included in the “serf” category, that is those at the very bottom of the wealth ladder.

The American middle class that rose so quickly after World War II was the result of a the  rapid change from war making industries to consumer based industries. The GI-bill allowed returning soldiers to get an advanced educations and the FHA which allowed them to buy a home. These two things which fed on one another created salaries that had enough discretionary income to cause other purchases which caused other jobs which caused more middle class. Of course both the GI bill and the FHA were government instituted plans.

These sort of things seem impossible now that we are in a mood to de-fund all government programs.  The upper 1% have prospered in the last twenty years at the expense of the dwindling middle class.Things seem to be returning to what has been the norm throughout most of world history and that is the aristocracy at the top and everyone else at the bottom.  Will the middle class ever be what they were thirty or forty years ago? Unless something fundamental  changes I kind of doubt it. While service jobs, which typically pay near minimum wage, are increasing middle class jobs just aren’t coming back.

We know that private corporations are presently sitting on almost $4 trillion in their coffers. Much of it, like our middle class jobs, is off-shore.  Until they start paying living wages there will never be sufficient demand for goods and services to bring back the economy to where is was even twenty years ago. Why can’t corporations understand that without discretionary income prosperity will never return to what it was.  Getting our population better educated is one long-term answer but the programs that allow many to go to college or even trade schools are being de-funded in order to some more tax breaks.

The current cuts in education and similar people programs and such seem like a never-ending spiral around the drain to me.

But what do I know…..