Thursday, May 9, 2013

The disappearing middle class and the changing nature of work

This is the second of a series on the influence of capitalism on our daily lives and that of others

The disappearing middle class has become a widely accepted axiom today. A few dissenting voices can be heard, but the majority continue to speak about a disappearing or vanishing middle class. What is clear is that the disparity between the very rich and the very poor is steadily increasing, while the middle class is being squeezed out of existence.

These few illustrative facts are from the US, although other countries can produce similar figures showing the increasing disparity between the rich and the poor and the growing disappearance of the middle class:

--In the US during 2010, 37 percent of all income gains went to the top 0.01 percent of all income earners, 56 percent of all income gains went to the rest of the top 1 percent, while only 7 percent of all income gains went to the bottom 99 percent.

--The wealthiest 1 percent of all Americans own more wealth than the bottom 95 percent combined owns. According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million together. The poorest 50 percent of all Americans collectively own just 2.5 % of all the wealth in the US.

--According to the Economic Policy Institute, between 1979 and 2007 income growth for the top 1 percent of all US income earners was an astounding 390 percent. For the bottom 90 percent, income growth was only 5 percent over that same time period.

--In 2010, 2.6 million more Americans descended into poverty. That was the largest increase that was seen since the US government began keeping statistics on this in 1959. In the year 2000, 11.3% of all Americans were living in poverty. Today, 15.1 % of all Americans are living in poverty.

--In November 2008, 30.8 million Americans were on food stamps. Today, more than 46 million Americans are on food stamps. One out of every six Americans is now enrolled in at least one government anti-poverty program. And federal housing assistance increased by a whopping 42 percent between 2006 and 2010.

--According to Heidi Shierholz, an economist with the Economic Policy Institute, about 53 percent of all income went to the middle class in the 1970s, but today only about 46 percent of all income does.

--In 1970, 65 percent of all Americans lived in “middle class neighborhoods”. By 2007, only 44 percent of all Americans lived in “middle class neighborhoods.” Yet, according to a CBS poll in 2007, 90 percent of all Americans consider themselves middle class.

--According to a recent report produced by Pew Charitable Trusts, approximately one out of every three Americans that grew up in a middle class household has slipped down the income ladder.

Where are the middle class going? These figures suggest that many are becoming poorer and thus dropping into the poor class. A few, however, are moving up into the rich class, a fact that is often cited by some who question the disappearance of the middle class.

There are many definitions of precisely who is middle class, which is probably the main reason why there is so much disagreement about the disappearance of the middle class. 

The simplest definition is to include those who fall in the middle third of the income distribution. In Canada, that is a broad category, with incomes ranging from $35,000 to $90,000. In the US, which uses a different standard, a household making between $24,376 to $73,129 per year would be considered middle class.

Still another way to define the middle class is in terms of household income within 50 percent of the median, as is illustrated in the following chart. But notice how this group is steadily getting smaller every decade.

Why is middle class being systematically wiped out in the US and other countries?  There are many answers. Some are political, some are economic, and some are technological.

In the US today, big businesses and wealthy individuals fund the campaigns of politicians, and in turn these politicians pass laws which rig the game in their favor. It is a symbiotic relationship which is bad for America. The same situation prevails in other countries.

Many jobs are disappearing today. Some for economic reasons, because it is cheaper to produce goods overseas than it is in the US or Canada, as was evident in the previous post dealing with garments made by workers in Bangladesh who are operating in substandard working conditions. Outsourcing is commonplace today in nearly every industry, including the service industries. We call this globalization.

Technology plays perhaps the most significant role in the disappearance of jobs. Many jobs are no longer as important as they once were or can be performed more cheaply through outsourcing or by robots. The car industry uses robots extensively in the manufacturing process.

The middle class is disappearing in part because many traditional middle-class skills are becoming obsolete. Routine clerical work and many other kinds of work can now be done by computers and robots. Algorithms and machines are replacing customer service agents and even grocery checkout clerks.

At the low end of the spectrum, the jobs that are left are those that computers and robots cannot do yet, such as janitorial work. While at the high end of the spectrum, the jobs that are left are again those that computers cannot do yet, such as law, medicine and management.  But the jobs of those in between are threatened. The list is almost endless, and it is growing by the day.

Paralegals, who do routine research for lawyers, are already being replaced by computers. This is just one example. And as technology advances, even more people in the middle of the spectrum are going to be elbowed out of the workforce.

Not only are jobs disappearing, those who do have jobs have to work harder for what they get. Families have to work long hours to maintain a middle-class existence.

An article in Macleans, a Canadian news magazine, the number of two-income families has soared to well over 70 per cent, from just 30 per cent in the 1970s. That means in most households, both parents need a job to pay the mortgage. The result is that they are logging twice the work hours to maintain a standard of living that was easily affordable on a single income a few decades ago.

In addition, having two working parents often necessitates extra costs like child care, which can run upwards of $10,000 a year per child, and a second car to commute to two jobs. At the end of the day, even double incomes are not the panacea they once were.

The article continues by pointing out that the middle-class squeeze has been happening for decades, but it was hidden from view and papered over by a buoyant economy. As long as unemployment was low and credit was easy, middle income earners could fool themselves into thinking that they were making progress.

But now the economy is in a recession that continues to persist. Economists say the middle class might not rebound when the recession is over. In the early ’80s and ’90s, both the real incomes of the middle class declined and the share of middle-class incomes declined. But when those recessions ended, the job losses were largely recouped. This time around, however, not only are the jobs disappearing, but the plants that supported them are closing too.

Even education is no longer the panacea that it once was. It has become unaffordable for many students. Twenty years ago, according to Macleans, going to university for a year would have cost roughly $5,000 (with tuition and living expenses). Today, it is upwards of $12,000. Meanwhile, financial aid for students is getting increasingly scarce. The cut-off level for university loans and bursaries is now well below what people would consider to be a middle-income income.

For those unlucky enough to fall from the comfort of the middle class, getting back in is now harder than ever. Troubling signs are beginning to emerge that there is less mobility between the working poor and the middle class than there used to be, so once you are out, it could be for life.

If the slogan of the Occupy movement, "We are the 99 %," is ever to be more than just that, the growing disparity between the very rich and the very poor needs to be addressed meaningfully. If more and more people, for whatever reason, are driven into poverty, then this must become a concern for all of us, and not only for those who are directly affected. Because sooner or later, nearly everyone will be affected.

As a society, we are going to have to rethink the nature of work. The disappearing middle class provides us with not only the chance but also the moral obligation to do so. In an era when jobs are disappearing every day, we must ask ourselves, are jobs a right and not just a privilege?

I am only raising this issue. I certainly don't have the answers, but I do hope that together we can begin this discussion. It is important.

This series deals with the influence of capitalism, thus at some point we must include a discussion of possible alternatives. That is quite an agenda, but that should not deter us. Our future is at stake.


  1. I've heard it said the rich need the middle class as a buffer to protect them from the poor, else revolution is around the corner. Not sure if true but it sounds compelling.

  2. 'If more and more people, for whatever reason, are driven into poverty, then this must become a concern for all of us, and not only for those who are directly affected. Because sooner or later, nearly everyone will be affected.'

    Yes agreed. It is the way of the world. Throughout history such things have happened. The Reformation may have been necessary but it stopped communities of monks and nuns helping the poor which created beggars eveywhere. The same is happening now. The rich get richer and the poor get poorer.

    'This series deals with the influence of capitalism, thus at some point we must include a discussion of possible alternatives. That is quite an agenda, but that should not deter us. Our future is at stake.'

    Is there an alternative though? Can't see one sadly. Capitalism is a political or economic manifestation of base human nature and greed; some people want and some want more. The debate is controlled by those who rule. What can we do? Christians must ask God for answers.

  3. The reason why middle class is disappearing is because middle
    class wants it all and all of it up front. They are democrats thinking
    they are on par with the upper class republicans. That's why the middle
    class is ceasing to exist. It's not the people on welfare faults or the
    big corporations fault (ok, maybe some of the blame lies in both of
    these places, but not the majority of it).

    The middle class of the 50's are a lot different then the middle
    class of today. The middle class of today want it all. They put
    everything on credit and then cry when it comes pouring down raining on

    My grandparents in the 50's worked and the kids played outside. When
    they went out to have fun they did things that were very cheap.

    middle class of today want: They want to have 3 kids. All those kids
    have to play sports, go to day care, have huge birthday parties, have
    nice cloths, have expensive Christmas gifts, go on vacations once a
    year, all of them have to have cell phones, ipods, iphones, laptops ,
    xbox, play station and the games that go along with it....that's just
    for the kids.

    The adults want a nice house, with everything 'updated' and granite
    counter tops and brand new furniture ready for move in. Then they want
    two nice cars, a huge flat screen tv, possibly 3 of them. Surround sound
    system, nice cloths, mani/pedi's, new things for his car and whole bunch of other stuff

    Everything I just described is the way RICH people live,
    NOT MIDDLE CLASS PEOPLE. Who is going to be BRAVE enough to tell the
    middle class once and for all that:

    THIS IS WHY THE MIDDLE CLASS IS DISAPPEARING. Because all of these middle classers are putting EVERYTHING on credit and when their marriage winds up in divorce and their kids are out of control because of the finical abyss that they are in , they claim bankruptcy and guess who has to pay for that?

    Granted, the cost of things have hiked because of greedy
    corporations and we have some lazy entitlement generation, but for the
    middle class to have the utter audacity not to look in the mirror and
    put the majority of the blame where it squarely belongs, ON THEMSELVES,
    is worst than anything I can imagine in this scenario. When is the
    middle class going to take responsibility for themselves, stop blaming
    everyone and stop playing the victim! I'M SICK OF IT!

  4. Wow. Good points, all. I just stumbled upon this website. The ancient Romans built aqueducts, funded by taxation. They knew that without water, people would perish. It was a right. In my town we have a water district - a corporation owned and governed by shareholders. It is not funded by taxes. Residents who want to continue to live must pay the water district's invoice - else be shut off. The water district, therefore, has the right and ability to kill you if you don't pay the bill. Did the Romans know something we don't? Basic life needs ought to be provided to all citizens. That is what taxes are for. Yes, the poor shall be with us always. But "poor" is an arbitrary designation. I am facing foreclosure. But compared to some, I am a wealthy man because today, there is a roof over my head. We need merely to raise the "poor bar." No citizen should have a nickel more than any other citizen until all have homes, electricity, water, warmth and food. These things are not luxuries. Once they are provided, the ambitious can go out and compete for the excess. Socialism is the name of the thing that we have been since someone said something about "We the People." "What's in a name?" Socialism accommodates capitalism quite nicely. We are already doing it. We are just afraid of the name. Let's admit it, embrace it, and, perhaps, get it right. There will be fishes and loaves left over for those who need and want them. Basketfuls.

  5. I think it is a travesty. The middle class built this country. Where would we all be without the middle class at one time. Everything is so competitive that the standards to get into college is know for the over exceeders. The average person/ middle class seem to be getting left behind. It takes two jobs to make ends meet. I have heard of several couples opting out of having children because they simply cannot not afford to live on one income unless they move down to the poverty level and the neighborhoods are not safe to raise a family. They don't even seem to even build middle class neighborhoods anymore where I from. It's very disturbing and makes you wonder about the future generations.