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WHAT OTHERS SAY: America's middle class is stuck

Saturday, December 21, 2013 | 2:32 p.m. CST; updated 4:03 p.m. CST, Saturday, December 21, 2013

“We’re all in this together,” goes the saying. That might be comforting except in the case of middle-class America. Yep, we are all in this together and going nowhere fast.

That’s not just hurting most of the people we know but the nation as a whole. As the gap between the richest Americans and everyone else grows, so do our hopes of a thriving economy.

The Associated Press interviewed three dozen economists about the middle-class paycheck and the pay gap. The consensus was that it’s not the wealthy who will swing the economy but rather the earnings of the middle class.

Until most of our earnings increase enough to afford a few more vacations, a few more dinners out on the town and maybe even a new TV or a new car, the economy will continue its struggle to gain traction.

According to The Associated Press, about 80 percent of stock market wealth is held by the richest 10 percent of Americans.

Income equality is now being considered one of the biggest challenges of the time.

The household budgets of the middle class must increase, and that can happen only if better-paying jobs become more available or if goods and services are cheaper.

Consider that the annual take-home pay of most middle-class families is about the same today as it was five years ago. It’s little wonder we can’t get out of the rut.

What is hopeful is the recognition of the problem and finally an acknowledgment about who is driving the train.

Those who can afford to buy political influence in order to keep their pockets full aren’t doing it to keep the wheels of the American economy turning. They are doing it to help themselves.

Being middle class shouldn’t mean being trapped. Now that the economists have agreed upon the problem, we’d also like to hear their solutions.

Copyright The Joplin Globe. Reprinted with permission.


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Comments

Michael Williams December 21, 2013 | 7:12 p.m.

"Until most of our earnings increase enough to afford a few more vacations, a few more dinners out on the town and maybe even a new TV or a new car, the economy will continue its struggle to gain traction."
_____________________

Yep, that's the solution, all right. All we need to do is buy more crap which is, of course, one of the reasons we're in this situation in the first place.

You don't "move on up" from the middle class by spending all your money and more. But, you can certainly spiral down or stagnate doing it.

Why the Joplin Globe would promote more of the same economic behavior is beyond me. They should know better and so should everyone else by now.

PS: This is one of the reasons that increasing the minimum wage has only temporary effects; folks get more wages and buy more than their new wages can support. Eventually, debt has to be paid and, voila, back where we started at higher overall market prices.

(Report Comment)
Mark Foecking December 22, 2013 | 6:01 a.m.

My observation is that a lot of middle class families are struggling because they spend too much money on stuff they really don't need. However, since that's what the economy runs on these days, an large scale push toward middle-class austerity would just make the economy worse.

It's a problem without good solutions. Since we don't manufacture much of our daily goods anymore, buying more stuff doesn't make jobs for Americans or enrich domestic manufacturers. We can protect our markets and bring industry back (at the cost of the good will of our largest foreign creditor), but this of course will raise prices. Same with increasing the minimum wage. And even of those industries that are investing in manufacturing here again, these are largely automated factories that don't offer much in the way of traditional manufacturing jobs.

I would like to hear the economists solutions too. It's a shame none of them seem to have offered any. Maybe there's a good reason for that.

DK

(Report Comment)
Ellis Smith December 22, 2013 | 8:11 a.m.

@ Mark, Michael et al.:

Some words about Mark's comment on bringing back manufacturing (to the United States). This is correct: the factories will be automated, and to the fullest extent affordable. Many factories where manufacture of a class of products has never LEFT the United States are similarly automated. Others, not so well automated - some products lend themselves better to automation than others - are continually engaged in finding personnel reductions.

Why? Because that's how it's possible to make things in this country without "tanking" financially in the process.

I regard the trend to bring back manufacturing to our country as good news, but do NOT fool yourselves about there being substantially more jobs.

One positive aspect of automation is that those jobs that are needed (many of which require no more than an associate degree, if that) DO pay well.

It would be helpful if we didn't just give our children a good overall education but specifically trained them to take advantage of the jobs that are, and will be, available.

We aren't the only industrialized country with this problem. Germany is a good example. A German steelworker, when wages and all other guaranteed benefits (healthcare, pension, large annual vacation time, etc.) are added, COSTS an employer as least as much as an American steelworker, yet the Germans are very competitive with manufactured goods and are a NET EXPORT country. A German person with technical training - but not necessarily a university degree - is and has traditionally been treated by his/her neighbors and the larger community as someone who is important.

We might begin to get beyond our problems by training people to assume jobs that actually exist and directly contribute to our nation's economic well-being. Also, maybe we should reconsider whether some of today's occupations are nearly as important as we pretend. Too esoteric?

(Report Comment)
Michael Williams December 22, 2013 | 10:33 a.m.

MarkF: "... an large scale push toward middle-class austerity would just make the economy worse."
______________

Short term....yes.

What's the alternative? Spend even more? That seems to be the direction folks are taking...or wish to take...but they are tapped out. The solution to avoid being "tapped out" is...apparently...simply pay higher wages?????

Do you know of ANYONE whose financial irresponsibility has been solved by even a massive 25% increase in salary?

I don't.

Such a thing simply allows misery at a higher debt level if unaccompanied by any change in fiscal acumen.

PS: It's simplistic, yet telling, but middle class folks should sit down and calculate their monthly, family cash outflows for (1) cell phones and (2) cable. Now, that number is WHAT percent of your monthly salary?

(Report Comment)
Michael Williams December 22, 2013 | 11:07 a.m.

Ellis: In your opinion, is automation a big driver of a burgeoning income inequality?

(Report Comment)
Ellis Smith December 22, 2013 | 12:16 p.m.

Michael:

It has some influence, but I don't see it as either THE major influence or A major influence. I can be argued that use of automation holds production costs down and therefore product costs down, which would be particularly helpful to consumers with limited financial means.

Another way to achieve the same product costs would of course be to employ more laborers at very low wages and thus keep retail product cost low (aka WalMart, which doesn't manufacture anything but sells products some of which are made using low-cost labor). That model provides fewer manufacturing jobs for Americans.

We need to address three problems:

1- We have more (and growing) population than is required to significantly increase domestic manufacturing through using efficient, automated manufacturing...

2- Additionally too few members of that population are now being educated/trained to properly perform the tasks needed, and...

3- The facilities themselves require plenty of captial investment, but our bloated and ever-expanding federal government has the effect of restricting the availability of capital for private investment.

First step in problem solving [and this is from Harvard Business School, no less] is to ADMIT THAT A PROBLEM EXISTS.

Like it or not, we are living in the 21st century, not the 19th or 20th centuries. I sure as hell wouldn't want to re-live the first five decades of the 20th century!!

(Report Comment)
Ed Lane December 22, 2013 | 12:28 p.m.

I am just glad this so-called pos president and his family of moochers enjoy their tax-payer vacation (HEAVY SARCASM)!!!!!! Him and his kind don't have any idea what it is like to actually work for their salary. He will get his in the end!!!!!!!!

(Report Comment)
Ellis Smith December 22, 2013 | 2:18 p.m.

Ed said, "He will get his in the end!" Actually, Ed, how things have turned out for some of his predecessors doesn't suggest that may happen.

On re-reading my posts, above, it occurs to me that trying to have a discussion of technical matters in a university-based newspaper is a bit like attempting to carry water in a sieve (that is, it's doomed to failure from the start).

Six inches of new snow here: a guaranteed White Christmas.

Merry Christmas!
Frohe Weihnachten!
Feliz Navidad y ano nuevo!

(Report Comment)

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