The death of the middle class...

[happyatheist]

...

I am amazed to still see the lefties on this and other boards rabidly supporting higher taxes on the 'rich' as though it is some sort of weapon in the war on the middle class.

Listen up folks, you could raise the taxes of everyone making $1 million a year to 100% and still not be able to save the middle class and turn this economy around.

Quite simply, the reason the middle class is dying has nothing to do with how much Mitt Romney, Warren Buffet and Paris Hilton made or paid last year but has everything to do with the type of economy we now participate in.

Over a century ago, the US moved from an agrarian economy (based on agriculture) to an economy based on manufacture. Through the next few decades we found that through our innovation, our drive to excel and our hard work, we had built perhaps the strongest, most productive and wealthiest middle class the world had ever seen.

Somewhere in the late 20th century, however, that economy once again underwent a metamorphosis and evolved into an economy based on services. The high skill - high pay jobs that our grandparents built a life on disappeared to be replaced with lower paying jobs flipping burgers and cleaning pools.

What was the progenitor of the loss of those jobs? Outsourcing.
Since 1994, according to the AFL/CIO, over 3 million manufacturing jobs and at least 600,000 professional services and IT jobs have fled our shores. And it's not only the private sector that has embraced this job killing trend. "At least forty states contract out administration of electronic benefit cards for the food stamps program offshore. In one audit, the state of Washington found 36 out of 41 agencies were contracting out work overseas." So, in addition to well paying manufacturing, professional and IT jobs, we are also losing mid-range public sector jobs as well.

And, according to a study by the University of Berkeley, this trend looks to accelerate as the study finds that 14 MILLION jobs are at risk for outsourcing.

And now, to make matters worse, the very service industry upon which our anemic economy is now based, is outsourcing at a breakneck (literally) pace. Not to mention that many, many of the lower paying service jobs (again, the bulk of American jobs in total) are now being filled by immigrants both legal and (more numerous) illegal.

And, here's the rub; these jobs, left to their own devices, will never come back to our shores. Unless this outsourcing trend is stopped, they are gone for good.


The loss of those jobs, besides taking away to real wealth and spending power of a vibrant middle class, is also a catalyst for another trend we're seeing. Namely, the loss of tax revenue.

If you don't have a job that pays a good wage, you don't pay as much in taxes. As a matter of fact, some 46% of Americans pay ZERO federal and state income taxes. And most of that 46% actually receive a subsidy in the form of 'tax credits' that turns their tax liability into a tax windfall.

So, what is the latest plan to stop this outsourcing? In his recent State of the Union speech, President Obama proposed to 'stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America' through the liberal application of tax breaks. A minor, if not insignificant, action that would, at best prevent some serviced based outsourcing, but would do little if anything to stop manufacturing outsourcing as the amount of the 'tax breaks' would just be too great to compensate for the increase in labor costs.

Not only that, but it will add to the already stifling national debt.


Now many of you are probably wondering what my solution to this issue is. The truth be told, I don't have one. I can not divine a mechanism that will magically lower the cost of labor in the US, while simultaneously increasing the cost of producing overseas. And that, I fear, is the only thing that will reverse this trend. Why would any business willingly pay more to produce a product in the US and sell it at a lower profit, when they can manufacture overseas, import it to American shores and sell it with a tidier bottom line?

Answer, they won't.

So, as you can see, the issue of this economy has little to nothing to do with the amount of taxes that any one group of American's pay but rather the downsizing, quite literally, of the core of the American society, the middle class.

Hmmm...

My take is that the US middle class is shrinking because people in the US really don't know how to do much of anything anymore. And moreso than that, they don't want to know how to do much of anything anymore.

I entered the job market - with an actual "career", in 1993 after graduating with a degree in textile design/textile technology. The first thing I noticed when I started getting jobs at "reputable" companies was that not many of the people working there actually knew a whole lot about how to design, manufacture, and sell textiles. That was right about the time the textile industry started opening plants in Mexico...(when Mexico got too expensive they turned to India and China, then they stopped opening plants overseas and just started importing...)

Fact is, US universities are graduating fewer and fewer people who know how to do things - how to design things, how to make things, how to market things and how to sell more things.

The only way that can be fixed is by people taking an active interest in participating in their own lives, their own economy, their own destiny.

I now work for a small, but extremely successful, manufacturing facility that has always and only operated in the US and will continue to do so for as long as can be foreseen at the moment. The reason for this has nothing to do with taxes or outsourcing or immigration or anything else. It exists and thrives solely because the owner and employees derive a great deal of satisfaction from being able to do something - to design something, to make something, to market something, to sell something. A thing - a tagible object that we create through our creativity and ingenuity that is useful and beautiful and other people are willing to pay for, even though it is a bit more expensive than the crap improted from China and India.

For 20 years I have held a a variety of jobs in a "dying" US manufacturing industry (only unemployed once for 3 months) - currently holding the best position at the best company I could have ever hoped to work for. And all it takes is just a few people who know how to do something.

And actually, there is an answer - profit simply is't everything. Quality of life, quality of the workplace, quality of education, quality product and quality people matter. You pay a higher price for better labour to obtain a better product that creates better consumer relations which provide steady and reliable profit margins consistently without having to resort to getting the most profit for the least cost to compensate for lost sales due to poor product performance or customer relations.

The middle class is the middle class for a reason - because the middle class is A-OK. We all don't have to be the owner, it is plenty good to be a top-notch worker at a top-notch company, making top-notch wages to make a top-notch product. It's plenty good to know that after 20 years of that, I'll have my house paid off, enough money to live comfortably through my retirement and be able to do most of the things I want to do with my life.

Will I ever own a yacht and a mansion and a mink coat? Nope, but, I never really wanted to anyway, so what does that matter?

 

[Corruptbuddha]

Apology accepted.

 

[Lapcat]

Uh....ya might wanna 'mention' that rule to GordonGecko.....

while you're at it.

Just comment on the POST, not the POSTER.

 

[Corruptbuddha]

You could be right. However I see it as a 'chicken or the egg' question. If there were enough mid-level, skilled manufacturing jobs available would there be enough workers to fill them? Or would training folks to fill them lead to their being created? And I'm really not including the higher end skills (engineer, scientists, etc) in my analysis. After all, the vast majority of people in general just don't have the capacity (nor the will) to fill those positions.

Perhaps the more important question is this: Now that we know these jobs are gone for good, what, if anything, can we replace them with? The sad fact is, a service economy does not afford the same level of income 'equality' as a manufacturing, supply, support economy does.

 

[mark14]

Uh....ya might wanna 'mention' that rule to GordonGecko.....

while you're at it.

Isn't there any information or something to make you smarter or even some clever insults that you should be looking up so that you won't be so defenseless?

 

[happyatheist]

You could be right. However I see it as a 'chicken or the egg' question. If there were enough mid-level, skilled manufacturing jobs available would there be enough workers to fill them? Or would training folks to fill them lead to their being created? And I'm really not including the higher end skills (engineer, scientists, etc) in my analysis. After all, the vast majority of people in general just don't have the capacity (nor the will) to fill those positions.

Perhaps the more important question is this: Now that we know these jobs are gone for good, what, if anything, can we replace them with? The sad fact is, a service economy does not afford the same level of income 'equality' as a manufacturing, supply, support economy does.

There are not enough skilled/educated workers here to fill them. That's why a lot of companies are actually starting to hire in people based on general intelligence and knowledge tests and then train them from there for the jobs they need done - not to mention actually send them to college to get the educations they need to do the jobs competently. And there are plenty of people who have the raw, innate intelligence and ability to become engineers, scientists etc., they simply are not being encouraged or helped to follow those paths as they used to be (and still are in other countries).

Fact is, these jobs are not "gone for good". They are on hiatus until the US steps up and produces a better workforce - a workforce that is competent and capable and is not solely interested in making the most money the quickest, easiest way possible. On the flip side, you will see these jobs returning to our shores soon enough because, just like the Mexicans (whose jobs were taken by the Indians and Chinese), the average Indian and Chinese worker doesn't want to slave like a dog for no return either. Mexicans, Indians, Chinese, South Americans etc., none of these people, in a global economy with access to all available information, will allow themselves to be exploited as they have been in the past.

The country that comes up with the best solution - a competent workforce, making a good living wage, that can produce while maintaining a fair profit and environmental stability - will be the country where the jobs end up long term. The US is currently set up to handle that task. But, without the determination to do it, any other country could pick up the deal in 10-20 years and those who want to work will simply migrate there.

 

[Corruptbuddha]

I disagree that we're even close to 'set up to handle that task'. Have you seen the abysmal results that are being produced by our public school system? The drop out rate? Or, more importantly, the rate at which we graduate young people who have a difficult time even writing their own names?

While I agree that a competent workforce is now lacking, as I have also seen the growth of 'insourcing', I maintain that education and (more importantly) training will be to no effect if the jobs aren't available in the first place. We must, first and foremost, do something about the dearth of available jobs in the US.

And even though you are right when you say that "the average Indian and Chinese worker doesn't want to slave like a dog for no return either" they will work for a much lower return than Americans seeking to hold onto our lavish lifestyle. Not to mention that, even with a massive hike in the pay scale in those nations, it will still be unfeasible to return to America to manufacture your product when you have to fight the unions, the EPA, and the state and federal government in hand to hand combat in order to turn a 'fair' profit.

Again, I see your point about education and training...but we need the jobs first. The talent will, as it always has, follow.

 

[Greenridgeman]

It is not a matter of capacity to succeed, but will.

Precicesly HA's point.

And America seems to have lost its will to succeed and become a nation of underachieving losers.

 

[connieb]

Well, it has happened to every other country who has "made it". And, it has happened here. It is so easy to see how when and why, too. We really have become a nation of spoiled brats.

 

[Greenridgeman]

It's the "Bread and Circuses" Phase. Government for the sake of government.

 

[Corruptbuddha]

Agreed.

And now that the middle class is suffering, the left's answer is confiscatory taxation to increase the dole of said 'bread and circuses'. Which will, inevitably, increase the rate of the nation's decline as the money leaves trying to keep from being taxed out of existence.

 

[Greenridgeman]

That is why I do not bleed for the middle class. They were complicit in the creation of the Great(Bread and Circuses)Society, and sat back silent, while Congress after Congress made promises that could not be paid for, and made leeching off of the government a viable option.

As long as the poor were kept out of sight, the middle class raised not a peep. Now that the inevitable lowering of the common denominator is becoming more and more apparent, the whining starts.

 

[Greenridgeman]

We used to teach kids how to work through home chores and through part time jobs.

The home, as we old scholers knew it, and disciplined labor within the home, has virtually been destroyed, and replaced by the single mom head of household model, and the minimum wage being set so high has eliminated most teens from the job market.

Sad state of affairs, kids grow up, have never known a person who gets up and goes to work every day, on time.

 

[Corruptbuddha]

Some still do. But you're right, of course, that it's a dying trend.

 

[MaryAnne]

CB,I will try and give an answer to your post. There are many solutions to bringing back jobs.

One is a complete over haul of the tax system. Cut out the tax breaks that have been put in by Congress over the years making it profitable to ship jobs over seas. I honestly wish the President would throw the budget down the way Reagan did and insist Congress simplify it. I did not care for Reagan,but think he did try.I know he raised taxes several times and the top paid more then.

We need to get money out of the elections.That was the worst decision ever by the USSC followed by their one time ruling on the election of 2000.

Right now many changes are taking place in the private sector bringing jobs back home.

Another thing that has to be fixed is the high cost of Health Care.The system we have is breaking the backs of our industry.

I heard a very good discussion on this subject today with Howard Dean and another man who worked with industry. He said it is killing industry. Both agreed.

That is just a start.There are many more solutions,Cutting useless regulations. Obama said they have already cut 500.

Tell the Republicans in Congress to come up with solutions instead of passing all kinds of bills they know will not go anywhere and word together. Democrats are not blameless either.

 

[Greenridgeman]

Obesity broke the health-care system.

Make it a crime to be morbidly obese, put them in a camp to work it off.

People will get the message.

 

[Corruptbuddha]

Perhaps, MA....but it remains to be seen if anyone short of Jesus Christ himself can get Obama and the Congress moving forward on this issue. All they want to talk about is whether or not to raise taxes.

If the conversation is indeed about 'income inequality' then jobs , not taxes, need to be at the forefront of that conversation.

 

[Corruptbuddha]

Chain gangs instead of fat camps?

A novel approach, if nothing else.

 

[mark14]

It's the "Bread and Circuses" Phase. Government for the sake of government.

Nothing that can't be reverse by electing a Republican!

 

[Corruptbuddha]

No, as I said earlier, I don't think the Republicans have a handle on the actual problem yet either.

It seems to me that very few politicians even care.

However, I've always been opposed to confiscatory taxation and I deplore class warfare.

Thus, the Democrat party has never secured my support.