Is there any coincidence that unemployment rates seem to be improving in the year before the next US presidential election? No matter if you side with the Democrats or Republicans, the issues of job creation and the economy will be hot ones for each of the candidates – in particular to the ears of the middle class voters. But will any of them have any fresh remedies to reverse what has been happening to the middle class for decades prior?
The Slow Erosion of the Middle Class:
Unfortunately, it seems doubtful. According to a recent article from Fortune Magazine featured on CNN Money, the issue goes much deeper than any policy set forth by the Obama or Bush administration. Consider the following turn of events:
• Up through the 1970’s, many Americans went to college and became some of the best educated workers.
• After the 1970’s, both high school graduation and college enrollment rates dropped. This is when America began to stop keeping up with the economic market demand for employees with higher-level education and skills.
• As we moved into the new millennium and technology became more prevalent, this only amplified the productivity of those who had the necessary skills and further widened the gap between those in lower-skilled positions.
Breaking the Basic Bargain:
In one of the better books I read last year, author Robert Reich also has his own theories on this phenomenon. The book “Aftershock: The Next Economy and America’s Future” largely suggests that an unwritten code which he refers to as “the basic bargain” has been broken. The basic bargain was the notion that employers should pay workers well so they will have the means to buy from your economy and thus keep it going. If not honored, it could only mean that the middle class will not be able to sustain our economy.
As Reich points out, the median income in American has been little unchanged over the last 30 years. Thus, market corrections like the housing crisis and Great Recession are fundamental examples of the repercussions of this broken basic bargain.
Who Is At Fault?
So is it corporate America that has rigged “the system” and put the power in the hands of the few? “Aftershock” would certainly suggests this. But the article from Fortune has a much simpler explanation:
• The problem is that the middle class isn’t supplying the new skills that the world is demanding.
To quantify this explanation, consider that the demand for so-called middle class skills has shrunk from 75% to 66% between the dates of 1980 to 2009. Explanations for this trend point to the combination of rising demand for high and low skilled workers while technology rendered typical middle-class routine positions to become obsolete.
Which Do You Think Is the Real Issue?
So is the real issue that the middle class’s wages aren’t keeping up with the times? Or is our perception of “worth” changing right under our nose, and, as employees, we’re failing to keep up with the changing rules of the economic game?
Photo Credit: Woodleywonderworks, on Flickr