Middle Class[Income] Jobs ain't Coming Back?

[jollystomper]

In terms of middle class jobs, I'm having some interesting discussion with folks who work for defense contractors. These jobs are very prevalent in the MD-DC-VA area, and pay very well (over $100K in many cases) - one reason that this area has not suffered economically as badly as others. If the sequestration and planned cuts to the defense budgets occur, a lot of those jobs will disappear. It is unlikely that there will be anything to fill the gap at that level. So, even though many feel, based on the numbers, our defense spending is way out of line relative to what the rest of the world spends, the big impact of cutting defense is further elimination of middle class and upper middle class jobs. It is a tough call to make.

 

[bUU]

But a decision we've made very regularly, implicitly and explicitly, over the last fifteen to thirty-five years. Numerous decisions by society, both legislative decisions and consensus decisions reflected in consumer and corporate choices, have elevated one side of the financial equation over the other.

 

[Brett_Cameron]

This thread is wonderful. Thank you to everyone for sharing.

 

[Midpack]

This thread is wonderful. Thank you to everyone for sharing.

+1. Lots of diverse but thoughtful views, always makes for a good thread.

 

[Ronstar]

In the old days, companies had to hire more people to make more money. Now companies look first for technology to increase production, and squeeze as much as they can from a reduced work force. I would like to see profit$ per worker now versus what it was in the 60's -80's.

 

[bUU]

In the old days, companies had to hire more people to make more money. Now companies look first for technology to increase production, and squeeze as much as they can from a reduced work force. I would like to see profit$ per worker now versus what it was in the 60's -80's.

[Source: The Conference Board]

Here's another cool chart, showing the same data from a different source, along with other interesting data:

[Source: Economic Policy Institute]

 

[Ronstar]

Thanks- looks like what I expected. I don't middle class jobs coming back in big numbers unless that first graph flattens out(I don't see that happening) or unless there is a huge increase in GDP

 

[REWahoo]

I have to wonder if there is any relationship between the deviation of the lines on the second chart and the growth of computers used in the workplace.

Nah, probably a coincidence.

 

[NW-Bound]

I have to wonder if there is any relationship between the deviation of the lines on the second chart and the growth of computers used in the workplace.

Nah, probably a coincidence.

Does that include computers inside smartphones that allow workers to text and surf Web while at work?

 

[bUU]

I just had a related thought about productivity and its impact: The goal of business cannot be to reduce the number of jobs in the economy - which, if taken alone, would be the impact of increasing productivity. So productivity increases must naturally be accompanied by new ways of making use of the labor that the productivity makes unnecessary (either new productive use or through increased leisure).

 

[NW-Bound]

... new ways of making use of the labor that the productivity makes unnecessary (either new productive use or through increased leisure).

Ah hah! That's the crux of the problem that all developed countries face.

There are indeed jobs, but people may not want them. Plumbers make good money, and there may be a demand for them because too many workers shun this work.

But we cannot turn every displaced worker into a plumber, even though a plumber's work is meaningful and productive. Finding good work like that for every unemployed worker does not look easy, but then I am not an economist.

 

[BLS53]

I perceive that things in the past that may have cost relatively more also lasted longer (and were relatively cheaper to repair). The car or TV may have cost a larger portion of ones salary, but tended to last much longer.

My experience is opposite of that. Cars in the 1960's were junk in 3-5 years, and the TV repairman visited several times a year,

How many 10+ year old cars were on the road back then, compared to today?

I have one 19 year old TV, that performs flawlessly, and has never seen a repairman. If it did bite the dust, I just get a new one for a few hundred bucks. 50 years ago, a TV was a major purchase, probably equal to several thousand dollars in today's money. You had no choice but to fix them, and they broke quite a bit.

 

[samclem]

My experience is opposite of that. Cars in the 1960's were junk in 3-5 years, and the TV repairman visited several times a year,

How many 10+ year old cars were on the road back then, compared to today?

I have one 19 year old TV, that performs flawlessly, and has never seen a repairman. If it did bite the dust, I just get a new one for a few hundred bucks. 50 years ago, a TV was a major purchase, probably equal to several thousand dollars in today's money. You had no choice but to fix them, and they broke quite a bit.

Agree on all this. But I think some things are now less durable. I'd cite washing machines, microwave ovens, and small kitchen appliances as being generally less sturdy than they were 30 years ago. I'm not sure if the total cost of ownership has gone up (they might have been more expensive to buy back then), but they sure don't seem to last as long and, in the case of washing machines, I think they've become more expensive to fix. But, I guess they are what the customers want.

 

[BLS53]

Agree on all this. But I think some things are now less durable. I'd cite washing machines, microwave ovens, and small kitchen appliances as being generally less sturdy than they were 30 years ago. I'm not sure if the total cost of ownership has gone up (they might have been more expensive to buy back then), but they sure don't seem to last as long and, in the case of washing machines, I think they've become more expensive to fix. But, I guess they are what the customers want.

Being a single person, I haven't tested the durability of washing machines, as compared to what an average family does. As for small appliances, I haven't thought about it much. If they cost less than $100, it's off to Walmart for a replacement. I suppose if they lasted less than a year, it might raise my eyebrows somewhat. If I was a tinkerer, I might attempt repair, but I'm not talented in that respect.

 

[bUU]

Agree on all this. But I think some things are now less durable. I'd cite washing machines, microwave ovens, and small kitchen appliances as being generally less sturdy than they were 30 years ago.

Even there it would be a hard case to make: Washing machines damaged more clothing more often back then (and that's even given how much crappier clothing has gotten over the years); microwave ovens 30 years ago would probably not pass UL inspection today, so figure they were "broken" right out of the box; etc. And I don't know what you're talking about with kitchen appliances, but that's probably because we have a Kitchen Aid mixer (the analog to which only professionals could afford 30 years ago), Kitchen Aid blender, and other high-quality small appliances. That's a big change over the last 30 years or perhaps longer: You can definitely buy crappier crap these days, but if you prefer the higher quality stuff is more affordable.

 

[marko]

How about this: (I'm not challenging here, just musing)

Is the middle class just a construct of post WWII boom? In other words, does it/should it exist in the sense of it being 'real' or is it some aberration to how normal economies are supposed to work? The rich get richer and the poor get poorer?

Broadly, is the future 'middle class' one of working in the service economy and coming home to a nice TV and little else?

It's nice to talk about income inequality as a recent injustice, but hasn't that been the case for the past 1000+ years? Is the question not about 'is the middle class dead', but 'should the middle class have ever existed' from a mechanical economic perspective?

 

[bUU]

The middle class tracks back in western society to the ascendancy of the merchant class six hundred years ago, when trade fostered wealth apart from the owning of land and lording over other people. A wave eventually swept leading merchants into the upper class followed by a second wave of captains of industry who started out as a middle class and were eventually swept into the upper class. The idealization of western society has been this continual set of waves sweeping more and more people into security, comfort and luxury.

Initially, of course, the powers-that-be resisted the ascendancy of the merchant class, because, invariably, at least in the medium-term, economics is a zero-sum game: What one group gains comes at the expense of those who have the excess. However, morality and natural consequence had previously been able to overcome such resistance. Unfortunately, after working effectively for hundreds of years, the ascendancy of the median standard-of-living has been arrested and reversed, by forces seeking to obstruct the expanding of the breadth of access to society's prosperity to additional members of society.

 

[marko]

Initially, of course, the powers-that-be resisted the ascendancy of the merchant class, because, invariably, at least in the medium-term, economics is a zero-sum game: What one group gains comes at the expense of those who have the excess. However, morality and natural consequence had previously been able to overcome such resistance. Unfortunately, after working effectively for hundreds of years, the ascendancy of the median standard-of-living has been arrested and reversed, by forces seeking to obstruct the expanding of the breadth of access to society's prosperity to additional members of society.

Interesting history lesson. Thanks.

But your last sentence intrigues me. Are you suggesting that there is a conscious, deliberate conspiracy to restrict access to the middle/upper class?

How do these people get together to make such decisions? Davos? Illuminati?

If so, isn't "obstructing access to society's prosperity" become a limiter to those above? (if no one has money to spend, the uppers lose money)

 

[bUU]

But your last sentence intrigues me. Are you suggesting that there is a conscious, deliberate conspiracy to restrict access to the middle/upper class?

No; more a matter of the general inclination toward arresting the hundreds-year long shift towards broader financial security, out of fear for what allowing it continue would mean to one's own access to luxury and comfort.

If so, isn't "obstructing access to society's prosperity" become a limiter to those above? (if no one has money to spend, the uppers lose money)

Money spent is money spent; whether it is to forestall hunger or to acquire a second yacht, it is still economic activity fostering economic growth.

 

[HFWR]

Money spent is money spent; whether it is to forestall hunger or to acquire a second yacht, it is still economic activity fostering economic growth.

Though I often opine just how many homes, planes, and yachts one person needs, I cringe a bit at redistributionist policies. Better someone has a job building or maintaining said homes/planes/yachts than receiving "charity"...

And who gets to decide how much is enough and how much is too much?

 

[Lazarus]

And who gets to decide how much is enough and how much is too much?

No one I hope.

 

[marko]

Though I often opine just how many homes, planes, and yachts one person needs, I cringe a bit at redistributionist policies. Better someone has a job building or maintaining said homes/planes/yachts than receiving "charity"...

And who gets to decide how much is enough and how much is too much?

Agreed. But I worry that we're almost already there.

 

[HFWR]

Agreed. But I worry that we're almost already there.

I'm not sure things are drastically out of line with historical precedent. Just the natural ebb and flow...

 

[bUU]

Better someone has a job building or maintaining said homes/planes/yachts than receiving "charity"...

Absolutely, but "efficiency" without new jobs to replace those lost to efficiency is the absolute worst situation: People who want good work but there isn't enough to be had. We can arrive at an imperfect solution, but that arrangement is simply too offensive to abide.

And who gets to decide how much is enough and how much is too much?

We sit down (figuratively) around a table, discuss it, and come to an agreement, respecting everyone's needs and not respecting anyone's childish insistence on getting their own way.

 

[samclem]

Absolutely, but "efficiency" without new jobs to replace those lost to efficiency is the absolute worst situation: People who want good work but there isn't enough to be had.

What's you idea of where jobs come from?
Is there a fixed pool of jobs that need to be managed and allocated?

"Creative Destruction"--like it or rant against it, it's here to stay in today's global economy. Adapt, innovate, or be crushed.