Lost Middle-Class Jobs Being Replaced by Burger-Flipping and Retail Gigs: NELP Study
There’s been a lot of talk in recent years about the “hollowing out” of the American middle class. A new study by the National Employment Law Project (NELP) confirms the troubling trend.
NELP broke down jobs into low/ middle/and high-wage groups based on median incomes. Looking at the period from early 2008 through the first quarter of 2012, the study found:
“High-wage” occupations accounted for 19% of the jobs lost during the Great Recession and 20% of the jobs gained during the recovery.
“Mid-wage” occupations suffered 60% of job losses during the recession but only 22% of the growth during the recovery.
“Low-wage” occupations accounted for 21% of the losses and a whopping 58% of the growth.
In other words, NELP found what many Americans already know: The market for middle class jobs has shrunk and most of the jobs that have been created during the recession are in low-income areas like retail and food services.
“In short, America’s good jobs deficit continues,” NELP said in a summary of the study. “Policymakers have understandably been focused on the urgent goal of getting U.S. employment back to where it was before the recession…but our findings underscore that job quality is rapidly emerging as a second front in the struggling economy.”
Beyond the recession itself, several factors are contributing to these trends:
Globalization, which has sent manufacturing jobs overseas;
The bursting of the housing market, which crushed the construction industry;
Deep cuts in state and local governments, which accounts for 485,000 mainly mid-wage jobs lost since February 2011.
Last week at Jackson Hole, Fed Chairman Ben Bernanke said the employment situation is a “grave concern” but denied there has been a “substantial structural change” in the economy to account for it. Edward Lazear, former top economic adviser to President George W. Bush, made a similar argument in the WSJ today.
But if you look at the long-term trend of rising income inequality and the shorter-term trend described in the NELP study it’s pretty clear something “structural” is going on — and not just with the American economy but the larger American experience.
By Aaron Task | Daily Ticker – Tue, Sep 4, 2012 12:45 PM EDT http://finance.yahoo.com/blogs/daily-ticker/lost-middle-class-jobs-being-replaced-burger-flipping-164535060.html
The Rise of the Super-Rich Is a Global Phenomenon: Chrystia Freeland
The growing gap between the top 1% and the rest of the U.S. population has emerged as a major issue in this year’s presidential campaign, but it’s not likely to narrow much no matter who wins, says Chrystia Freeland, author of the new book “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else.”
As the title suggests, “the increase in income inequality” in the U.S. is not just a domestic development but “is happening in all Western industrialized countries,” Freeland tells The Daily Ticker in the accompanying interview. “And crucially you’re seeing the same phenomenon in the big emerging market economies.”
Related: The Betrayal of the American Dream
Freeland says globalization is at the root of income inequality around the world. Both capital and labor are global therefore businesses leaders must maintain a global perspective, says Freeland.
“Inevitably that means the super-elite see themselves as citizens of planet earth” rather than as a citizen of their home country, which means they are less concerned with the health of the middle class in the U.S. or any other country they call home.
In the U.S. the gap between the very rich and everyone else “is wider than at any time since the gilded age,” says Freeland.
Between 1979 and 2007, the top 1 percent of earners more than doubled their share of the nation’s income over the previous three decades, according to the Congressional Budget Office report last year.
More recently, the Census Bureau reported that annual income between 2010 and 2011 increased 4.9% for the top 5% but fell for the middle class and held steady for the poorest.
The average household income in 2011 after inflation was $50,054 — 1.5% lower than the 2010 average and 8.9% lower than a 1999 peak.
President Obama has said he wants more economic fairness and favors higher tax rates for only the wealthiest Americans. He’s proposed extending the Bush-era tax cuts for all but those earning more than $250,000. He also favors the “Buffett rule,” named for billionaire investor Warren Buffett, which would set a minimum 30% tax rate on income of $1 million or more.
Mitt Romney, in contrast, has proposed extending the Bush-era tax cuts for everyone plus a 20% income tax cut across the board along with the closing of tax loopholes and spending cuts. He believes in the tenants of supply side economics — lower taxes will lead to stronger growth and benefit all Americans.
Freeland says if the president is serious about helping the American middle class, he needs “to connect the dots between his domestic and foreign policy in a new way” and possibly work with other Western industrialized economies which are experiencing the same “hollowing out of the middle class.”
As for the plutocrats, Freeland says if they confuse their own self-interest with the common good, they threaten the very system that created them. By Bernice Napach | Daily Ticker – Tue, Oct 16, 2012 8:30 AM EDT http://finance.yahoo.com/blogs/daily-ticker/rise-super-rich-global-phenomenon-chrystia-freeland-123053176.html
The Middle Class Is Broke: Pew Study Reveals Real Problem With Economy
One of the most important stories in the U.S. economy these days is the rise of extreme inequality.
Over the past 30 years, a larger and larger portion of America’s income growth has gone to those in the top 10% of incomes, and especially those in the top 1%. This is a major change from the prior 60 years, in which the top 10% and the bottom 90% shared in the income gains.
A stark and startling example of this trend is the fact that, adjusted for inflation, “average hourly earnings” in this country have not increased in 50 years.
A recent Pew study confirms that America’s middle class has recently experienced a “lost decade.”
Since 2000, the Pew says, “the middle class has shrunk in size, fallen backward in income and wealth, and shed some—but by no means all—of its characteristic faith in the future.” Pew cites statistics showing that middle class earnings and net worth have plummeted since the mid-2000s and that about 85% of the middle class say it is harder to maintain their standard of living than it was 10 years ago.
The reason the decline of the middle class is important is not just about fairness. It’s about the health of the economy as a whole.
Collectively, the middle class represents enormous buying and spending power, and in the past 60 years this spending power has helped the U.S. economy become the envy of the world.
But now, however, the middle class is increasingly strapped. And the resulting impact on spending is constraining the growth of companies that sell products and services to American consumers.
The causes of this middle-class decline are many, from globalization (jobs being shipped overseas), to the decline of private-sector unions, to the wholesale embrace of a “shareholder value” religion that values profit over everything else that companies produce. But the result of the trend can be seen vividly in two charts.
First, wages are now at an all-time low as a percent of the economy.
Second, corporate profits are now at an all-time high.
To truly “fix” the U.S. economy, corporations are going to have to be persuaded to invest more of their excess profits in their employees, both by hiring new employees and paying existing employees more.
“Wages” to employees become spending money for those employees, and the spending produces revenue for other companies. If corporations can collectively be persuaded to reinvest more of their profits in their people, in other words, they will help restore their own revenue growth.
Henry Ford famously decided to pay his workers more than he had to to keep them. One result of this was that the workers made enough money to be able to buy Ford’s cars, and this made Ford more successful. Another result, which is considered irrelevant in some business circles, is that Ford employees were able to live middle-class lives. This helped not only Ford, but the country.
Our current economic problem is not likely to be solved by the government, which possesses neither the power nor the competence to make it happen. The problem will have to be solved by the private sector. And one important part of that solution is for corporations to share more of their wealth with one very important (and often overlooked) corporate constituency: Their employees.
By Henry Blodget | Daily Ticker – Thu, Aug 23, 2012 11:50 AM EDT