The Loss of the American Middle Class

There is no question that the American middle class is disappearing. There are a ton of statistics that prove that this is happening right now. It isn't just the poor economy of the past few years, but it is an evolutionary process. It is a process that no one saw as inevitable, but in twenty twenty hindsight I have to say that it was. The American middle class grew on the power of American industry. The brilliant innovations created by American inventors in the twentieth century led to the creation of the American industrial power. In the twentieth century American manufacturing was king and American products were the best in the world. With this power came opportunities for the average American to earn a good living making everything from toasters to farm tractors.

During this time of great demand for American made products, the American spirit showed itself in many ways. Some of those ways were in direct conflict with each other. Companies were always and were supposed to be, operated in a way that increases profits for themselves and their investors. To do this they had to keep production costs down, production volume up, and income steady. The American worker wanted to do their best for their families. At this time in history the American worker had value. In order to make the products that were sought after all over the world, the American worker had to make them. With this value came leverage in the form of unions. The purpose of the unions was to get the best deal they could for the rank and file. Both of these entities were doing what they were supposed to do. They were both doing the right thing. Neither considered backing off of their goals just a little and to think of the health of the economy as a whole. Why should they? There was no evidence for even a thought that Americans would have to live in a global economy. The middle class American enjoyed high wages, great benefits, and a life style unmatched in the world. Little did they know that those very advantages would come back to haunt them.

As the twentieth century came to a close American companies began to see the big picture. Shipping costs from one point on the planet to another were going down. New markets were opening up all over the world. Soon the corporate powers were struck with the realization that these markets didn't just offer goods to buy and new places to sell, but they also offered vast labor pools. They could have workers that would work for five to ten times less than what they were paying workers in the United States. This difference more that made up for building factories and shipping goods to market. The term outsourcing was coined and the American worker was in big trouble. It started with manufacturing but, as with the advance of high tech communication, jobs in telemarketing, help desks, and even engineering are now being outsourced.

This wasn't the only new weapon in the companies arsenal. Automation was quickly taking jobs off the table for American workers. It was more cost effective for a company to buy a new automated assembly line that it was to keep paying all of the workers. Robots appeared on factory floors and workers disappeared. The companies now had weapons that no union strike could stop. The strength of the union was fading from the factory floor and from the American political landscape. With it went the survival of a strong American middle class.

Again, this is not a total slam against companies. As I have mentioned in other articles, the companies are doing what they are supposed to do. It is what every 401K investor in this country wants them to do. What is happening was bound to happen. You can't stop the march toward a global society. When it comes to religion, philosophy, political views, and morals, we may be centuries away from coming together. But when it comes to making money, people are willing to put everything aside and make an agreement.

The American middle class must now compete for jobs with people all over the world. Their competitors are not in the middle class. The governments in the countries where our competitors live aren't as interested in their safety or their welfare. As a result they offer companies freedom from regulation and minimum wage laws. It is very hard for the American middle class worker to compete with what their competition has to offer and they are losing this battle.

Any economist will tell you that a strong economy hinges on the strength of the middle class. Without people making a reasonable amount of money there will be no buying power. Consumer spending must slow down if there is no disposable income to spend.

I am beginning to think that this economic time bares a close resemblance to this time of climate change. It looks like there will be many years of upheaval as the world moves from national economies to a true global economy. During that time there will be many disasters and I believe the loss of the American middle class will be one of the first to be recorded.