"The economy has definitely picked up" I replied. And added the commentary that is not new in this blog: "but, the middle-class jobs are not there, which is a big problem."
A couple of days later, it was a similar question from a couple and I replayed my reply. I continued with "my favorite examples are Facebook and WhatsApp. They have created billions of dollars, but next to nothing in terms of jobs."
The American model that dominates our thinking is the experience for two generations from the early 1940s. With a high school diploma, one clocked in and clocked out at work and was assured of a successful middle-class life. Now, the US and the world are full of வேலையில்லா பட்டதாரிகள் (unemployed college graduates,) as an autorickshaw driver commented two days ago.
Offshoring and automation happened. The old middle class model has been obliterated.
Yes, the stock market is soaring, the unemployment rate is finally retreating after the Great Recession and the economy added 321,000 jobs last month. But all that growth has done nothing to boost pay for the typical American worker. Average wages haven’t risen over the last year, after adjusting for inflation. Real household median income is still lower than it was when the recession ended.I have been delivering this bottom-line of the middle class in trouble for a number of years now. But, hey, who cares about what I say, right? So, will let some other person say that instead!
Make no mistake: The American middle class is in trouble.
Millions of American jobs disappeared during the 1990, 2001 and 2008 recessions. That’s what happens in recessions. But for decades after World War II, lost jobs came back when the economy picked up again. These times, they didn’t. And it was a particular sort of job that disappeared permanently in those downturns, economists from Duke University and the University of British Columbia have found: jobs that companies could easily outsource overseas or replace with a machine.The sophistication in automation, which seems to have a Moore's Law equivalent of its own with the automation getting better and better every single day, means that there will be lesser and lesser demand for the "middle-skill" labor. The American middle class model is doomed. I don't see a way out of this at all.
Economists call those jobs “middle-skill” jobs. They include a lot of factory work — the country is down about 5.5 million manufacturing jobs since 1990, according to the Labor Department — but also a lot of clerical and sales tasks that can be handled easily from a country where workers make a fraction of what they make here.
Which is also why I increasingly find it very, very difficult to deal with students--at my university, they typically come from lower-middle-class and lower-income backgrounds, with the hope and promise that a college diploma will vault them into the prosperous lives promised to Americans. If I give them my take along the lines of this and many other posts at this blog, I will not be even a little bit encouraging. On the other hand, not telling them means wilful concealment of the truth as I see it. Hopefully, some read this blog and the warning:
Even if they all earned degrees, who would hire them?