Random ruminations from your resident curmudgeon...
After World War II, the United States developed a solid and growing middle class. People that were willing to work hard and were financially responsible were able to achieve the dream of home ownership and providing well for their family. The abundance of jobs and the ability to earn a good income through hard work attracted people from all over the world to seek and obtain the "American Dream".
Now, that American Dream is turning into a nightmare.
According to the Social Security Administration, the latest wage statistics show that more than half of American workers make less than $27,500 per year. After taxes, that works out to be less than $2,000 per month.
Hardly enough to pay a mortgage, car payments, everyday living expenses, and save for retirement.
The American Dream is becoming increasingly out of reach for many Americans, and the middle class is dying.
Jobs that pay well and allow families to secure a middle class lifestyle are rapidly shrinking. Many have been exported overseas. Technological advancements have allowed employers to do more with fewer workers. And the jobs that our economy is creating now are lower wage jobs.
We hear that the economy is adding or creating new jobs. Today's employment report showed the economy created 217,000 new jobs last month. Further examination reveals that that over half, 116,000, of the jobs were in lower paying education, leisure and hospitality services, and temporary jobs.
These jobs do not pay enough to support a family on their own. Now, I am not belittling these jobs or the people that hold them. I am stating an economic fact: these jobs are lower wage jobs that do not provide enough income to support a family. They do not pay enough to place a family in the middle class.
Consider these facts:
- According to a CNN poll, 59% of Americans say that achieving the American Dream is no longer possible.
- According the U.S. Census Bureau, 36% of Americans under the age of 35 own a house. That is the lowest level that has ever been measured.
- Also according to the Census Bureau, one out of six men in their prime working years (25 to 54) do not have a job.
- The Census Bureau reports that the number of working age Americans that do not have a job has risen by 27 million since 2000.
- 20% of all families in the United States do not have a single family member that is employed.
- 25% of American families do not have any retirement savings.
- One in five children in the United States lives in poverty.
Having a solid middle class allows for better economic mobility. It gives those that are in a lower socioeconomic class more opportunity to advance. More opportunities to economically move up are healthy for society, not only economically but from an aspirational standpoint. A solid and growing middle class provides opportunity for individuals and families to better themselves financially and a better way of life. Most people respond positively to that opportunity and will chose to master new skills or improve their education if they can see a realizable benefit.
A substantial portion of the tax burden in this country fall on the middle class. With a shrinking middle class, the propensity of government to raise taxes on those that are still in that group is high. We know that government is not going to curtail spending, so the probability of higher taxes on those in the middle class is extremely likely.
It is no secret that our economy is built on consumer spending. Approximately 67% of GDP is driven by what we do as consumers. With a shrinking middle class, the economy is going to continue to struggle to grow.
Further pressuring the middle class is the explosive growth of social programs and those programs, which will require a higher level of taxation on the middle class.
Our country needs a healthy and growing middle class.
It is time to rethink education, taxes, and the business environment in this country. The old paradigms no longer work. We need bold and innovative thought about how to add quality jobs and educate people to compete in the competitive global environment. The burden of government and the taxes to support a bloated bureaucracy has to be lessened.
If we don't, the middle class is going to continue to die out.
To the detriment of our country.
And that, my friends, is my view.