Blog Series: Rebuilding the Global Middle
Part I: Good Times Gone Very, Very Bad –
It seems like a quaint folk tale told to schoolchildren. Study, work hard, and you too can live happily ever after. The American Dream, each generation better off than the last meant true upward mobility. Skills rather than birthright defined success. It’s been the mainstay of popular culture for over a century. Was it too good to last?
There’s a long and generous history of hardworking immigrants establishing themselves in the U.S. Children often gained more education than their parents and either walked into a good manufacturing job after high school, went to a trade school or off to college. Eventually most married, bought a small house, a car, a television and appliances. Maybe they took a vacation to Disneyland or rented a room for a week at the beach each summer.
Suburbs sprouted out of shallow fields and the interstate highway connected a patchwork of states that eventually became part of a global economic, media and politically powerful nation.
Somewhere around the 1970’s the magic of upward mobility soured. Wage growth stalled while the cost of living kept rising. A worker might produce more per hour, especially with the aid of advanced manufacturing and automation, but that didn’t translate into higher take home pay, especially with the bite of inflation. Where one salary supported a family of four in the past, two incomes and credit card debt soon became the norm.
When that failed to keep up with the Joneses next door home equity loans became the fashion. “Free” money paved the way up the increasing slope of superficial prosperity until the road ended in a cliff. That was 2008 and four years after the the worst economic disaster since the Great Depression the U.S. recovery slows to near stall speed. Signs of a prolonged global slowdown point to increasing middle class strain.
At this juncture in economic history it becomes increasingly difficult to imagine how the middle class recovers absent a 1950’s-60’s style manufacturing boom. That pattern can hardly repeat itself considering the outsourcing trend and globalization which, in theory, opens the way for more value-added jobs in the U.S.
The changing structure of work isn’t necessarily a bad thing. Telephone operators that literally connected phone calls with wires and plugs were made obsolete by electric switching. Automobiles replaced horse drawn carriages.
Each leap forward left some destruction in its wake, but there was always another factory, another invention, another job to do.
Lower prices for clothing and shoes to washing machines and televisions made every dollar go further, for the moment. That moment has passed. Borrowing to buy now and retire later in near poverty has become the new reality, not the promise of an almost forgotten dream.
Has the middle class been damaged beyond repair? While this may not be the end of the age of opportunity, some serious surgery is required, and soon.