Among other things, I think this exonerates Silicon Valley. Information tech did not cause this. I've smelled an agenda to frame SV and its larger economic and cultural orbit for middle class woes for several years, mostly emanating from curmudgeonly journalistic and literary circles. I think it's total baloney... the dates just don't match up. This murder occurred while the suspect was in diapers.
Interesting in light of all the recent discussion around Peter Thiel's new book which argues that fundamental (as opposed to just incremental) technological innovation has slowed in most areas since roughly the same date. I would add the above graph to the very long list of things that went off the rails in the 70s.
I'm very heartened by all this talk, especially given that it's coming from multiple points on the political landscape. I'm hearing liberals, conservatives, and libertarians all talking about how something really broke around that time-- something I've personally believed very strongly for many years. For years I've said that on or around 1970 "the future was cancelled." As for why-- I don't know. I scribbled down my own hypothesis here: http://adamierymenko.com/c/
Specifically the part where it talks about how the current establishment is squeezing the value-creating workers (teachers, police, factory workers, artists, mechanics, etc) while ballooning the "bullshit jobs" (school and hospital administration, lobbyists, PR researchers, consultants, etc)
Wow!
I've been saying this ever since I saw the paper pushers at school taking a "fika" break every 15 minutes making us queue for hours just to turn in papers to our teachers.
We call those "filfak" in Sweden. The "philosophical" faculty.
Basically non-value creating personell that leeches on those who add value.
After reading the article I don't think the author has actually worked BS jobs. I have. BS jobs are more stressful because all you do all day is battle others with BS jobs, directly or indirectly. You're the footsoldiers of empire building. (edited to emphasize, we have a centrally controlled economy focused on limiting freedom, so rather than having 100 competing firms where footsoldiers would be highly advantageous, we have the .gov paid off to limit the marketplace to maybe 2 competing firms, each of 50 departments fighting tooth and nail with whichever department is weakest, lets say 25 of 50 of supposedly friendly internal departments, and the locals are a lot closer and more fun to fight than the competitor, so most of the foot soldier fighting is internal, not with customers or competitors)
Humans are strong worthy opponents and battling them all day is tiring, either directly or indirectly as what amounts to being a toolsmith. TPS reports and such.
A "real job" is much more asymmetric warfare. You, with high technology, cheap energy, financial capitalization tools, an advanced mechanized transport system, and health care support, vs a poor defenseless forest of trees. I wonder who will win?
Even retail vs customer is fundamentally asymmetric warfare, not person to person warfare.
Nationally, as per the article, we probably do spend only 10 or so hours per week working on average. But we also spend maybe 30 hours per week national average fighting other people, either directly or more likely as support troops.
The purpose of this new procedure or report or process is solely for exec A to screw over exec B. Don't worry about the customers we have .gov on our side to eliminate competition.
I don't feel bad about working these jobs. Some high level crook paid off the government to collect a huge amount of money in an unfair market. If I don't collect my share for basically doing nothing, the crook will get it. The system is designed so its completely outside my control other than accepting my cut for doing not much. Well OK then. My carefully designed TPS reports or new procedure or whatever will report my feudal overlord is better than the other feudal overlord. Whatever.
For all your mentions of the government, it's hardly the primary source of competition-oriented jobs, is it? I mean, even without the government's help, there are a lot of jobs in Company A and Company B simply fighting each other for greatest share of a fixed pie of consumer attention (e.g., large parts of marketing and advertising, though the phenomenon is far from restricted to these), no?
I've been staring at a lot of these kinds of graphs for years. Most of them show gains in middle class income in the late 90s, which means that the statement "the middle class hasn't gotten a raise in 15 years" is accurate. Yet when you zoom way out nearly everything I've seen shows the decoupling starting around 1970 or shortly thereafter. It simply experienced a blip in the opposite direction from roughly '95 to 2000 and then the trend both resumed and accelerated. In stock trading they say "nothing goes straight up and nothing goes straight down," but the overall trend is what's important.
I think the fall of the middle class has a lot to do with a lot of different factors, but probably the biggest is the lack of negotiation that happens in our country by the average person.
We are a country of price takers, not price setters. Most people are taking whatever price they are offered with no push back. No raises this year? Well maybe next year. Maybe a tiny bonus. Etc.
Unions had their own set of problems and at some point might be unsustainable, but when people stop negotiating deals, they get taken advantage of.
I've changed jobs more than some people I know because it would get me a better deal, and it has. But before that, I experienced myself and watched my parents stick to the same job without getting appropriate raises and bonuses for the work they did.
In our current economy the best way to get a raise seems to be to switch companies because companies don't like giving raises and people don't like asking for them. Eventually what used to be a early raise negotiation will be a yearly job negotiation. It's starting to happen with younger workers and the more that is normal, the less efficient all these businesses will become.
Maybe people are afraid. The new mantra is "you're lucky to even have job" with this economy. People are less inclined to push back because they don't want to potentially jeopardize their job.
I agree that ideally people should always be pushing back, but if it's potentially between a raise or you're fired(at least in the minds of people requesting the raise), then people will be more cautious.
Also, young(cheap) workers are in large supply so people may actually be fired for asking for a raise; they can just fire the guy and hire a new younger worker(probably working for less too).
Many of these tech companies out here in the Bay probably pull hundreds of millions of dollars in "free" labor using an army of temporary interns(because it's cheap).
What a load of garbage. Show me even one example of someone who's been fired for asking for a raise (who wasn't going to be fired anyway). There's no logic at all in firing someone who asks for something, unless there are other factors at play.
It's an untruthful trope that's damaging, because some people actually believe it.
Whoa. I'm not saying people are actually doing it(not asking for raises for fear they'll be fired), I'm just describing, hypothetically, what a person's logic might be in that situation.
> young(cheap) workers are in large supply so people may actually be fired for asking for a raise
which is what I'm specifically asking about. Is there any case where this causal relationship has been demonstrated?
> I'm just describing, hypothetically, what a person's logic might be
Then we need to preach loud and long how totally mistaken that logic is. "Well Johnson, you're a model employee and get great reviews every year, but you asked for a raise so I'm afraid we're going to have to let you go." - never happens.
>The new mantra is "you're lucky to even have job" with this economy.
The limit is shown in the recent fast food strikes: when the existing jobs are so damn bad that people can't get by from working, people start fighting back again.
One thing I find extremely conspicuous about that brand and web-page is that no information seems to appear on the site stating the mean or median wages, working hours, and/or benefits packages available in the skilled-trade jobs Rowe and Profoundly Disconnected are marketing.
If employers can't be bothered to pay well, why work for them?
My anecdata from hiring a lot of trades (sticker shock!), and having lots of friends and family in trades, is that skilled trades pay extremely well, but you have to go up the ladder. apprentice (crap pay) --> journeyman (good pay) --> master (great pay) --> own your own shop (fantastic pay).
The only people I personally know with paid-off houses in California are tradespeople and startup lottery winners.
Sounds just exactly like the "can't find enough skilled engineers" whining in the tech sector. The other half of that thought, "at the price I'm willing to pay" is almost never mentioned.
This country has a deeply embedded, cultural and in my opinion entirely unhealthy bent toward deference to the wealthy and connected that borders on obsquious.
I doubt it. Like I said in another comment, the only people I personally know with paid-off houses in California are tradespeople and startup lottery winners.
> The other half of that thought, "at the price I'm willing to pay" is almost never mentioned.
Think on that for a second. Let's say CompanyX is willing to pay huge gobs of money for engineers. Now CompanyX employs all the good engineers and everyone else whines that they can't find any. So CompanyY comes along and offers a bit more. Some engineers bail and move over, but most are happy where they are/don't want the life change/etc. And on it goes. It's like the search for a mate: the older you get, the more likely it is you've found a situation you want to keep. In the engineering case, "skilled engineers" are for the most part older, may have other responsibilities (mortgage, kids, spouse), have had the opportunity to "sow their wild oats" by trying a few different companies/startups/whatever, and have found a situation they want to keep.
The only trust you need to negotiate is the trust that the other party will follow through on what they promised and we have the police to enforce that.
Real trust is great, but you can negotiate without it.
This might have something to do with the fact that we've outsourced much of our trust to the federal government. And no one trusts the federal government.
Agreed. The amount employers are paying to employ people has gone up, in constant dollars. But the increase is getting eaten by the increased cost of providing health care.
The bottom end has been held down by illegal immigration. You don't add eleven million people with sixth grade educations to the job market and expect wages for unskilled labor to go up.
Health care inflation has been substantially outstripping core inflation for the past several decades (though this trend has slowed, or possibly even reversed, in the past four years).
Americans now spend nearly $18 of every $100 produced in the US on health care.
For every $100 made in the United States, $1.50 is spent just on hospital administration.
Wages are being eaten up by corporate health care expenditures.
This is the first ever analysis I've seen of this that really digs into the different corollary factors - awesome! A perfect example of what I hoped 538 could do more of.
The trade deficit and globalization have more to do with this than demographics.
"The United States has been running consistent trade deficits since 1980 due to high imports of oil and consumer products. In recent years, the biggest trade deficits were recorded with China, Japan, Germany, Mexico and Saudi Arabia. United States records trade surpluses with Hong Kong, Australia, Netherlands and Belgium."
In 1970, 55 percent of U.S. income was earned by households in the middle 60 percent of the income distribution. More than half of households were in what Pew Research Center has labeled the “middle tier” of households (those earning between two-thirds and twice the median income). In 2013, both numbers had fallen to about 45 percent.
It's not clear that this is an apples-to-apples comparison, but this AEI chart suggests this statistic might not be as disheartening as it sounds:
In other words, America’s “middle class” did start largely disappearing in the 1970s, but it was because they were moving up to a higher-income category, not down into a lower-income category. And that movement was so significant that between 1967 and 2009, the share of American families earning incomes above $75,000 more than doubled, from 16.3% to 39.1%.
"In other words, America’s “middle class” did start largely disappearing in the 1970s, but it was because they were moving up to a higher-income category, not down into a lower-income category."
Is this for real? Are you actually serious?
Go talk to some ordinary people, or maybe tour some of the country outside whatever rich coastal enclave you inhabit.
Edit: to clarify: I don't trust the source. Doesn't it make you suspicious that AEI and their orbit are the only ones saying this while everyone else says otherwise? All I'm saying above is that my anecdotal experience clearly supports what "everyone else" is saying, not what AEI is saying. When I read stuff like that I'm like "uhh... what parallel universe is this from?" Pravda always had graphs that made the Communist Party look good too. (Side note: during the Bush years it really struck me how oddly "Soviet" the American right is in its thinking and character. I guess, like Nietzsche said, when you fight against something you become what you fight against.)
He's arguing that life has gotten better for the median family, not about how "fat" the distribution is around that family, but based on your other comments, I assume you think "everyone" agrees that things are getting worse.
> Does "everyone else" include progressive wonks like Matt Yglesias?
Its kind of odd that the only people I ever see positively citing "progressive" Yglesias are doing so in the context of using Yglesias's support for an economic position to bolster the idea that its not a particularly conservative viewpoint.
The rise in income recorded almost directly tracks the entry of women into the workforce which is why the article explicitly mentions household income. The average middle class wage earner has not seen a pay raise in a long time, and thus his wife has had to start working in order to make due in the face of rising energy, health care, and education costs.
The article is a classic example of lying by omission. It would be like saying household incomes dropped precipitously in the late 1800s after government started regulating factories, without mentioning that the regulation was banning child labor, thus removing the income brought in by your 12 year old son working at the mill.
This article instead casts the last several decades of neo-liberal trade and economic policies as having greatly increased household incomes, without ever mentioning the fact that now twice as many people in the household have had to start working in order to keep pace with the economy. On an individual level, the one that matters, the middle class has been boned for several decades now.
Edit: Trade policies are neo-liberal as pointed out by eli_gottlieb. Thanks for the head's up!
Those trade and economic policies are neoliberal. "Neoconservative" usually refers to a position in fundamental political philosophy (a kind of The Republic "noble lie" for modernity) or in foreign policy (aggressively enforcing the Pax Americana).
Only someone working for the aei would describe $25k for a family as "middle-class". For reference, in 2014, the poverty line for a family is $23,850 [1]. You don't jump from poverty to middle-class.
He then cites a paper by Meyer and Sullivan [2] which, amongst other things, argues that
the poor shouldn't count because they get food stamps;
the fraction of poor people with a/c doubled between 1981 and 1999 (I didn't realize you could eat A/C)
more poor people have cars w/ power breaks and steering (I am surprised you can buy a car in the last decade w/o either of the above)
etc etc -- the authors go on at length about how consumption rather than income should be a measure of poverty. Which is a classic, but stupid, argument. If you can barely afford rent, are living paycheck-to-paycheck, but now your apartment has a dishwasher, you are not better off. If your used car has power steering, it does not make you better off.
Meanwhile, back over in reality, food insecurity continues to be a problem, the hours at minimum wage required to afford minimal housing in major metropolitan areas continue to rise far beyond possibility, etc etc. But this is what AEI is for -- to kick up confusion about reality in the service of conservatives and the rich.
Not necessarily. You could, for example, have a large generation (the Boomers) pass through their peak earnings years at the same time as a large number of low-skill immigrants arrive in search of a better life. That wouldn't be polarization in the sense of the middle being split into rich and poor, it would just be changing demographics.
No idea if that's what's actually happening, but just watching the dot of the median and not the whole distribution is not likely to be enlightening unless events conspire to keep the shape of that distribution static. I don't think that's the case.
You can explain part of that, anyway, by immigration. Between legal and illegal immigration we're adding a couple million poor people to the total every year.
How much of that was due to the fact that a much larger proportion of women are in the labor force now than in '67? My guess would be that almost all of it is.
What the linked article says...
"Eighty-four percent of Americans have higher family incomes than their parents did."
...the question is "incomes" just raw income or did they adjust it? Clearly people will have more dollar bills, but that dollar bill doesn't go as far.
I certainly know I'm not better off than my parents, I'm most definitely worse, but I still have a higher number on my paycheck.
I fear the truth is worse, that some of us have gotten fairly large raises (or you might even say exited the middle class) and the rest are taking a pay cut relative to decades past.
http://thecurrentmoment.files.wordpress.com/2011/08/producti...
Among other things, I think this exonerates Silicon Valley. Information tech did not cause this. I've smelled an agenda to frame SV and its larger economic and cultural orbit for middle class woes for several years, mostly emanating from curmudgeonly journalistic and literary circles. I think it's total baloney... the dates just don't match up. This murder occurred while the suspect was in diapers.
Interesting in light of all the recent discussion around Peter Thiel's new book which argues that fundamental (as opposed to just incremental) technological innovation has slowed in most areas since roughly the same date. I would add the above graph to the very long list of things that went off the rails in the 70s.
I'm very heartened by all this talk, especially given that it's coming from multiple points on the political landscape. I'm hearing liberals, conservatives, and libertarians all talking about how something really broke around that time-- something I've personally believed very strongly for many years. For years I've said that on or around 1970 "the future was cancelled." As for why-- I don't know. I scribbled down my own hypothesis here: http://adamierymenko.com/c/