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"Our future will bring more wealthy people than ever before, but also more poor people," he writes. "Rather than balancing our budget with higher taxes or lower benefits, we will allow the real wages of many workers to fall — and thus we will allow the creation of a new underclass."
Remember, Cowen isn't adding or subtracting anything from what's already happening. He's merely forecasting based on current trends: middle-class American jobs being eliminated by automation and outsourcing, downward pressure on wages for all but the most skilled, growing inequality between the wealthy and everyone else, and elected officials who don't seem capable of slowing those trends, let alone stopping them.
Time Magazine takes a more chatty-list-oriented look using Texas as the model for the future as predicted by Tyler Cowan:
In the cover story of this week’s TIME magazine, libertarian economist Tyler Cowen, author of the new book Average Is Over,looks at why so many Americans are headed to the Lone Star State. And he comes to a surprising conclusion. For better or worse, he argues, it’s because Texas is our future.
...reason #3 (which isnt necessarliy about Texas) is Automation:
Quote:
One of the big reasons behind the middle-class squeeze is automation — and it’s only going to get worse, possibly much worse. A recent study by researchers at Oxford University found that 47% of jobs in the U.S. are vulnerable to automation, not just in fields involving manual labor but also increasingly in fields involving complicated decisionmaking.
Looking forward, says Carl Benedikt Frey, co-author of the Oxford study, more and more low-to-medium-skilled jobs will be vulnerable to automation. “Take the autonomous driverless cars being developed by Google. This new technology may lead to workers such as long-haul truck driver being replaced by machines,” he says. “The ability of computers, equipped with new pattern-recognition algorithms, to quickly screen through large piles of documents threatens even occupations such as paralegals and patent lawyers, which are indeed rapidly being automated.” Even the bulk of service and sales jobs, Frey says, from fast-food-counter attendants to medical transcriptionists — the types of fields where the most job growth has occurred over the past decade — are also to be found in the high-risk category.
And the Oxford study mentioned in the above blurb can be found here in .pdf format.
I get the spirit in which this article was written, but not sure I totally agree with this article. First, what's "middle class" defined as? My grandfather had a modest home built in the 1960s that has been well-maintained, but newer "middle class" homes are probably twice the size of his. His house would be seen as working class today and would be a stretch to sell for $120k. They always drove new cars, but they both worked (odd for the time and area) and the cars they had weren't nearly as reliable, as comfortable, or as efficient as today - I remember a lot of breakdowns on their Oldsmobiles and Chevrolet truck that I never had with my Toyota and now Hyundai. I've seen more of the country at 27 than he had seen at 77. He and his peers in the neighborhood squirreled away money, but never traveled much nor did anything with it. While he and his peers had decently funded retirements (for the most part) and had paid for, modest homes, I'm not sure sitting around your house for ten or twenty years post-retirement is a good thing or indicative of a "middle class" life.
Second, you have to be aware that a decent percentage of our population doesn't even graduate high school and are only marginally employable. According to the Washington Post, only 75% graduated in 2010. While some of these may get their GED and eventually go on to college, many won't, and this is the base of the underclass.
The Texan model can't be replicated everywhere. Texas' education and social metrics tend to be below par, many of the jobs being created are low paying, poverty is systemic, and many of the better jobs are based on a resource boom, which other areas can't replicate. If taxes were a tremendous part of prosperity, why is TN doing so poorly and MN doing so well? Even after taxes and cost of living differences, the average Minnesotan is probably better educated, wealthier, and healthier than the average red state resident. You have to have an educated, healthy, employable populace to prosper, something the red states are not understanding .
Anecdotally, I do think the "common man" has gone backward. Purchasing power for the median salary has lost ground over the years.
In one word or 100,000?
One word answer: Independence; earning enough to provide for your families needs.
In most of the US that middle class life for a family of 4 starts at $50,000 of income.
In some areas (like LA) it takes a whole lot more.
Assuming two people working feeding two kids, with two kids, a home of some type, two cars to maintain, etc, $50k is barely scraping by about anywhere you go. I wouldn't call that middle class - working class at best.
There are other articles similar to this, forecasting something similar. A large upper class, that is like 15% of the population, then a vast lower class. I agree this is the likely scenario, but a little more refined.
A 10% upper class. Then a much smaller middle class composed of government employees, professionals, engineers, managers in large corporations. Maybe 25% of the population. Then the rest approximately 2/3 rds will have jobs that have low pay, subsidized health care, food stamps, earned income tax credit, and other government props to help them get along. Because of this you will have a entrenched one party democratic government supported by all the folks that need government help to get along. But the days of the average guy being able to support his family from his factory job are gone, unless you work at a big unionized manufacturing plant like a UAW auto plant, Boeing, Caterpillar and the like.
Assuming two people working feeding two kids, with two kids, a home of some type,
two cars to maintain, etc, $50k is barely scraping by...
Agreed. That's why I used the phrase "starts at".
(Of note: there are a lot of very proud people -many who will post here on this topic-
who earn considerably less yet will insist that they really are managing a middle class life.)
Deal with the first hurdle of what gets that family INTO the middle class state of independence:
earning enough to provide for their families needs; then you can explore the niceties or more/better.
Politics aside, I highly recommend reading the Two-Income Trap by Elizabeth Warren. It's not a new book, but I now count it among the many things I wish I had known years and years ago.
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