The U.S. Middle Class Is Being Wiped Out

[Hacp]

As far as China goes, their labor is gradually getting more expensive as people are buying middle class items such as cars (GM is doing real good in China). Eventually their labor force will not be able to compete as well, we will ship iPhone manufacturing to Africa. That is why they are emphasizing so much on hard science and math, so their next generation can compete on the technological front as opposed to just relying on manufacturing-based economy. That gravy train will run dry on manufacturing real soon for them.

Protectionism will not work. People are accustomed to a certain lifestyle where cheap prices of goods has contributed to a significant part of that. Would you want to pay $5k for a TV? Or $300 for a pair of Nike's?

The point is to adapt our economy so that we can shift our labor force from manufacturing to design as the primary economic engine. Manufacturing holds a less important significance in the economy after a country has been industrialized. We will never be able to compete on manufacturing and artificially forcing companies to hire here on these jobs will only drive them away. We need to improve our labor force's skills so that we can design CPUs, and let someone else manufacture it, which is what exactly Intel is doing. That way we keep our competitive advantage in technology design, and utilize other countries' competitive advantage in manufacturing so we can have these goods produced cheaply. This is the only win-win solution, provided that we can adapt our labor force to keep pace with this rapid changing world economy.

I keep hearing about "design" but many of the "design" jobs are being outsourced too. How many software engineers does Microsoft hire in India? Too many. A lot of the low skill jobs that are outsourced are actually entry level jobs that lead to higher skilled jobs in the future. We aren't seeing it now, but in a few decades, it won't be the US that is innovating. All the experienced people will be the ones that were trained from the bottom of the totem pole in other countries by US based companies.

Of course companies will go where it makes them the most money. Right now, the standard of living is too high to support US manufacturing and the jobs that accompany manufacturing(management and engineering). The only way to solve this mess is to lower our standard of living and reduce the cost of what it takes to do business in the US. Obviously, it doesn't look like that is going to happen.

 

[JSt0rm]

The only way to solve this mess is to lower our standard of living and reduce the cost of what it takes to do business in the US. Obviously, it doesn't look like that is going to happen.

nobody is going to work for $2 a month, retard. There has to be a better way forward.

 

[Gonad the Barbarian]

The only way to solve this mess is to lower our standard of living and reduce the cost of what it takes to do business in the US. Obviously, it doesn't look like that is going to happen.

Um, that's exactly what is happening and will happen if things are left to continue as they are.

 

[ebaycj]

Hardly, anyone who didn't panic and divested themselves from the market after it tanked in '08 should have made back most if not all their losses in '09. I certainly did. One of my funds (DFEVX) earned a whopping 92% return in 2009.

You silly people and your silly mutual funds. My 2009 return was 3200%.

 

[Corn]

You silly people and your silly mutual funds. My 2009 return was 3200%.

Do tell, what did you buy and sell that earned you that kind of return. Poker night doesn't count......

 

[Acanthus]

Do tell, what did you buy and sell that earned you that kind of return. Poker night doesn't count......

Maybe trafficking cocaine?

 

[Jhhnn]

Maybe trafficking cocaine?

It's not *that* profitable...

 

[HendrixFan]

It is a race to the bottom. Globalization is the worst thing that could happen to the United States.

China has a near unlimited labor supply willing to work for 1/20th our national minimum wage. Vietnam and Sub-Saharan African countries are even less.

Funny you should mention "1/20th" because the GDP of China is less than 1/3 of ours with a population almost 5 times as large. Splitting that up the average Chinese person has 1/15 of the wealth that the average American has.

The amount spent by US citizens on food and clothing has gone down since 1970, mostly due to cheaper labor and resources. The reason the middle class is languishing is increased spending on health care, child care, and housing. Those have nothing to do with globalization and they are putting the biggest strain on US households.

 

[Acanthus]

It's not *that* profitable...

It is if you keep doubling up

 

[Acanthus]

Funny you should mention "1/20th" because the GDP of China is less than 1/3 of ours with a population almost 5 times as large. Splitting that up the average Chinese person has 1/15 of the wealth that the average American has.

The amount spent by US citizens on food and clothing has gone down since 1970, mostly due to cheaper labor and resources. The reason the middle class is languishing is increased spending on health care, child care, and housing. Those have nothing to do with globalization and they are putting the biggest strain on US households.

Spending is not what i am talking about right now. That is another threat that is kind of the "double whammy" on the middle class.

I'm discussing how we are outsourcing all of our revenue sources to countries where people work for slave labor wages and have no worker protections.

 

[gingermeggs]

Your post is true, but it is missing the point. The middle class is better off now than compared to generations ago. I had to argue that point in a thread about globalization a while back.

However, the argument is that the middle class is shrinking, which is also true. The middle class is gauged by the current standards of living and not from how things were a generation or two ago. In comparison to the wealth owned by our country and its inhabitants, the middle class has a much smaller share than in the past. Society is pushing forward and bringing great wealth to us all, but it is concentrating at the top. The numbers in the link bear this out.

The point isn't whether or not the middle class is better off now than in 1970 (or whenever). It is that the middle class is shrinking.

And with it, is lost the moderate center to politics, polarizing people to the extremes of left and right- which is where lies the real trouble!

 

[gingermeggs]

I keep hearing about "design" but many of the "design" jobs are being outsourced too. How many software engineers does Microsoft hire in India? Too many. A lot of the low skill jobs that are outsourced are actually entry level jobs that lead to higher skilled jobs in the future. We aren't seeing it now, but in a few decades, it won't be the US that is innovating. All the experienced people will be the ones that were trained from the bottom of the totem pole in other countries by US based companies.

Of course companies will go where it makes them the most money. Right now, the standard of living is too high to support US manufacturing and the jobs that accompany manufacturing(management and engineering). The only way to solve this mess is to lower our standard of living and reduce the cost of what it takes to do business in the US. Obviously, it doesn't look like that is going to happen.

Or destroy the over populated countries!
Climate change will be the nail that send them back up their trees, as they smoke the LBFM's of out their little slums!

 

[alkemyst]

There are a couple 'dupes' that were put into place/the public bought into that set the stage.

First was going to the two income household. With all the automation and housework advances you didn't need to slave all day to keep a house in check. In the beginning only a few sent their wives to work. Once others saw that they had the better cars, homes, etc....others followed. What ended up happening is everything got more expensive and you then had to have two incomes.

Then people accepted no pensions then no company loyalty, etc. Hell, people would rather see their neighbor dead today if they could profit from it.

Now we are at it again. People are letting their adult kids stay at home....this is creating 3-4+ income homes. With these bail-outs and what-not you are further liquidating the dollar.

The problem is the uber rich have so many of them, they still stay rich, but the fine line between low and middle class goes away esp with all the benefits the low class can qualify for.

 

[Jhhnn]

Funny you should mention "1/20th" because the GDP of China is less than 1/3 of ours with a population almost 5 times as large. Splitting that up the average Chinese person has 1/15 of the wealth that the average American has.

The amount spent by US citizens on food and clothing has gone down since 1970, mostly due to cheaper labor and resources. The reason the middle class is languishing is increased spending on health care, child care, and housing. Those have nothing to do with globalization and they are putting the biggest strain on US households.

Sounds peachy, but you forgot to mention how having a job fits into that, how job growth requires the capital being exported to create jobs elsewhere, and how a huge balance of payments deficit reduces liquidity in the national economy, necessitating the substitution of debt for wages earned to maintain the money supply.

 

[ebaycj]

Do tell, what did you buy and sell that earned you that kind of return. Poker night doesn't count......

Bought highly distressed (stock price wise) commercial truck parts stocks, back when they were significantly less than $1.00. Now most are upwards of $15, some upwards of $20.

They were distressed because the market significantly overestimated their exposure to the US Big 3. Also because their credit was not the greatest (again, mostly because of supposed Big 3 exposure). These are (and were at the time) fully functioning global companies with very significant manufacturing both in the US and abroad. These were multi-Billion market cap stocks back before the crash, after the crash they were in the tens-of-millions market cap range (for the most part).

Stuff still needs to be shipped = Still need truck parts.

It was a big risk, but also a big reward.

 

[jackace]

There are a couple 'dupes' that were put into place/the public bought into that set the stage.

First was going to the two income household. With all the automation and housework advances you didn't need to slave all day to keep a house in check. In the beginning only a few sent their wives to work. Once others saw that they had the better cars, homes, etc....others followed. What ended up happening is everything got more expensive and you then had to have two incomes.

Then people accepted no pensions then no company loyalty, etc. Hell, people would rather see their neighbor dead today if they could profit from it.

Now we are at it again. People are letting their adult kids stay at home....this is creating 3-4+ income homes. With these bail-outs and what-not you are further liquidating the dollar.

The problem is the uber rich have so many of them, they still stay rich, but the fine line between low and middle class goes away esp with all the benefits the low class can qualify for.

Actually if you watch the (admittedly long) video that was posted in this thread you would find that most families spend less on just about everything then they did 30 years ago. The major exceptions are Housing, Healthcare, and Childcare. These 3 saw HUGE gains that over shadow all the reductions PLUS the increase of having a second income.

 

[MJinZ]

Funny you should mention "1/20th" because the GDP of China is less than 1/3 of ours with a population almost 5 times as large. Splitting that up the average Chinese person has 1/15 of the wealth that the average American has.

The amount spent by US citizens on food and clothing has gone down since 1970, mostly due to cheaper labor and resources. The reason the middle class is languishing is increased spending on health care, child care, and housing. Those have nothing to do with globalization and they are putting the biggest strain on US households.

1/15? Unlikely. Wealth in US is concentrated, not spread out. Since China's is as well, I'm betting on average, it's more like 1/8.

 

[Trianon]

The point is to adapt our economy so that we can shift our labor force from manufacturing to design as the primary economic engine. Manufacturing holds a less important significance in the economy after a country has been industrialized. We will never be able to compete on manufacturing and artificially forcing companies to hire here on these jobs will only drive them away. We need to improve our labor force's skills so that we can design CPUs, and let someone else manufacture it, which is what exactly Intel is doing. That way we keep our competitive advantage in technology design, and utilize other countries' competitive advantage in manufacturing so we can have these goods produced cheaply. This is the only win-win solution, provided that we can adapt our labor force to keep pace with this rapid changing world economy.

What a load of baloney, if you don't do large scale manufacturing, how would you even know anything about how things are being built in terms of quality and reliability. We stopped producing nuclear power plants and lost design edge in that technology to Japan, LCD and plasma panels tech is lost to Korea/Japan/China, same with memory chips, photovoltaics and fuel cells. About the only unique know-how that we are still maintaining pretty well is military tech, because it's not allowed to be outsourced. Not everyone is meant to be a designer, and Americans tend to stay away from Engineering in grad schools. So no, unfortunately without manufacturing jobs US economy doesn't have much to stand on long term.

 

[SammyJr]

You are not entitled to a livable wage, you have to earn it. It used to be that a UAW worker in the 60s could earn a livable wage for the entire family, but that is not the case anymore. The white collar workers are not immune either, software development jobs are going overseas just the same. If you don't adapt your skills quickly in the fast-changing world economy, you become obsolete. It sounds cruel, but it is the way it works. The rest of the world is catching up fast, and we can't compete in the global stage unless we adapt.

The first step is to stop whining about job losses and actually improve our labor force skills so that we are competitive in the world labor market. Companies are not going to pay an American worker $30/hr when they can pay $5/hr elsewhere. We definitely can't compete on price because our standards of living expectation is much higher, but we can try to compete on labor skills. Thus, we need to further educate ourselves first. China and India already sees this, there is a reason they turn out so many engineers and scientists for the next generation. Your economy can only depend on low-cost manufacturing for so long.

America will not be on top forever (we are already seeing signs of decline). It the coming years, the slow decline will reach equilibrium when we have declined enough and developing countries' economy have grown enough. The wage deflation we are seeing is a mere reflection of America integrating its economy into the world economy.

Yeah, girlie man economics and all that. Rah rah! Your assumptions are based on two falsehoods.

1. That American engineers/scientist/doctors/etc have the ability to be inherently better than their counterparts in India, China, Russia, or whereever. An American can educate himself until he has diplomas and Dean's Letters falling out of his ass, but if his wage demand is too high, he can't compete with someone equally qualified from a cheaper nation. What's that, you say? He should demand less? Well, student loans don't pay themselves and his counterpart in India doesn't have any.

2. That all Americans have the ability to be the brilliant engineers/scientists/doctors/etc above. There are 300 million Americans, each with their own talents and abilities. I know a lot of people who are extremely trustworthy and dedicated and very hard workers but they aren't mentally gifted. These people need jobs and the manufacturing industry that you're so happy to see go provided those jobs. We need a diversity of jobs, paying a living wage, that provide employment opportunities to Americans of all abilities.

Lots of people share the above misconceptions and thus believe its somehow possible for all Americans to win at this game. The only people who win at this game are the wealthy and I noticed that in all your talk of sacrifice and self improvement, you didn't mention that they ought to do the same.

 

[SammyJr]

And with it, is lost the moderate center to politics, polarizing people to the extremes of left and right- which is where lies the real trouble!

Polarization not found. We have the Republicans, who used to be center-right, now pushing far right. And we have the Democrats, who used to be center, now occupying the Republicans former spot on the center right.

You hear a lot of left wing talk with relation to the Democrats, but look at the Democrats in action. They're just as happy to give corporate welfare as the Republicans, promote the free trade religion just like the Republicans, and continue Republican wars. Unfortunately, the left wing really has no party to call their own so they take the lesser of two evils.

 

[IndyColtsFan]

Yeah, girlie man economics and all that. Rah rah! Your assumptions are based on two falsehoods.

1. That American engineers/scientist/doctors/etc have the ability to be inherently better than their counterparts in India, China, Russia, or whereever. An American can educate himself until he has diplomas and Dean's Letters falling out of his ass, but if his wage demand is too high, he can't compete with someone equally qualified from a cheaper nation. What's that, you say? He should demand less? Well, student loans don't pay themselves and his counterpart in India doesn't have any.

2. That all Americans have the ability to be the brilliant engineers/scientists/doctors/etc above. There are 300 million Americans, each with their own talents and abilities. I know a lot of people who are extremely trustworthy and dedicated and very hard workers but they aren't mentally gifted. These people need jobs and the manufacturing industry that you're so happy to see go provided those jobs. We need a diversity of jobs, paying a living wage, that provide employment opportunities to Americans of all abilities.

Well said. The "education, education, education!" rallying cry isn't valid, especially when the poster you responded to, in the same breath, notes the vast numbers of scientists and engineers being turned out by China and India. How can anyone say, with a straight face, that education is the answer when we are going to end up competing with people who are just as educated but will work for less?

Lots of people share the above misconceptions and thus believe its somehow possible for all Americans to win at this game. The only people who win at this game are the wealthy and I noticed that in all your talk of sacrifice and self improvement, you didn't mention that they ought to do the same.

Funny how that works, isn't it? When do we start outsourcing the CEO positions? I bet you could find people in India or China who are just as talented and would work for a salary hundreds of times less. That's why I chuckle when I hear the "We're outsourcing these jobs to save money because we're all for our shareholders!"; they certainly aren't concerned with shareholder value when they accept multi-million dollar bonuses when their companies are tanking, are they?

 

[Acanthus]

1/15? Unlikely. Wealth in US is concentrated, not spread out. Since China's is as well, I'm betting on average, it's more like 1/8.

My friend just got back from china, he said 40 cents an hour is common. Do the math.

They also usually work 12+ hours a day, and 7 days a week.

 

[SammyJr]

What a load of baloney, if you don't do large scale manufacturing, how would you even know anything about how things are being built in terms of quality and reliability. We stopped producing nuclear power plants and lost design edge in that technology to Japan, LCD and plasma panels tech is lost to Korea/Japan/China, same with memory chips, photovoltaics and fuel cells. About the only unique know-how that we are still maintaining pretty well is military tech, because it's not allowed to be outsourced. Not everyone is meant to be a designer, and Americans tend to stay away from Engineering in grad schools. So no, unfortunately without manufacturing jobs US economy doesn't have much to stand on long term.

Very true. Engineers need to work extremely closely with the manufacturing floor to work out bugs in the product and the manufacturing process. This is pretty much impossible to do with geographic seperation, time differences, and language barriers. Thus, when manufacturing goes, design and engineering goes right along with it. It is determental to quality to do otherwise.

 

[WhipperSnapper]

Whatever. I don't have a duty to ensure someone can make a living in an obsolete unskilled manufacturing job at above market rates. You're not owned anything just because you're an American, and it's not my fault if you can't bother yourself to create a personal skill set to command a job position better than something that can be done by someone with a 1st grade education in Bangaladesh.

If you don't care about the welfare of your fellow Americans, then why do you identify yourself as an American? Why should your fellow Americans not kidnap members of your family and hold them for ransom like the poor do to the rich in Sao Paulo?

Do you really think it's in you and your family's self interest to live in a third world nation racked by poverty? Do you want to live behind barbed wire fences and security gates? Do you want to have to purchase a "kidnap proof" car or travel by helicopter? Do you want to have an RFID GPS (personal Lojack) chip embedded in your arm? Do you want to end up being a prisoner in your own country? (If anyone's interested in learning more, watch the movie Manda Bala, which might air on cable sometime.)

Do you believe in karma? If you hold the welfare of your fellow Americans in such great contempt, don't expect them not to feel the same way about you. If your sentiments are representative of what the upper classes think, and I suspect that they very well may be in many cases, then the lower classes might just as well regard the rich and the upper classes as an occupying force that needs to be ruthlessly exterminated.

 

[Acanthus]

As far as China goes, their labor is gradually getting more expensive as people are buying middle class items such as cars (GM is doing real good in China). Eventually their labor force will not be able to compete as well, we will ship iPhone manufacturing to Africa. That is why they are emphasizing so much on hard science and math, so their next generation can compete on the technological front as opposed to just relying on manufacturing-based economy. That gravy train will run dry on manufacturing real soon for them.

Protectionism will not work. People are accustomed to a certain lifestyle where cheap prices of goods has contributed to a significant part of that. Would you want to pay $5k for a TV? Or $300 for a pair of Nike's?

The point is to adapt our economy so that we can shift our labor force from manufacturing to design as the primary economic engine. Manufacturing holds a less important significance in the economy after a country has been industrialized. We will never be able to compete on manufacturing and artificially forcing companies to hire here on these jobs will only drive them away. We need to improve our labor force's skills so that we can design CPUs, and let someone else manufacture it, which is what exactly Intel is doing. That way we keep our competitive advantage in technology design, and utilize other countries' competitive advantage in manufacturing so we can have these goods produced cheaply. This is the only win-win solution, provided that we can adapt our labor force to keep pace with this rapid changing world economy.

I missed this earlier. There are still companies that make shoes in America that are reasonably priced and high quality. There are also LCD panels made in the United States.

How can you not realize the simple math? 1/20th the income is not worth a 50% reduction in cost. It is not efficient to ship this shit halfway around the earth unless you are working people for slave wages.