The Eroding Middle Class

The International Association of Machinists (IAM) is voting today on a negotiated contract between the Boeing Company and its leaders. A friend of mine, who is in the union, posted a Facebook comment that he is voting against the contract. The negotiated contract is a contraction of previous negotiated benefits. If the Union agrees to this contract, Boeing machinists will have their pension frozen, and new employees will not earn a traditional pension. However, the employees will receive a 401(K) including a guaranteed 4% match by the company, and a $10,000 signing bonus.

As much as some one would like to call this an attack on the middle class in the United States, I am conflicted whether this is an attack by the managerial class on the middle class or not. Although there seems to be confusion over what constitutes a middle class income, the average Boeing machinist wage is around $85,000 with benefits. For some, this would be seen as an upper middle class wage, while to others it is average.

I go back to my thought on whether this is an attack on the middle class or not? Income inequality, which decreased after WWII until 1970 when the gap began to grow again, was at a peak in 2006. However, one of my favorite editorialists reported some staggering detail this morning that I think anyone who is concerned with the decline of our country should pay attention too.

“In 1971,” wrote Glaston, “according to the Pew Research Center, 61% of all adults lived in middle-income households. By 2011, the middle-income share had fallen to 51%, while the lower-and-upper income sectors grew.” Although median income has not changed, the share that went to upper-income households grew by 17%, “while the middle-income share fell by 17 points.” This does not mean that the all of middle-class moved up to the higher-class, because according to Glaston there was a migration in both directions, increasing the gap between the upper and lower classes.

As much as we would like to blame immigration and globalization on these changes, studies have proven that technology has had the greatest impact on the shrinking middle-class. Input-substitution is a reality in our country. Wages get to a certain level and companies then look for other ways of increasing productivity; the work once done by people is now accomplished by machines. The reducing middle-class has huge social implications that we need to pay attention to.

Cornell University, in a recent research project, reported that “middle-income neighborhoods have declined from 65% to 42% between 1970 and 2009,” however, the number of people living in affluent and poor neighborhoods have more than doubled. “In sum, the middle class is shrinking and hard pressed to keep its head above water, while upper and lower-class Americans are increasingly likely to live in geographical concentrations of wealth and poverty.”

I, for one, am very concerned with this phenomenon. Politically we isolate ourselves from antagonistic ideologies, leading to the demonizing of those across the aisle. Socially, we live in our affluent or poor enclaves, demonizing those that live across the lake from us. All of this creates a tension that simmers below the surface. This tension emerges when some critical event happens leading to the burning down of a neighborhood.

Glaston reports an Aristotelian comment that reflects the above mentioned tension. “I worry about all this for the reasons Aristotle offered more than two millennia ago: Societies where the middle-class dominate are the most likely to be stable and decent.  The wealthy tend to be arrogant and heedless; the economically insecure, resentful and destructive. By Contrast, Aristotle observed, that members of the middle-class tend to have moderate desires, they are more open to reasonable persuasion, and they are more likely to be linked to one another by ties of civic affection.”

Although there is a debate on whether America is economically, at least from a macro perspective, declining or not, I think it is very clear that socially we have real issues. Politically we have declined to a dysfunctional system that is incapable of making decisions in an expeditious manner. Income-wise I think it is un-refutable that we are declining into a wider chasm of those who have and those who don’t. Soon our enclaves will have higher walls with broken glass embedded on the top to keep the riffraff out. The upper-class will shop at Safeway, and the lower-class will shop at Winco. All with a seething tension just waiting to boil over in violence.

And that is my thought for the day!

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