The Collapse of the Middle-Class Job


Our middle-income jobs are disappearing. That fact may be disputed by free-market advocates, who want to believe Barack Obama when he gushes, “We’re in the middle of the longest streak of private sector job creation in history.”

But the evidence shows that living-wage, family-sustaining positions are quickly being replaced by lower-wage and less secure forms of employment. These plentiful low-level jobs have padded the unemployment figures, leaving much of America believing in an overhyped recovery.

The Incredible Shrinking Job

New research is beginning to confirm the permanent nature of middle-income job loss. Based on analysis that one reviewer calls “some of the most important work done by economists in the last twenty years,” a National Bureau of Economic Research study found that national employment levels have fallen in U.S. industries that are vulnerable to import competition, without offsetting job gains in other industries. Even the Wall Street Journal admits that “many middle-wage occupations, those with average earnings between $32,000 and $53,000, have collapsed.”

Productive Workers, but Less of Them

High-salaried jobs in technology still exist, but they’re available to fewer people as machines become smarter. Netflix, for example, serves 57 million customers with less than 2,200 employees, who have a median salary of $180,000. Google is worth $370 billion but employs only about 55,000 workers (50 years ago AT&T was worth less in today’s dollars but employed about 750,000 workers). Facebook’s messaging application WhatsApp has 55 employees serving 450 million customers.

As jobs are downsized, profits are maximized. Apple makes over $500,000 per employee; Facebook and Google are both over $300,000; Exxon and Phillips 66 are both well over $250,000; Merck and Allergan and Pfizer are all significantly over $100,000. Just 25 years ago GM, Ford, and Chrysler generated a combined $36 billion in revenue while employing over 1,000,000 workers. Today Apple, Facebook, and Google generate over a trillion dollars in revenue with 137,000 workers.

Researchers at the University of Chicago have estimated that half of the labor decline in this century is due to the replacement of people with computers and software. Oxford University researchers forecasted that half of all jobs will be performed by machine by the 2030s.

More Jobs Lost to the “Gig Economy”

A recent Harvard/Princeton study concluded that the increase in alternative work arrangements — contract and ‘gig’ jobs — is impacting previously stable sectors such as transportation, information technology, education, health care, and public administration.

Contract work is even invading the low-income ranks, making them yet lower-income, as in Silicon Valley, where tech experts are increasingly being served by janitors, bus drivers, food service workers, and security guards who are no longer employees with benefits, and who make only about 70 percent of the salaries of hired employees.

A Solution: The Guaranteed Income

We need the assurance that every American family receives a sufficient living income as compensation for the great productivity and unprecedented levels of wealth derived from decades of new technologies funded by our tax dollars. We and our families have all contributed our labors and taxes over the past three-quarters of a century. But social equanimity lags far behind finance and technology, and thus the relatively few people positioned to exploit this new knowledge have reaped most of the benefits, in many cases under the guise of achieving “self-made” fortunes. The truth is much different.

Our phones, our Internet searches, our medications, our transportation systems, and our national security all originated with our tax dollars. Entrepreneurs deserve compensation for their initiative and innovation, but for the most part the nation’s prosperity has arisen from the productive commons that is our heritage. A guaranteed income will only come about if 35 years of redistribution to the rich is reversed.

How to pay for it? A financial speculation tax on the rich and, for the poor, a tradeoff of safety net benefits for the security of a guaranteed income. And, most significantly, through the massive stimulus that will result from millions of people made productive again, as the guaranteed income offers them opportunities to improve their lives.


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