
The U.S. economy is killing off the middle class - bootload
http://www.nytimes.com/2015/01/26/business/economy/middle-class-shrinks-further-as-more-fall-out-instead-of-climbing-up.html
======
d4nt
I have a theory that the classification of working class, middle class and
upper class will disappear as we go through the 21 century. They will be
replaced with two types of job:

1\. Jobs were you design things (code, graphics, marketing campaigns,
franchise models, sales scripts, hedged trades, screenplays, new business
models, retail store layouts, art, fashion etc) 2\. Jobs were you follow basic
instructions (flipping burgers, voice-over artists, uber drivers, sales,
retail manager, factory line worker, tax accountants etc)

The first category is a subset of the current middle class, but it's much
smaller.

Everyone in the second category is in for a rough ride. They will be
constantly competing with machines, algorithms and millions of other people
who can all follow the same manual that they have. Even jobs like sales where
you'd think there has to be a human involved will be gradually eroded. Human
intuition will increasingly be replaced by scoring algorithms and CRM reports.
Their persistence in following up with people will be replaced by lifecycle
emails, tracking algorithms and chatbots. And ever more transactions will be
pushed online anyway.

I also believe that we're at the point of saturating our hierarchy of needs.
Some people will try to monetise things like love, acceptance and respect of
others (I can already buy a Facebook girlfriend on Fiverr). But I think this
will be largely un-monetisable. Meaning we're in for mass unemployment. This
is not necessarily a bad thing though, so long as we drop the stigma. People
can be kept warm, dry, well fed and entertained with games and box sets, with
relatively little cost.

~~~
vacri
Tradespeople don't really design things, but neither do they just follow basic
instructions.

~~~
tomjen3
Tradespeople are (economically speaking) substitute goods for buying a new
good factory made. You can hire a guy to repair your washer or buy a new one.

In the future it will be even cheaper to buy new so there will be less need
for repairing or custom work. As for the rest - well computers can drive, why
shouldn't they be able to help your wiring your house? Or why shouldn't a
single electrician (probably in India) be able to help 10 non-electricians
with HoloLens wire a house?

------
sdoering
Actually the exact same thing is happening in Europe. A lot of formerly well
paying middle income jobs is being automated and rationalized, whereas a lot
of new low level income jobs and lot less high level income jobs are being
created.

Where good education formerly could save you and your family a good living, it
now has to be an excellent education, where even both persons in an household
have to work, to make ends meet. or in lower income jobs, in the case of
Germany, people have to work two or three jobs, or depend on substitutions
from the state.

It is economically speaking rational, to automate the bulk of the (middle
income) jobs, as there lie the most potential savings. So without regulation
this trend will continue (it will on the other hand continue even with
regulation, I believe).

Sadly, I have no idea, what can be done about that.

~~~
nofutureagain
The big difference is that in much of Western Europe, the combination of
social security, healthcare, pensions, social housing, eduction costs, public
transport etcetera means you don't rapidly fall out of the middle class even
if you lose your job.

As a result, there's much less talk about the "decline of the middle class" in
Europe. There has been no dramatic change.

~~~
olefoo
Thus the greater likelihood of violent revolution, or violent suppression
thereof in the United States.

Given what happened with Occupy the suppression part is well under way.

The head of the NYPD said he needed to be able to deploy a 150 strong unit
with machine guns to deal with protests yesterday.

[http://nypost.com/2015/01/30/nypd-to-launch-a-beefed-up-
coun...](http://nypost.com/2015/01/30/nypd-to-launch-a-beefed-up-
counterterrorism-squad/)

~~~
scarmig
350.

------
dpweb
This is hyperbole. Yes, there has been some movement low 31-34, middle 45-43,
high 25-22, since 2000. But also consider that 2000 was at the height of a
bubble where people were artifically wealthy. I wouldn't call a couple of
percentage points "killing the middle class".

Also, consider the labor participation rate. At a 36 year low. Less people are
working.
[http://data.bls.gov/timeseries/LNS11300000](http://data.bls.gov/timeseries/LNS11300000)

Without getting into the whole political argument about whether people should
be paid by the government when they do not work, or to the extent robots or
cold hearted business barons are killing jobs - or - whether these people
can't work or _choose not to_ because they can get by on govt. dole (or
working friends/family) - less people working will mean less income.

The survival of middle income families is a very real concern, but I don't
find the click bait headlines and exaggeration of what's happening
particularly helpful. We have too many areas in American life where instead of
taking a sober look at the problem, we stir people up by appealing to their
base fears and create narratives to scare people.

------
wsc981
I've taken a liking to James Altucher's post on LinkedIn where he also
explained why the middle class is dying:

[https://www.linkedin.com/pulse/20140407131300-5858595-10-rea...](https://www.linkedin.com/pulse/20140407131300-5858595-10-reasons-
you-have-to-quit-your-job-in-2014)

------
q2
This is happening in Asia also. A question arise as to why we work and how
fast should we work? In the absence of technology, many things (e.g: ability
to write this comment) are not possible. But technology is subsuming many
activities where people earn just sufficient amount for the peaceful life of
their families without bothering about loss of jobs or what position his
country stands in the GDP/productivity rankings ...etc.

Economic press has created a race among leaderships of nations on who is
developed(advanced) i.e. praiseworthy and who is not and many organizations
started preaching ways to improve productivity as if productivity only is the
ultimate goal of human life. Political leaders cannot dare to advocate
alternatives because that is suicidal for them, their countries ...etc.

I think, technology's effect on human life is like inverted bathtub curve i.e.
technology advancement to certain level is beneficial to society but beyond
that we enter region where costs/losses outweigh benefits if we consider
entire society. No doubt, there will be winners any time but as a whole
society loses and inequality may rise causing law and order issues and
impacting even winners indirectly. In that sense, technology is like level of
water in river and beyond certain level, it is not good for humanity.

World is highly decentralized and innovators or cultures who tasted success in
innovation won't agree that progress in certain technologies need to be
stopped or efforts need to be directed towards other required activities. So
technology progress always happen and jobs also gets destroyed as collateral
damage.

~~~
delackner
Political leaders cannot advocate alternatives like a guaranteed income for
everyone, only so long as the people fail to demand such measures.

The history of technology is a long progression of jobs that we don't have to
do anymore, freeing us up to both achieve more complicated tasks, and to
require fewer hours of human energy to achieve a certain level of pleasant
life for everyone.

McDonalds cook, taxi driver, self driver, brick layer, so many jobs today are
just on the edge of being unnecessary, and that is a great thing. Those people
would be much happier, and society as a whole much safer, if we just gave all
these people the money they need to live, and simply ask that they contribute
a little civic participation (talk to some old people, supervise children,
etc).

~~~
zaroth
> Those people would be much happier, and society as a whole much safer, if we
> just gave all these people the money they need to live, and simply ask...

The money they need to live? So... from cradle to grave "these people" should
simply be given all the food, clothing, shelter, education, entertainment,
transportation, etc. that they need and no need to earn any of it?

I assume the plan is to confiscate the money from the other people, the ones
that worked for about a century investing their money into developing the
technology, processes, and software to bring that level of AI into the world.
Pour money into the bottom, it's spent through the system, confiscate it at
the top, rinse, repeat?

This doesn't work because it turns out if you can't actually keep the money
you earn, you tend not to bother earning it.

------
machinebirth
I see these articles a lot. They often present similar data and confirm the
very long term trend. Without exception, none of the articles ever mention
that humans without jobs forever, will simply die out. Humans without means to
sustain themselves will simply die out. That is all. It could be different but
it is not. This is where we are. And it is natural. Our parents and their
parents died before us as we rose to power. Sure dying out and dying of old
age aren't necessarily the same but passing your genetic code on is passing
your genetic code on whether it is through a machine or a human. Humans are
still much better at reproducing our code than machines but not for long. When
this line is crossed the discussion will not be about dying middle classes but
about massive human population loss through famine and wars. It's inevitable
because no one simply gives their power away without dying. This applies to
your parents. And their parents. Get ready to die and don't be a wimp about
it. Your parents weren't. And neither were their parents.

------
jusmus88
Gosh, if only we had some context instead of trying to push a populist
narrative. Oh wait.

[http://1.bp.blogspot.com/-q83NyGTLock/UekhmnoX4tI/AAAAAAAABc...](http://1.bp.blogspot.com/-q83NyGTLock/UekhmnoX4tI/AAAAAAAABc8/2DTpx4H9Rug/s1600/family+incomes.jpg)

~~~
zaroth
This is a similar chart which reads quite differently...

[http://www.advisorperspectives.com/dshort/charts/census/hous...](http://www.advisorperspectives.com/dshort/charts/census/household-
income.html?household-incomes-growth-real-annotated.gif)

Also, I think you would be better linking here, which has several versions
with differnt groupings (per @r00fus' point) as well as the full discussion
behind it:

[http://www.aei.org/publication/census-data-on-income-
distrib...](http://www.aei.org/publication/census-data-on-income-distribution-
reveal-evidence-of-rising-income-levels-for-a-rising-share-of-american-
households/)

It's interesing data, but also missing the last 5 years which are crucial as
this is a recent phenomenon. The 3rd chart in the series I think best shows
what economists are calling the "lost decade" where we stopped making real
progress in upward mobility. Add another 5 years onto those series and I think
you would see we are going backwards now.

Edit: Shouldn't the top graph in my link be the same as your link? Now I'm
doubting these graphs are even 'correct' (methodology aside)

~~~
mrow84
The difference between the graphs are that the one linked by jusmus88 is
illustrating the distribution of incomes of "families", whereas all three in
the article you linked are for the distribution of incomes of "households".
These are two different ways of analysing the issue that give different
answers, and the differences are discussed in the article.

edit: Just to be clear, I'm not making any positive or negative statements
about the article, I just wanted to help you work out what it was you had
missed, and I think what I described is it.

~~~
zaroth
Thanks for pointing that out! I had saved both images to my phone and flipped
back and forth between them to try to understand, and all I could see changing
was the data! But you are absolutely correct it's "Families" in one and
"Households" in the other. Very interesting distinction...

------
lifeisstillgood
The telling point in this article is just glanced upon - that those who stayed
in middle class are covered by Medicare or welfare. That a free health care
system helps buffer people against sudden shocks - and without it the
hollowing out is worse.

~~~
zaroth
Medicare, and dozens of other welfare programs raise the marginal tax rate in
some parts of the curve up to 95% for the middle class. Since earning the
money is not free, and you keep virtually none of it, working more you end up
with less.

Increasing the payouts for earning less, not surprisingly, erodes the middle
class. Either you are determined enough to work more to earn less and maybe in
a few years come out on the other side of the chasm, or you work less and
immediately benefit from it.

Check out Figure 1 (page 6) in this CBO report, and note it's worse now than
when this was written;

[http://www.cbo.gov/sites/default/files/cbofiles/attachments/...](http://www.cbo.gov/sites/default/files/cbofiles/attachments/11-15-2012-MarginalTaxRates.pdf)

It's amazing how little value you actually gain from the first $60k of
earnings! If you prefer a more newsy analysis;

[http://www.economist.com/news/united-
states/21585010-america...](http://www.economist.com/news/united-
states/21585010-americas-welfare-state-not-working-nearly-well-it-should-
taxing-hard-up-americans#)

~~~
davidw
The US spends a huge portion of its GDP on health care - more than anywhere
else:

[http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...](http://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_%28PPP%29_per_capita)

But this sounds like politics, so ... article flagged.

~~~
Brakenshire
The US even spends more tax money as a percentage of GDP on healthcare than
Britain.

------
binarysolo
So, takeaway:

-Most jobs are computer-solvable, given enough time and resources.

-From a cost-benefit standpoint, people have strong incentives for automating higher-paying jobs than lower.

-People automating work and people allocating funds to automate said work will reap rewards.

-We as a whole really need to think about a world where a majority of people don't work and figure out how society works and maintains stability given those constraints. (Basic income, etc.)

-For those who haven't settled on what they want yet, they should prolly find work in something that's hard to solve by a robot (that also hopefully provides meaning and sustenance).

------
forrestthewoods
So, uh, looking at those charts.... good? When you see low, middle, and high
it's pretty clear that most of those loses are moving up to the high class. In
fact the high class has grown by as much as the middle class shrunk and then
some!

The issue doesn't seem to be that people are falling out of the middle class.
The real issue looks like, to me, that we're successfully graduating people
from middle to high but not from low to middle. The low class has shrunk a
teeny bit but is basically flat.

If instead low shrunk, middle stayed flat, and high grew that's be pretty
great. It'd mean everyone is moving up.

At least that's whatmy interpretation is. What do y'all think?

~~~
georgeecollins
From the article: "Until 2000, the reason was primarily because more Americans
moved up the income ladder. But since then, the reason has shifted: There is a
greater share of households on the lower rungs of the economic ladder."

The graphs are 1967-2014. If you look closely you can see that the "high"
group goes up until 2000, but not after. That is the point they are trying to
make.

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fsloth
Once again, time to suggest Thomas Pikettys "Capital in the 21st century" as
highly astute commentary on this.

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minthd
Any free links to the content ?

~~~
zaroth
Google search for the title and click through.

------
bootload
source: Brent Staples
[https://twitter.com/BrentNYT/status/559796286569062400](https://twitter.com/BrentNYT/status/559796286569062400)

