
The “middle class” myth: Here’s why wages are really so low today - mikeevans
http://www.salon.com/2013/12/30/the_middle_class_myth_heres_why_wages_are_really_so_low_today/
======
johnmaynard
Americans have a funny idea about what the middle class is compared to what I
know in the UK.

He talks about people working in meat processing as being middle class if they
get a good wage. WTF? In my mind middle class jobs are doctor, lawyer,
professor, politician. Then the aristocracy are upper class. I guess you don't
have an aristocracy in the US who I don't know what counts as upper class
there.

~~~
officemonkey
I tend to break "middle-class" from "upper-class" right around the $100,000
salary mark.

If you're making $100,000/year, you're very likely upper class in the U.S. Of
course, this doesn't work well in big cities (where the cost of living raises
the bar to upper class a bit,) but it's remarkably accurate for most places in
the country.

~~~
ImprovedSilence
it might be enough to make a 22 yr old in Mississippi upper class, but in no
sense of the word is 100k upper class. Especially if you've got a family. I'd
say upper class starts where you have enough money to live off the interest.
Drs, lawyers, etc are upper middle. And industrial wage earners and most fresh
college grads are lower middle. 100-200k earners would be middle middle.
Aristocracy isn't really much of a thing. Yeah, there's plenty of "old money",
but that falls into the upper class category. As stated in another comment, in
the US, it's really the size of you bank account, not your name, or your
accent, or where your from, or what school you went to, or what "estate" you
live in that matters.

~~~
iamjustin
>100-200k earners would be middle middle?

100-200k for households puts you in the top 10%. Individuals, maybe top 5%.
How is that not upper class!?

I wish I was even low middle according to your scale...

For reference:

    
    
      Income in 1999
    
      Households..................................105,539,122 100.0
      Less than $10,000............................10,067,027   9.5
      $10,000 to $14,999............................6,657,228   6.3
      $15,000 to $24,999...........................13,536,965  12.8
      $25,000 to $34,999...........................13,519,242  12.8
      $35,000 to $49,999...........................17,446,272  16.5
      $50,000 to $74,999...........................20,540,604  19.5
      $75,000 to $99,999...........................10,799,245  10.2
      $100,000 to $149,999..........................8,147,826   7.7
      $150,000 to $199,999..........................2,322,038   2.2
      $200,000 or more............................. 2,502,675   2.4
    
      Median family income (dollars)..................50,046
      Per capita income (dollars).....................21,587
    
      Median earnings (dollars):
      Male full-time, year-round workers..............37,057
      Female full-time, year-round workers............27,194
    

[http://censtats.census.gov/data/US/01000.pdf](http://censtats.census.gov/data/US/01000.pdf)

~~~
Crito
Unless you live in a city, I'd put lower-middle somewhere around 45k-90k per
household. The kind of range where buying and maintaining one or two slightly
used cars isn't a big deal, and the idea of choosing between rent and
groceries is alien.

Middle-middle probably kicks in when buying a nice new car every few years
isn't a big deal, and your kids all have college funds started.

Upper-middle kicks in when buying a nice _german_ car every few years is
assumed, and you plan on paying your kids college tuition without much
thought.

------
nilkn
> According to the laws of the free market, though, none of that is supposed
> to matter. All that is supposed to matter is how many people are capable of
> doing your job.

While by no means do I disagree with the article as a whole, this seems
obviously false. Why would you not expect a higher wage for a more dangerous
job, even if otherwise it doesn't have a higher skill or knowledge barrier to
entry? I know I'd certainly want to make more money shoveling taconite into a
blast furnace compared to taking fast-food orders. Given two such jobs at the
same wage, I'd take the second one.

~~~
mattmcknight
the author should have said "capable and willing", not just capable.

I did disagree with the article as a whole though- it was union wages and
government enforced monopolies on union labor supply that pushed many jobs to
countries with lower costs. What this purely nationalistic view fails to
account for is how much wages worldwide have risen over the past 50 years.

[http://www.aei-ideas.org/2013/12/chart-of-the-greatest-
and-m...](http://www.aei-ideas.org/2013/12/chart-of-the-greatest-and-most-
remarkable-achievement-in-human-history-and-one-you-probably-never-heard-
about)

------
hooande
This article could be summarized as: "Things were better for working people
when this country had strong unions."

A response could be summarized as: "Times, they are a' changin'"

* There are 50% more people in the US than there were in 1965, the year used as an example in the article. Up to 316MM from 194MM [1]. This means more people competing for jobs, which weakens the power of unions. Many of those people are immigrants from countries where the US dollar goes a long way. It's hard to bargain when there are dozens of applicants lined up, many of which have at least a two year degree.

* Market consolidation happened. This means that workers can't easily move to another job if they don't like their wages. Consolidation also means more competition with big enemies and fiercer battles for margins. Small companies have room to negotiate. Big companies live and die by quarterly earnings reports, and lowering wages is always a convenient go to.

* Unions cause obvious financial problems. Most unions do far more good than harm. But there are multiple examples of cutting open the golden goose. Many unions have collectively bargained _too_ well, nearly bankrupting their employers with poorly calculated pensions and benefits. Once a union fights hard to earn a concession they can almost never give it back, no matter how damaging it becomes.

Unions are not bad things. Corporations have a fiduciary responsibility to get
as much work out of employees for as little compensation as is practical. It's
good to have that balanced by organizations who have a responsibility to their
members to get as much from the corporation as is practical.

The lack of unions and organized labor isn't what's ailing the middle class of
this country. Capitalism is a greedy optimization function. At the extremes it
doesn't do "middle". Not to discuss a different topic, but ideas like basic
income combined with increased automation could be like a collective
bargaining for every citizen. By making work effectively optional, employers
will lose some of their leverage and employees won't have to be on the
defensive.

[1] [http://www.multpl.com/united-states-
population/table](http://www.multpl.com/united-states-population/table)

~~~
Guvante
> Corporations have a fiduciary responsibility to get as much work out of
> employees for as little compensation as is practical.

Only in the current backwards mindset that your employees are an expense.

Properly managed people are capable of amazing things, and can be turned into
an asset easily.

In theory the prevalence of white collar work should make this easier, but the
stock market has turned everyone into thinking of just the next quarter. And
honestly you will never get a raise out of an employee in the first quarter.

~~~
waps
Only for unsolved problems, and only if you can actually afford it (both
mostly mean competition is limited or non-existant).

Otherwise, that won't work. It's a matter of time (decades, probably, but
limited) until IT work turns into that as well. There was a time when helpdesk
work was a well-paid satisfying job. Unions were merely a consequence of
effectively 100% employment, and a pretty horrible one at that.

We're returning to the middle ages, it's as simple as that. I don't mean
technologically (the middle ages weren't all that primitive, they had
knowledge, they just didn't have any economic application for it in a lot of
places. But look at the cathedrals and trading houses they built : the problem
was not that know-how had disappeared entirely, it just wasn't useful in 99%
of places). I mean the employment situation : 95%+ unemployment (if you don't
count subsistence farmers, and you shouldn't).

~~~
Guvante
> Only for unsolved problems, and only if you can actually afford it (both
> mostly mean competition is limited or non-existant).

You are taking a very naive viewpoint of work. If you abstract everything
away, of course it is impossible to find value in your employees.

Lets take a simple example, say a Walmart employee who stocks shelves. Walmart
will figure out how efficient they think a person should be, lets say they
determine it should take 20 minutes to stack a shelf.

Now lets take Bob, Bob can do a shelf in 15 minutes without too much effort.
Unless Walmart finds a way to encourage Bob to go above and beyond, Bob will
_never_ do 15 minute averages, why would he?

By treating Bob as an expense you have thrown away 33% of your capacity. The
difficulty becomes finding the Bobs and deducing how to encourage them
properly.

------
Rylinks
>Stanley’s wages would be the equivalent of $17.17 today — more than the
“Fight For 15” movement is demanding for fast-food workers. Stanley’s job was
more difficult, more dangerous and more unpleasant than working the fryer at
KFC (the blast furnace could heat up to 2,000 degrees). According to the laws
of the free market, though, none of that is supposed to matter.

What "laws of the free market" are those?

~~~
VikingCoder
Supply and demand. If there are an over-abundant supply of workers, then wages
should tend to lower over time.

~~~
Rylinks
Sure, but a job being more difficult, more dangerous and more unpleasant
should result in a lower supply of workers for that job. If two jobs pay the
same, a worker will choose the less unpleasant one.

~~~
jedmeyers
So the unpleasant work will have pay more.

------
at-fates-hands
This article has so many fatal flaws, I have no idea where to start.

For starters - Unions are great, I mean, just ask Detroit how awesome they
are. The unions absolutely buried that city in unfunded pensions:

[http://www.freep.com/interactive/article/20130915/NEWS01/130...](http://www.freep.com/interactive/article/20130915/NEWS01/130801004/Detroit-
Bankruptcy-history-1950-debt-pension-revenue)

"Even in recent years, when no one questioned that the health care tab had
been ballooning, city leaders failed to cut costs because of intense pressure
from unions. Adverse court and arbitration rulings also stymied the city’s
best efforts to cut. The city’s spending on retiree health care soared 46%
from 2000 to 2012, even as general fund revenue fell by 20%."

From the article: "The anti-labor movement’s greatest victory has been in
preventing the unionization of the jobs that have replaced well-paying
industrial work."

This is such a myth. Right now there's a HUGE shortage of skilled labor in
this country - most in non-unionized fields:

[http://www.scdigest.com/ontarget/13-11-06-3.php?cid=7555](http://www.scdigest.com/ontarget/13-11-06-3.php?cid=7555)

"Companies that make tangible products are struggling to find candidates for
about 237,000 job openings. To put that figure in perspective, it's 89,000
more than the entire U.S. economy created in September."

"But worse, the under 30 crowd simply does not see manufacturing work as an
attractive option. That may be due to some misconceptions about new age
manufacturing jobs, says Paul Gerbino, head of ThomasNet News.

Many young workers don't even think about manufacturing as a career "because
they don't realize that factory jobs are not what they were in the old days,"
says Gerbino. "Many of these jobs involve sophisticated technology" he told
Fortune, and with that comes improved pay. Salaries can start at $50,000 or
more, and climb to well over $100,000 a year for skilled, experienced
engineers and technicians.

The Thomas.Net study found that 59% of small and medium-size manufacturers are
planning to hire skilled trade workers - that is, if they can find them."

Not exactly a ringing endorsement for the author's assertion we need more
unions to protect the "working wages".

~~~
EliRivers
_Right now there 's a HUGE shortage of skilled labor in this country_

Maybe if they paid more than _un_ skilled labour, they'd fill those posts.

www.nytimes.com/2012/11/25/magazine/skills-dont-pay-the-bills.html

~~~
at-fates-hands
I'm not buying that - not only from the OP's article, but all of the press
fast food workers are getting because they feel they aren't getting paid
enough.

From what I know and what I've read, you have to be at least an assistant
manager before you'll see the same wages you can make as a skilled worker.
Most asst. managers make around $40K a year plus benefits. Just like my
article pointed out, most skilled laborers START at $50K and go up from there.
If I was 23 and making $50K with a car payment and no kids and no family, I'd
be living the high life!

~~~
EliRivers
_most skilled laborers START at $50K and go up from there_

"At GenMet, the starting pay is $10 an hour. Those with an associate degree
can make $15, which can rise to $18 an hour after several years of good
performance."

40 hours a week for 52 weeks a year on 10 an hour comes out to 20888 dollars.
That's a lot less than 50000.

Got a degree and been there for several years? 40 hours a week for 52 weeks a
year on 18 an hour comes to 37440. That's a lot less than 50000.

~~~
at-fates-hands
A lot depends on what industry you're in:

[http://www.bls.gov/oes/current/oes472031.htm](http://www.bls.gov/oes/current/oes472031.htm)

Residential Building Construction: $41,910 Performing Arts Companies: $57.710

~~~
EliRivers
Those are the _mean annual wages_. Starting wages are much, much less than the
50000 starting wage (and most of those mean annual wages are themselves less
than the "50000 starting wage").

------
patrickg_zill
What will it matter what a US-based slaughterhouse worker is paid, when
WalMart gets its way and is able to import Chinese-produced, Chinese-
slaughtered, and Chinese-packaged meat?

Already much of the seafood is from Thailand and Chinese sources (check the
label at your local supermarket).

(And how often is such food tested for antibiotics that are legal there, but
banned here? Is a question I would like the answer to...)

~~~
kelnos
Agreed. And also, wouldn't effectively raising the minimum wage to ~$20 and
jacking up wages across the board cause the price of goods to increase enough
such that a $20/hr wage is below the poverty line? That money has to come from
_somewhere_ , and I imagine most employers would elect to pass those costs on
to the consumer.

~~~
stefan_kendall
Smaller companies would fold, larger companies would pay more in the short
term, and become much more capital efficient in the long-term. When the
minimum wage increases, the ROI of replacing people with machines changes, and
yields higher R per I.

If just the "companies that can bear it" bear it, you'll get less of those
stores, as the expected profit yield per store decreases. Less stores is less
competition, which will yield higher prices.

------
jamesaguilar
> According to the laws of the free market, though, none of that is supposed
> to matter. All that is supposed to matter is how many people are capable of
> doing your job.

This statement about the "laws of the free market" is an erroneous claim. Look
up "compensating differential."

~~~
jbellis
I had to look it up. For the lazy:
[http://en.wikipedia.org/wiki/Compensating_differential](http://en.wikipedia.org/wiki/Compensating_differential)

------
bluedino
Nice try. The author tries to give the credit to unions. The author forgets to
note that the steel industry was in a 100-year long boom in the United States.
We were making the majority of steel used in the world.

He also uses the year 1965. Just a few years later in the 1970's the steel
industry in this country started to take a huge dive. Why? _They priced
themselves out of the market._ Steel was cheaper everywhere else.

One look at this graph tells a grim story. Imagine if it went back to the
1900's instead of just 1980.

[http://www.marketsize.com/blog/wp-
content/uploads/2011/05/Ir...](http://www.marketsize.com/blog/wp-
content/uploads/2011/05/IronSteel.jpg)

Can you imagine what the air quality, or lack of was like back then?

Now, just multiply the loss of the steel industry with all of the others that
we've lost over the years, like the auto industry. It's easy to see where the
jobs went. The rest of the world simply caught up.

------
iaskwhy
Food industry is actually one of the easiest for consumers to change since a
good percentage of the population in the US does have access to markets with
lots of providers, right? I know it's like that in most (all?) European
counties. You go to the supermarket and you decide which pockets you want to
fill: the local producer or the guy from the other continent far far away.

It's easier in some counties. For example, while in London, I was able to buy
a very good percentage of local food, even bio stuff. As I travelled through
Europe last year, I was able to do the same in every country I went to. I was
driving around and that certainly helped getting to the big supermarkets but I
also went to smallers shops and, while not perfect, it was still possible to
choose products based on its origin.

~~~
jedmeyers
If you want bananas in Australia - tough luck, mate.

~~~
iaskwhy
This is kind of obvious but if there are no local producers of something, like
bananas in Australia, you have some options: do not buy it (you don't need to
eat everything), buy it from a responsible source (tip: buy bananas from the
Madeira Island, those are great!), add an exception to your .localignore brain
file.

Now, I went on to check what's the closest source of bananas for Australia
and, well, Australia does produce around 200k tonnes of bananas every year[1]:
[https://www.dropbox.com/s/iomsvbzcaizcfh7/FAOSTAT_2014-01-02...](https://www.dropbox.com/s/iomsvbzcaizcfh7/FAOSTAT_2014-01-02_23-24-42.png)

Sources: [1] [http://faostat3.fao.org/faostat-
gateway/go/to/download/Q/QC/...](http://faostat3.fao.org/faostat-
gateway/go/to/download/Q/QC/E)

~~~
jedmeyers
Now here is the problem: since Australia is "protecting" local producers and
does not allow foreign grown bananas on the market Australians have to pay
ridiculous prices for them, or wait until they rot and pay half the price, or
just not have them at all.

------
pbreit
I think perhaps in the US, unions have given themselves a bad name with some
particularly excessive contracts. I'm thinking of the unions who hold their
companies hostage to the point of bankruptcy.

------
dredmorbius
While there's some truth in this article, there's a _lot_ of confusion as
well.

Edward McClelland claims that "the laws of the free market", differing
compensation for different types of work, and for work of differing degrees of
unpleasantness and risk, should be compensated equally. While there are some
within present economic circles who'd argue that, if you go back to Adam Smith
(insufficiently read by either economists _or_ their critics), you'll find he
actually expands at some length on this in Chapters VIII and X of Book I of
_The Wealth of Nations_. Edited for length (the 18th century was a time of
considerably more leisurely writing...).

The precis: general wage levels should cover the basic needs of survival, and
are established by whether or not general employment is growing, steady, or
declining, with the favorability to labor being best in the first and worst in
the last case. Compensation for specific types of works varies according to
five factors identified by Smith: agreeableness of the work (which reduces
pay), cost of acquiring a skill (which increases it), regularity of employment
(decreases), trust required of the worker (increases), and the probability of
success (less risk: lower reward).

Incidentally, this answers the question of why college professors are
relatively poorly paid ("If you're so smart, why aren't you rich?"): while the
job requires considerable education, it's agreeable, _highly_ regular,
relatively low on the trust metric, and (for tenured positions) carries very
low risk. And hence: the pay is adequate, but generally modest. Back to
Smith....

First, Chapter VIII notes that it's the increase or decrease in the economic
output of a country, _not_ its total size, which sets the prevailing wage
rate. A smaller economy growing faster than a larger one will pay better yet
have lower prevailing prices. Smith also notes that pay must always be
sufficient to cover living expenses, a point somewhat lost on WalMart and
McDonalds of late:

 _A man must always live by his work, and his wages must at least be
sufficient to maintain him. They must even upon most occasions be somewhat
more, otherwise it would be impossible for him to bring up a family, and the
race of such workmen could not last beyond the first generation...._

 _There are certain circumstances, however, which sometimes give the labourers
an advantage, and enable them to raise their wages considerably above this
rate, evidently the lowest which is consistent with common humanity._

 _When in any country the demand for those who live by wages, labourers,
journeymen, servants of every kind, is continually increasing; when every year
furnishes employment for a greater number than had been employed the year
before, the workmen have no occasion to combine in order to raise their wages.
The scarcity of hands occasions a competition among masters, who bid against
one another in order to get workmen, and thus voluntarily break through the
natural combination of masters not to raise wages...._

 _It is not the actual greatness of national wealth, but its continual
increase, which occasions a rise in the wages of labour. It is not,
accordingly, in the richest countries, but in the most thriving, or in those
which are growing rich the fastest, that the wages of labour are highest._

In Chapter X, wage differentials by type of work:

 _The five following are the principal circumstances which, so far as I have
been able to observe, make up for a small pecuniary gain in some employments,
and counterbalance a great one in others. First, the agreeableness or
disagreeableness of the employments themselves; secondly, the easiness and
cheapness, or the difficulty and expense of learning them; thirdly, the
constancy or inconstancy of employment in them; fourthly, the small or great
trust which must be reposed in those who exercise them; and, fifthly, the
probability or improbability of success in them._

 _First, the wages of labour vary with the ease or hardship, the cleanliness
or dirtiness, the honourableness or dishonourableness, of the employment. Thus
in most places, take the year round, a journeyman tailor earns less than a
journeyman weaver. His work is much easier. A journeyman weaver earns less
than a journeyman smith. His work is not always easier, but it is much
cleanlier...._

 _Hunting and fishing, the most important employments of mankind in the rude
state of society, become, in its advanced state, their most agreeable
amusements...._

 _Secondly, the wages of labour vary with the easiness and cheapness, or the
difficulty and expense, of learning the business._

 _When any expensive machine is erected, the extraordinary work to be
performed by it before it is worn out, it must be expected, will replace the
capital laid out upon it, with at least the ordinary profits. A man educated
at the expense of much labour and time to any of those employments which
require extraordinary dexterity and skill, may be compared to one of those
expensive machines...._

 _The difference between the wages of skilled labour and those of common
labour, is founded upon this principle...._

 _[I]n order to qualify any person for exercising the one species of labour,
... [custom imposes] the necessity of an apprenticeship.... During the
continuance of the apprenticeship, the whole labour of the apprentice belongs
to his master. In the meantime he must ... be maintained by his parents or
relations... Some money, too, is commonly given to the master..... [O]n the
contrary, the labourer, while he is employed about the easier, learns the more
difficult parts of his business... It is reasonable ... [that] the wages of
mechanics, artificers, and manufacturers, should be somewhat higher than those
of common labourers.... This superiority, however, is generally very small:
the daily or weekly earnings of journeymen in the more common sorts of
manufactures ... are, in most places, very little more than the day-wages of
common labourers. Their employment, indeed, is more steady and uniform, and
the superiority of their earnings, taking the whole year together, may be
somewhat greater.... Education in the ingenious arts, and in the liberal
professions, is still more tedious and expensive. The pecuniary recompence,
therefore, of painters and sculptors, of lawyers and physicians, ought to be
much more liberal; and it is so accordingly._

 _Thirdly, the wages of labour in different occupations vary with the
constancy or inconstancy of employment...._

 _A mason or bricklayer ... can work neither in hard frost nor in foul
weather... What he earns, therefore, while he is employed, must not only
maintain him while he is idle, but make him some compensation for those
anxious and desponding moments [he awaits employment]..._

[Any contractor should be familiar with this circumstance ... Ed]

 _When the inconstancy of employment is combined with the hardship,
disagreeableness, and dirtiness of the work, it sometimes raises the wages of
the most common labour above those of the most skilful artificers. A collier
working by the piece is supposed, at Newcastle, to earn commonly about double
[or more] ... the wages of common labour ... [arising] altogether from the
hardship, disagreeableness, and dirtiness of his work...._

 _Fourthly, the wages of labour vary according to the small or great trust
which must be reposed in the workmen._

 _The wages of goldsmiths and jewellers are everywhere superior to those of
many other workmen ... on account of the precious materials with which they
are entrusted.... Such confidence could not safely be reposed in people of a
very mean or low condition...._

[Entrepreneurs pay attention to the next .. Ed]

 _Fifthly, the wages of labour in different employments vary according to the
probability or improbability of success in them._

*The probability that any particular person shall ever be qualified for the employments to which he is educated, is very different in different occupations.... In a perfectly fair lottery, those who draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession, where twenty fail for one that succeeds, that one ought to gain all that should have been gained by the unsuccessful twenty.

[http://www.gutenberg.org/files/3300/3300-h/3300-h.htm](http://www.gutenberg.org/files/3300/3300-h/3300-h.htm)

------
xname
I was thinking, where this sh#t came from, why am I reading this sh$t? I
traced back to feedly, then I found this is from hacker news.

Why this sh*t is posted on hacker news?????

Why????????????????????????????????????????

