U.S. Middle Class
Introduction
The major shifts U.S. economy has experienced over recent years signify comparable changes in social fabric. The re-orientation of U.S economy from one based on manufacturing one based on services has introduced changes in how class is defined. Notably, a conventional social stratification of upper-middle-lower segments is no longer working in current economic ecosystem. Of particular significance for current purposes is how "middle class" has witnessed differential definitions in response to changing economic status. In a more conventional conception, U.S. middle class is used to refer to "median" earning workers in fixed-hour, manufacturing-based jobs. This conventional conceptualization has, however, been increasingly eroded by adopting high-skilled, flexible working hour, service-based practices in economic activities. There are, of course, multiple causes to a decline in what is broadly referred to as middle class. The question should be, accordingly, one of more accurate conceptualization in order to better identify, if possible, what went wrong for U.S. middle class. To prespectivize, U.S. middle class is compared to Canada's middle class for deeper insights about shifts in conceptualizations and practices. This paper aims, hence, to explore claims about U.S. middle class decline and to offer recommendations to reverse course at federal, state and personal levels.
This paper is made up of fix sections in addition to introduction: (1) Defining Middle Class, (2) U.S. & Canada: Diverging Middle Classes, (3) Recommendations: Federal Level, (4) Recommendations: State Level and (5) Recommendations: Personal Level. The Defining Middle Class section offers multiple definitions of U.S. middle class based on different criteria. The U.S. & Canada: Diverging Middle Classes section offers insights into differences between U.S. and Canada's middle classes. The Recommendations: Federal Level section offers recommendations to help reverse course of U.S. declining middle class at federal level. The Recommendations: State Level section offers recommendations to help reverse course of U.S. declining middle class at state level. The Recommendations: Personal Level section offers recommendations to help reverse course of U.S. declining middle class at personal level.
The concept of middle class is a complex one. Embedded in economic activities and social practices, middle class – in a U.S. context – has been defined based on different criteria. The recent changes in economic activities have, moreover, set middle class concept in further flux. If anything, middle class has come to be self-defined by large, surveyed segments of U.S. society based on perceived status of personal income and consumption. In surveying samples of U.S. population, Gallup shows increasing segments of surveyed samples are self-identifying as belong to lower income brackets and class compared to earlier results showing identification as middle class (Smith). In spite of a lack of specific metric for measuring middle class, a general perception among surveyed samples is indicative of a broad sense of decline in multiple quantifiable and non-quantifiable criteria.
In contrast, quantifiable metrics used to identify a middle class segment exist in abundance and cover a broad range of criteria. Notably, middle class can be identified based on income, wealth, consumption or aspiration ("What is middle class, anyway?"). Based on income, middle class includes everyone but poorest 20% and wealthiest 20%. Based on wealth, middle class includes all persons who have saving and investments above or below a specific limit are said to be wealthy or in debt respectively. Based on consumption, middle class includes all persons receiving non-cash government benefits such as food stamps, or savings which are not usually accounted for ("What is middle class, anyway?"). Based on demographics, middle class is decided based on age, education and class, variables adopted as "less volatile" compared to income and wealth. These criteria are, of course, broad and can vary largely based on collected statistical data as well as spanned periods. Yet, each criterion has specific merits which can account for current (perceived) state of decline in U.S middle class. Further, each criterion appears to emphasis, given current perceptions of U.S. economy, a state of decline in standard of living on multiple dimensions including, most notably, consumption, home ownership, college admission and, not least, employment compensation.
U.S. & Canada: Diverging Middle Classes
The current presidential campaign is, probably, one most notable indicator of perception of middle class status among U.S. citizens at large. If anything, college debt, home ownership, outsourced U.S. jobs and universal healthcare are most common issues discussed by all candidates. The recurrence of issues is an indicator of, if anything, how broader segments of U.S. society are experiencing a decline in standards of living particularly as compared to earlier perceptions of middle class as a relatively affluent class. The status of U.S. middle class is better understood when compared to Canada's middle class.
In an extensive analysis performed by The New York Times, U.S. is shown to lag behind in income raises enjoyed by lower and middle classes in developed countries, including Canada, over last 30 years (Leonhardt and Quealy). Compared to Canada, U.S. is shown to have lower after-tax middle-class income and lower pay in general since 2010. This decline in U.S. middle class pay and a broad sense of a lower standard of living is, according to The New York Times analysis, attributed to: (1) U.S. declining education standards, (2) U.S. companies sharing less wealth with employees and (3) U.S. less aggressive measures to redistribute income. The factors highlight, if anything, deeper changes in U.S. economy.
Compared to Canada, U.S. education system appears to be increasingly ill adapted to current employment needs. By offering quality education at prestigious but most expensive colleges and universities, only a "1%" college graduates are able to reap benefits of a knowledge-based, service-oriented economy requiring more sophisticated skills hardly offered everywhere. This situation leaves substantial portions of college and university graduates with an education offering little, if any, edge in a highly competitive job market. As well, by unevenly distributing corporate profits among works, U.S. companies are creating a pay gap which further broadens income inequalities between workers in same companies and across industries. Not least, U.S. has a historical, aggressive neoliberal approach to economic activity. By outsourcing at accelerated rates most public services, U.S. Government offers little, if any, safety net for most vulnerable segments unable to afford increasingly underfunded public education (and hence more expensive) and healthcare services. These developments influence, accordingly, U.S. middle class in most harmful way compared to effects on middle class in earlier decades even during periods of economic slowdown or recession.
What Can Federal Level Do?
The U.S. economy has barely recovered from one of worst economic recessions in history. This could be considered as an excuse in order to defer federal intervention – burdened as is – to alleviate economic pain. Yet, U.S. Government does have responsibility to cater for greater good of U.S. population. The specific interventions and approaches adopted by U.S. Government should consider, above anything else, for current macroeconomic climate. Given how complex and integrated U.S. economy is at state, federal and international levels, U.S. Government should gradually introduce structural "reforms" aimed at repairing current imbalances in specific economic sectors.
Notably, U.S. education suffers from structural imbalances making an increasing expensive college education, paradoxically, less viable in current job market. By changing current federal funding system based on which public universities and colleges operate, new programs can be introduced in order to meet specific job market needs. This should be complemented by more federal effort to support more disenfranchised student populations, particularly African-American and Hispanic students. The federal government should restructure current corporate tax system in order to make lower paid workers able to share more corporate profits. By offering tax incentives, federal government can initiate companies to offer better pay for lower paid workers. On a social level, federal government should broaden Public Private Partnerships (PPPs) in order to create a humane safety net for workers once self-identified as middle class become increasingly vulnerable to economic crunches and growing inflations eating up slight pay raises.
What Can State and Local Level Do?
At state and local levels, regional and local companies should contribute to regional and local economies respectively. By adopting better hiring practices (e.g. optimizing recruitment of local skill and knowledge pool), enhancing labor chain value (e.g. by reaching out to seniors on college campuses during job fairs) and promoting partner chain value (e.g. by expanding on existing narrow, profit-focused, quarter-based partnerships into long range, more sustainable practices cutting across different business activities) – by so doing, companies can leverage state and local economies and hence create more opportunities and, ultimately, higher pay.
Given comparative independence of states and local authorities, specific legislations can be passed in order to regulate workforce in light of recent job market developments. For examples, international border states can introduce specific labor legislations in order to legalize (or not) status of temporary workers at southern borders. In so doing, labor pool is better optimized at minimal economic and political cost and, not least, eliminating, at least in part, a general perception of "stolen" U.S. jobs by foreign workers.
What Can Individuals Do?
At a micro, personal level, fresh college graduates (majority of middle class in younger age brackets) should develop personal and professional skills for a hyper competitive job market. Indeed, education in recent years has expanded in concept well beyond classroom only to put more pressure on graduates to invest in knowledge base and skill portfolio in innovative ways. For instance, by creating companies, instead of working for or in companies, college graduates can become entrepreneurs who create, not seek, jobs. This requires, of course, extensive preparation at multiple levels but also "natural" readiness. International education and multiple internships, prior to graduation, are complementary pathways college graduates can seek to expand on knowledge base and skill portfolio.
Works Cited
Leonhardt, David, and Kevin Quealy. "The American Middle Class Is No Longer the World’s Richest." The New York Times. The New York Times Company, 22 April 2014. Web. 28 April 2016.
Smith, Noah. "Decline of the U.S. Middle Class." Bloomberg View. Bloomberg, 28 March 2016. Web. 28 April 2016.
"What is middle class, anyway?" CNN Money. CNN, n.d. Web. 28 April 2016.
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