Impact of Globalization to the Decline of Middle Class in the United States
Introduction
Globalization has helped to raise the economy of other countries. One of globalization activities is the relocation of factories and offices to areas that are less congested and lower cost compared to central cities. This spatial dispersal of economic activity and the technological advances have resulted to a wide range of professional activities, operations and management, generation of low wage jobs, and expansion of social network (Sassen, 2011). These effects have benefited some low economic countries but cause the decline of countries with most advanced economies. In the United States, the middle class are the most vulnerable to the decline. Globalization has caused the stagnation of wage for middle class, growing inequality and others (Sassen, 2011). Due to this reasons, globalization becomes associated with the decline of the middle class in the US. The impacts were further explained by Saskia Sasses. In her works, she discussed how globalization has affected geography which is one of the major factors that causes the decline of the middle class in the US. The key characteristics of the global economy that is important in understanding globalization are examined. Additionally, the impact of globalization on urban systems and the effect of rising immigrant populations are analyzed.
Globalization brought changes in the geography, institutional framework and composition in the economy of the world. These changes had major effect for cities. During 1800’s, world economic activities mainly consisted of extracting natural resources and trading. The cities played an important role in the economic activities by serving as servicing centers. On the other hand, cities in the colonial countries of France, Spain, Germany, and Portugal served as international gateways. However, cities served as administration and commerce centers. The production sites were built in harbors, factories, plantations, and mines. Presently, world economic activities still includes extraction of natural resources, manufacturing, and international trade but new and emerging activities overshadowed them. Such activities include the development of global financial markets and the expansion of global markets (Sassen, 2013).
Globalization changes the composition, geography, and institutional framework of the global economy today. The value of financial transactions had sharper growth compared to trade. In the mid-1980’s, the main component of foreign direct investment (FDI) shifted from manufacturing and raw materials extraction to investment in services. Geography plays an important role in the global economy. Geography is important in determining the resources for international flows that are composed of mining goods, raw materials, or agricultural products. During those times when manufacturing and raw materials extraction were the main component of FDI, Latin America, Africa, and the Caribbean were key sites for this economic activity. However, the purpose of these areas declined in importance when financial and service centers become important components of global transactions. Due to this new geography, investors build and set up new firms in other countries. On the other hand, the several factors defined the composition of global transactions. These includes the promotion of developed countries as major capital exporters, the growing number of cross-border mergers and acquisitions, and the emergence of the flow of services and transnational service corporations as major parts of the global economy (Sassen, 2013).
Impact of Geographical Changes on the Middle Class
As previously discussed, the impact of globalization in changing the geography is shown when economic activity centers shifted from one area to another. As new economic centers are establish, jobs are also created. However, jobs were declining on previous economic centers and this decline majorly affects the middle-class workers. Another implication of the shift of economic centers is the declining share of tax. Because of these the sources of budget of the state for its activities decreases. This affects the middle-classes because they are dependent on the state services.
Effect of Rising Immigrant Populations
The rising population of the immigrant in the United States has affected the wage for middle class workers. It was expected that the number immigrants will rise due to the current immigrants who will bring their families to be reunited with them. However, the population of the immigrants did not rise only for this reason but also due to the undocumented immigrants who are seeking job in the US. Data shows that immigrants from the Caribbean Basin mostly settled in New York while Asians are received in Los Angeles, San Francisco, and New York (Sassen, 1990).
The rise of the number of immigrants resulted the increase in the demand for labor. To increase the labor supply, low-wage jobs are created. This action lowered the quality of more jobs which make them unattractive for middle-class workers. This also causes a decline in the middle class in the US because the quality of the available job does not match their skills.
Growing Inequality
It has been extensively debated that middle class stratum should have been expanding with the increasing low-wage jobs. However, this does not happen because of factors such as inequality in the earnings resulted as the effect of the changes in demography. Such changes in demography include the rising participation of women and young people in the labor force. The women and younger workers usually earned lesser than white adult male. However, Harrison and Bluestone (1988), as cited by Sassen (2013), pointed out that this new group of workers is not fully responsible in the increasing inequality in the distribution of earnings as a whole. They found out that inequality in earnings increases for each group of workers (white adult men, white, women, young workers and other).
This income inequality makes it difficult for the middle class to sustain their lifestyle. They cannot keep up with the increasing prices of consumer goods and housing with the income they are receiving. As the prices of goods and services increases while the income becomes stagnant, the middle class continues to decline.
Coping with the Impact of Globalization
Globalization is good as it helps in expanding the economic activity of the nation. It helps in the creation of jobs and improvement of goods services. However, along these benefits also come some disadvantages and the middle class are majorly affected by them. The stagnant income and availability of quality jobs fit for their skills are some of the negative implications of globalization. Changes in global activities are inevitable. But, the implications that these changes will bring should be examined in order to cope up and to devise a plan that will not leave anyone behind. Aside from analyzing the impacts of globalization on the middle class, understanding the role of various types of cities in the framework of global economic activities is important. Global cities are essential in providing major financial and leading services (Sassen, 2013). Realizing this importance could help in planning strategies that will help the middle class.
References
Sassen, Saskia. (1990). The Mobility of Labor and Capital: A Study in International Investment and Labor Flow. Cambridge University Press.
Sassen, Saskia. (2011). Cities in a World Economy. USA: SAGE Publications.
Sassen, Saskia. (2013).The Global City: New York, London, Tokyo. New Jersey: Princeton University Press.
