Decline Of The Middle Class Essay, Research Paper

Throughout the past century, the middle class has emerged as a vital part of the North American psyche. Even today, many people classify themselves as a part of the middle class, regardless of their actual income level. However, this perception is incorrect. In the past 20 years, the middle class has been declining, primarily as a result of past political interventions and job polarization throughout North America. The subject of middle class is very controversial, and depending on how it is defined, many different conclusions can be drawn regarding the subject. It is not fair to judge a declining middle class without taking into consideration many other aspects that contribute to this class. The following report will detail many aspects that have contributed to the decline of the middle class; including events of the past that have shaped the middle class today as well as conditions today that may affect us in the future.

For the purposes of this essay, the middle class will be defined as households with income between 75 percent and 125 percent of the North American median. Many other factors must also be considered when analyzing the middle class, such as, social criteria, educational levels and occupation. Regardless of the actual definition adopted for the middle class or the many other factors that contribute to middle class status, for the past 20 years the middle class has been steadily decreasing. The great American Middle class, the provocateurs contend, is no longer so great. It is shrinking steadily, goes the theory, and shedding its members into the economic extremes of wealth and poverty. From the 1970 s to the present day, over two million people who were representative of the middle class, are no longer in this class. In many cases some individuals have slipped a notch to the poverty class, and in other cases a very few have moves up into the ranks of wealth, and the higher class. There are many reasons for the decline of the middle class in the present day, most importantly are the events that occurred in our past that have lead up to this issue that could threaten North America and the rest of the world forever.

After World War II, middle class people s wages grew steadily as well as the jobs they occupied. With the rise of the manufacturing era, between 1958 and 1968, manufacturing added 4 million jobs, states and local governments added another 3.5 million. From this point on as the economy began to shift away from manufacturing and into high technology and service industries, the number of jobs providing the middle class standard began decreasing. Manufacturing, which pays on average almost three times the minimum wage, added fewer than a million jobs between 1968 and 1978, and has lost nearly 3 million jobs over the past four years. With the loss of these jobs many people s wages and salary income became more and more unequally distributed in the economy as a whole. Unfortunately, this did not provide companies with the opportunity to expand rapidly and re-employ many of its workers. The overall story of how U.S. manufacturing was losing its earlier ability to support a blue-collar middle class was more complex. Jobs lost to foreign competition in heavily unionized, highly paid industries like steel, autos and machinery were not being replaced simply by low-wage service jobs at McDonald s and K-Mart. The decline of the middle class is also the result of the explosive growth in world trade. As manufacturing technologies have become more mobile, and firms have become more and more careless, production jobs have migrated to countries where wages are low. Another significant reason for the decline of the middle class in North America has been the uneven growth of the market-oriented economy. Market-oriented economies rely on incentives to promote work effort and risk-taking. People in the middle class who can respond most capably to these incentives are best rewarded. The blameless problem is that wages are determined by supply and demand. Many times these forces work in one s favor. In other cases, they do not. Canadians no longer define middle class by the opportunity it presents, but by the burden it carries: high taxation, fear of the future, and a feeling of being overwhelmed by events. For the majority of today s middle class, the odds have been against them in the past; however, the future may be different.

With the decline of today s middle class many people lives have changed for better or for worse. After three decades of social and economic upheaval, the contours of a new North American middle class are starting to emerge. Today s middle class recipients have more choices and are notably more satisfied. However, many people living in the middle class face more tribulations, ranging from widespread divorce to slow income growth in today s economy. From the sixties until today, middle class North Americans have established a clear set of lifestyle rules. There have been changes in relationships between employees and employers, husbands and wives, and parents and children. Middle class recipients of today are marrying later, having fewer children, retiring earlier, and living longer then individuals from past generations. This changed lifestyle is a result of the new options and challenges people living in the middle class are face today. Taken together, the middle class is more sanguine today, as revealed in a survey of 5,000 households this year .The Board asked people to compare their standard of living with what they recalled of their parents. Over two-thirds responded that they have it better; only 15% said they were worse off. Today middle class recipients bear a greater responsibility for keeping skills fresh with the explosive era of technology. As well, a significant change in today s middle class has been the brighter career opportunities for young women. With all off these benefits contributing to middle class lifestyles, there are many issues as a result of this new middle class lifestyle. High divorce rate means more families headed by single mothers living in poverty And with people over the age of 75 the fast-growing segment of the population, more are falling victim to lingering ailments such as Alzheimer s disease, emphysema, and stroke. Middle class people today live better lifestyles then those before them even though there income is lower and the expenditures are higher.

The erosion of the middle class household net incomes in the 1990 s has taken its sharpest decline since the 1930 s. Middle class declines of the past have been cyclical and very brief; however, today s economic decline of the middle class may prove to be secular and long-term. The worries of today s middle class decline go beyond the immediate job losses threatened by recession or the more expensive lifestyles middle class people live in today. They threaten the erosion of assets, especially home values, and people living as middle class also worry about the provisions of their future, pensions, annuities and insurance policies. The importance of the preservation of middle class is necessary for North America as a whole; the middle class shapes the values and ambitions for any nation throughout the world.

The past deterioration of the middle class could have serious results towards North American societies. However, there are many possible solutions in replenishing the situation our generations may face in the future. Regardless of the changes in government taxation, there are several economic trends that may cause an upswing in the middle class, ultimately increasing the middle class income wage as a fixation to a serious problem of the past and possibly of the future. For example, the first is slowing the growth of labor in North America. The Bureau of Labor Statistics (BLS) is forecasting a 25 percent drop in the rate of labor force growth for 1994 to 2005 as compared with 1988 to 1993. One reason why this alternative seems practical is due to the fact that women s labor growth is expected to reach a stabilizing point after decades of increase. This event will result in about half a million fewer people a year at work or looking for work then the past. If the supply of workers decreases and the demand for work is maintained, real wages may rise as they did in the past. The second factor that may drive up the middle class would be the cumulative effect of increasing education for young people. Having more people stay in school for longer periods of time past high school would force higher wages for young people. Increasing skills, learning and experience through post high school education will cause the economy to drive up wages for young adults. Many economists have argued that the solution to the middle class is not the higher payment of wages but rather the halting the outflow of well paying jobs and focusing on aiding industries in improving a countries global competitiveness. All of these factors will have different impact on the improvement of the middle class and perhaps will bring the middle class back to where it once was in the past. No matter what trends are taken to resolve this growing issue, being a part of the middle class is stated by one s earning. However, being middle class is a state of mind shared by nearly all people in North America.

The assertion that the North American middle class is disappearing arose in the 1970 s, and a definitive answer and consensus as to the seriousness of the problem remains unclear. Any analysis of the middle class depends on the definition of middle class income and other aspects relating to middle class stature. From the period of 1957 to 1987 the middle class has decreased, primarily due to the uneven growth in middle class income. During this period of time the cost of a middle class goods have risen substantially, straining families, abilities to sustain a middle class standard of living. Moreover, non-wage compensation for full-time employees, such as health care pension provisions have eroded, further straining the middle class lifestyles.

Any substantial decline of the middle class even if it were partly psychological would be ominous for North America as a whole. It is the middle class whose values and ambitions set the tone for any country. It is the middle class that drives to become a society. The middle class people serve as the strongest, powerful voices for political compromise. The middle class is so sacred to North American nations that even its potential shrinkage is so controversial. North America needs a middle class. The middle class has an influence that has been highly valued for hundreds of years and will continue to stay valued for many more years to come.

Stephen Koepp, Is the Middle Class Shrinking? Economy & Business: 54, November 1986 [article on-line] available from http://infoautics.com; Internet; accessed 17 April 2000.

Bob Kuttner, The Declining Middle, Middle Class Society 14 (April 2000): 1.

Bob Kuttner, The Declining Middle, Middle Class Society 14 (April 2000): 1.

Kevin Phillips, Boiling Point Democrats, Republicans and the Decline of Middle-Class Prosperity (New York, NY: Random House Press, 1993), 196.

Eric Molson, Middle Class, Social Trends: 1, May 1998 [article on-line] available from http://infoautics.com; Internet; accessed 17 April 2000.

Louis S. Richman, The New Middle Class: How it Lives, The Economy: 1, August 1990 [article on-line] available from http://infoautics.com; Internet; accessed 17 April 2000.

Louis S. Richman, The New Middle Class: How it Lives, The Economy: 1, August 1990 [article on-line] available from http://infoautics.com; Internet; accessed 17 April 2000.

Kevin Phillips, Boiling Point Democrats, Republicans and the Decline of Middle-Class Prosperity (New York, NY: Random House Press, 1993), 142.

Work Cited

Koepp, Stephen., Is the Middle Class Shrinking?, Economy & Business: 54, November 1986 [article on-line] available from http://infoautics.com; Internet; accessed 17 April 2000.

Kuttner, Bob., The Declining Middle Class, Middle Class Society 14 (April 2000): 1-14.

Molson, Eric., Middle Class, Social Trends: 1, May 1998 [article on-line] available from http://infoautics.com; Internet; accessed 17 April 2000

Phillips, Kevin., Boiling Point. New York, NY: Random House, 1993.

Richman, Louis S., The New Middle Class: How it Lives, The Economy: 104, August 1990 [article on-line] available from http://infoautics.com; Internet; accessed 17 April 2000.