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HISTORY DISCUSSION

12 Jul

HISTORY DISCUSSION    PART ONE- ORIGINAL POST, PART TWO RESPOND to two posts

PART ONE – 5-7 paragraph essay answer to question: The economic affluence of the American middle class has not grown since the late 1970s nearly at the pace it did right after WWII. Some would even question whether the middle class has shared in the new prosperity at all. Now, what do you think have caused the biggest problems to the middle class? Globalization? Technological development? Domestic and/or international politics? Other economic factors?

As always, argue your case through specific evidence, data, and examples. Note: Using some of the resources of the 3 post build an original answer, most notably “The Middle Class at Risk”, “No Direction Home”etc.

PART TWO– RESPOND briefly to  these three others posts?

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One main factor that continues to be an issue for the middle class is the stagnant wages. According to The Middle Class at Risk, most families require to separate sources of income to make ends meet when the common middle class used to live off one income for the entire family. The Middle Class at Risk mentions important points such as giving tax breaks to the wealthy, opposing policies that help families juggle the demands of work and home, blocking measures that raise wages, and slashing education investment and undermining a key ladder of opportunity, to emphasize the struggles that middle-class experiences. How are young students suppose to afford college when tuition has increased at least 21% within five years? How are Americans to earn more money by only working longer hours but are not paid overtime wages? How does the middle class suppose to increase income and responsibilities at home when middle-class programs such as social security are cut to pay for tax breaks for the wealthy? When a middle-class person cannot afford education, more than likely their job title results in a waitress, cook or security guard, which represents the middle class at its best, according to Fareed Zakaria in The Post-American WorldThe Middle Class at Risk also relates to No Direction Home by Natasha Zaretsky as she explained arguments concerning unemployment rates, education reforms, and the actions of the presidents and the Republican parties.

 

On raising the minimum wage

 

My nephew – with a young family – just graduated from college. While education is essential if one wishes to create a better life, the cost of living has gone up considerably in the past 20 years. And if he is striving to center himself in the Middle Class, his livelihood is at risk. The State of Georgia’s minimum wage is $7.25 (Georgia Minimum Wage for 2017, 2018). The minimum wage must be raised because the cost of living has gone up considerably. This is one of the concerns of many in regards to the minimum wage increase. In their article, The Middle Class at Risk, Gerney, Chu, & Duke (2015) discusses this point reiterating that many economists believe that “the slow wage growth for working-and middle-class families is the deterioration of wage standards.” Reality screams out – when the authors note that the federal minimum wage has not kept up with inflation since the late 1960s.

Furthermore, according to a Pew Research report (2015), since 1971 – once the majority – “Middle-income Americans are no longer in the majority.” While it may be difficult to comprehend, it is only reasonable to assume that if the federal government is not convinced there is a direct need to distinguish between The Have-And-The-Have-Nots, then there is no safety net, the middle class falls to rock bottom.

Cutting taxes is a well-founded idea; however, lopsided as it may seem, the minimum wage must be raised for the reason that it will benefit America’s middle-class and businesses too. It is my humble opinion that if companies are required to pay workers what they deserve – in an effort to bring about balance – its personnel-living standards should amount to more than the $7.50 minimum wage. However, devoid more businesses are susceptible to redefining human capital. For example, “people who get paid a decent wage for skilled but routine work in manufacturing or services are getting squeezed out by a pincer movement of technology and globalization” (Zakaria, 231). Therefore, those at the top have done better than those in the middle, who in turn have outpaced at the bottom.

In theory, what is morally correct? On the issue of raising the minimum wage, it is most assuredly two-fold: (1) will assist our young, well-educated families in an effort to help stimulate economic growth; and (2) save an important segment of America, its diminishing middle-class – falling behind financially.

Georgia Minimum Wage for 2017, 2018. Federal and State Minimum Wage Rates for 2018, http://www.minimum-wage.org/georgia.

Gerney, Arkadi, et al. “The Middle Class at Risk.” Center for American Progress Action, http://www.americanprogressaction.org/issues/economy/reports/2015/07/27/118103/the-middle-class-at-risk/.

Zakaria, Fareed. The Post-American World Release 2.0. W. W. Norton, 2012.

 

 

The biggest problems of the middle class seem to come from three main areas: a change in income distribution, that wages do not keep pace with inflation over time, and growing pains switching from an industrial-focused economy to a service-oriented economy.

 

The median income of the middle class decreased from $77,898 in 1999 to $72,919 in 2014 for a three-person family. [1] This is not an isolated event – the same CNN article states that 203 out of 229 metro areas saw a decline in the middle class, in terms of both income and number of people classified as “middle class.” [2] What is a main reason? Since 1979, real income (adjusted for inflation) has tremendously increased for the top 1% wage earners (up 300% at its peak between 1979 and 2007) while the bottom 20% of wage earners showed very little growth. [3] More money is flowing into the hands of the richest Americans, while the middle class is squeezed. More of the lower sections of middle class now fall into the “poor” category because of this squeeze. As income decreases for the middle class, the ability to buy goods also decrease…at a point in time when prices of many goods increase to keep pace with inflation. This brings me to my second point:

 

Wages have not kept pace with inflation over time. Back in the 1950s, there was one main wage earner for households. The father figure of the “average American family” worked while the mother figure stayed at home. The father figure made enough money to buy a new “cookie cutter” house in the suburbs and support the family. This began to change (as we have learned) in the 1970s, with more women becoming workers. (Not to keep bringing up Zaretsky’s work, but No Direction Home really was a very important book in understanding quite a few points about what this course is about.) Two incomes should allow households to buy more goods, right? Wrong. According to statistics presented by Elizabeth Warren in The Two-Income Trap, two-income families are “almost always worse off than their single-income counterparts a generation ago, even though they pull in 75 percent more in income.” [4] The prices of housing, in particular, has vastly increased past levels of inflation, making homes much more expensive for families to afford in the 1990s and to present day than in the 1970s.

 

Finally, there are issues with the transition from an industrial-based economy to a service-oriented economy. This ties into globalization quite a bit (although I do argue that globalization is not inherently bad at all). Many middle-class families – especially blue-collar workers – have seen changes in their employment. Call center jobs, manufacturing jobs, training and development jobs, some healthcare jobs…these have been outsourced to workers in other countries that can do the same job for cheaper. Businesses’ bottom lines are to make profit, and a reduction in personnel costs have allowed for them to continue to make profit. This has involved many growing pains in America, as workers who have been doing certain jobs for many years now find themselves irrelevant.  In 1970, there were 48.8 million service workers, but by 2000, there were 107.1 million service workers. [5] There is a reason many support the current economic climate of tariffs and bringing manufacturing jobs back to the United States – they lost their job to someone overseas, which made them lose some of their livelihood. Economic theory suggests that these workers are replaceable in these conditions, but that they will learn to use their skills in new positions. As we continue into focusing more on service jobs instead of producing actual goods, these workers will have to adapt to new positions. (It is understandable that someone who only knows how to do one thing would be disappointed to lose their job or have to learn another skill, but it is part of advancing an economy.) As technology increases exponentially, so do the possibilities of new careers that have not even been invented yet.

 

Globalization may have also helped the middle class too. Free trade has lowered the prices of many goods made elsewhere, such as China. Businesses such as Walmart have capitalized on this position. In some ways, the purchasing power parity of people have afforded them to buy cheaper goods. But for some of the big-ticket expenses (houses, automobiles, etc.), their dollar does not stretch as far as it used to. This has significantly hurt the middle class, and it makes me wonder how much further the middle class will be squeezed. Might we be heading toward a more rich/poor split society?

 

[1] The Share of Middle-income Households Declined in 90% of the Country’s 229 Metro Areas between 2000, and 2014. “America’s Middle Class Is Shrinking Almost Everywhere.” CNNMoney. Accessed July 07, 2018. http://money.cnn.com/2016/05/11/news/economy/middle-class-shrinking/index.html.

[2] Ibid.

[3] “The Rich and the Rest.” The Economist. October 13, 2012. Accessed July 07, 2018. https://www.economist.com/special-report/2012/10/13/the-rich-and-the-rest.

[4] Plumer, Bradford. “The Two-Income Trap.” Mother Jones. June 27, 2017. Accessed July 07, 2018. https://www.motherjones.com/politics/2004/11/two-income-trap/.

[5] Malbreau, Sharon. “The American Workplace – The Shift To A Service Economy.” Population, Employment, Table, and Women – StateUniversity.com. Accessed July 07, 2018. http://jobs.stateuniversity.com/pages/16/American-Workplace-SHIFT-SERVICE-ECONOMY.html.

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