The wealthiest 20 individuals in the United States — a group small enough to fly together on a Gulfstream jet — have as much wealth as the 152 million people who comprise the bottom half of the U.S. population, The Institute for Policy Studies reports in “Billionaire Bonanza: The Forbes 400 and the Rest of Us“.
But what’s really driving the widening gulf between the haves and the have nots in America?
Among the more widely appreciated reasons for declining economic growth is the advance of automation. But other factors have begun to collide with technology to launch what may be a Perfect Storm: reshaping the economy to a “new normal” marked by economic uncertainty.
Another culprit is the rise of lopsided trade deals in the 1980s and ’90s, which have provided greater incentive to offshore jobs. The late billionaire and financier Sir James Goldsmith in his book “The Trap” predicted that poorly crafted free trade deals would produce a “net job loss”. In the early 1990s, Goldsmith testified before Congress advising against entry into another globalization deal known as GATT. Goldsmith also called out the Clinton administration on the Charlie Rose show in opposition to NAFTA, again predicting an outflow of jobs and capital.
If the wage stagnation of the late 1970s had not persisted to the present — some four decades! — the average American would earn $92,000 per year, reports Forbes in “Average America vs the One Percent“. In today’s dollars, those who identify as middle class are less secure than families that relied upon on a single breadwinner in the 1960s and earlier. We have gone from a society that can pay its bills and raise a family on a single income — and often a blue-collar income at that — to one in which the norm is for two able-bodied adults to work full time to support a family. (And because this is the new normal, illness and divorce are now the leading causes of child poverty and personal bankruptcy, according to the book “The Two-Income Trap“.) During this same period household debts have grown and savings diminished.
While cynics use these economic indicators to berate Americans — promoting the simplistic conclusion that Americans are eager to live beyond their means — reality is far more nuanced. In recent years recessions have gone deeper, last longer and recoveries are that much weaker. In part this is because our economy is nearly 70 percent dependent upon consumer spending for its health. Economic growth has instead remained tenuous in ways that economists typically ascribe to “lack of consumer confidence”. Behind the euphemism lies the unsettling reality that fewer Americans have the discretionary income necessary to stimulate the economy. More than 2/3 of Americans struggle to come up with $400 in an emergency.
“[O]ccupational forecasts that show the state will produce 10,312 more four-year graduates than there are jobs to fill between 2008 and 2016, while at the same time there are 3,892 more jobs available requiring associates’ or technical degrees than there are people to fill them, ” reports Jan Moller of the Times Picayune.
Fairly or not, such news equates in Americans’ minds with sub par wages. And low-wage prospects make Americans see red.
“If I saw the strongest growth area was ushers, lobby attendants and ticket-takers, I’d leave Louisiana too,” said Belle Wheelan, president of the Southern Association of Colleges and Schools.
Outside of Louisiana this story has not gained much traction. But it is far from a Louisiana fluke.
“According to the Forgotten MiddleSkill Jobs reports by The Workforce Alliance, middle-skill occupations, which require more than a high school education but less than a four-year degree, make up roughly half of all employment in the nation, compared with only 1/3 of high-skill occupations that require at least a four-year education,” writes Ann Pace in “The Forgotten Middle Worker“, published in September.
Louisiana was not among the states studied but it very well could have been: The Workforce Alliance analysis of middle-skill job demands include Washington, Oregon, California, Wisconsin, Illinois, Indiana, Michigan and Rhode Island — all of which have proven consistent with the national outlook, survey reports show.
Welcome to the future, America.
The mainstream media is either entirely oblivious to real job trends, or chooses to keep Americans in the dark because a future filled with ticket-takers, cashiers, healthcare aides, auto mechanics and electricians isn’t the kind of news we want to hear. To the contrary, syndicated New York Times columnist Thomas Friedman, in October, argued that “our schools are failing” to promote American competitiveness, in part, because we allegedly have a shortage of science, engineering, mathematics and other such high-tech grads. The “new untouchables“, by Friedman’s definition, are those who maintain an innovative and stable career in an increasingly cutthroat economy.
Message: Make schools more competitive. This will cure America’s globalized bellyache.
Improving student literacy, of course, is never a waste of time. What Friedman and others fail to take under consideration, however, is that few Americans work in the field they studied in college. That includes so-called STEM grads (science, technology, engineering and math majors).
But wait, it gets better!
Susan Hockfield, MIT’s president, takes the argument to a whole new level of absurdity in an October opinion piece for the Wall Street Journal in which she pleas for immigration reform to allow more foreign-born STEM grads to stay in the U.S. for permanent work as “jobs creators” and “Nobel winners”.
Who hires those foreign grads on H-1B visas? Microsoft, Google and other heavy hitters. This is the last thing most Americans call job creation. Hockfield’s suggestion reeks, instead, of domestic job displacement. Why? Because fewer U.S. citizens are likely to pursue challenging Ph.D.-level curriculum when their post-graduation economic stability is undercut by inexpensive foreign talent (insourcing/outsourcing). American-born students aren’t stupid, they’re pragmatic: What incentive is there to incur massive student loan debts if at best “employment insecurity” is the reward for the effort? And finally, to add insult to injury, independent studies from The Urban Institute, RAND Corp., Duke and Rutgers University, among others, say the so-called demand for high-tech and high-skill foreign workers doesn’t even exist — and that was true before the Great Recession cut loose thousands of qualified workers, dumping them back into the open market:
Is Anybody Safe?
Here’s how Eysink gets it right and the corporate and academic sources often quoted on this subject slant it wrong: Highly skilled foreign students aren’t coming to American universities to pursue jobs as lobby attendants or cashiers on the one hand, or the better paying “skilled trades”, such as auto mechanics, electricians and machinists, on the other. They are pursuing cream-of-the-crop professional skills whereas non-manufacturing jobs that require hands-on skills are relatively unscathed. After all, if your pipes burst you aren’t calling a plumber in China; your hairdresser will not be replaced anytime soon with a computerized robot; and your auto body repairperson is unlikely to be supplanted by a foreign grad student.
Nobody is arguing that these are ideal aspirations for Americans — only that middle-skill jobs are relatively safe from the insource/outsource phenomena. But when lettuce pickers and high-tech whiz kids are both here on work visas — if legally at all — watch out.
That should scare us.
When Eysink says that vocational and low-skill jobs are where much of the growth projections are, he’s only saying what everyone working on behalf of community and state employment agencies already knows.
What is telling is that Eysink’s neck has been slashed for sticking it out too far.
Eysink’s blunt outlook flies in the face of the education-as-a-panacea argument that has been the politically correct solution to all that ails the U.S. economy for at least 30 years now. Might tax incentives drive U.S. corporations to seek greener pastures offshore? Naw. Might looser environmental and human rights standards make foreign labor attractive? Naw. Might this be a predictable outgrowth of border-free trade? Naw. Let’s just dismiss all those larger-than-life realities and jump on the little guy at a state agency for saying what we already knew but are too afraid to admit.
The School of Hard Knocks
Following the conventional go-back-to-school advice, unemployed Americans are enrolling in schools of all stripe. Those educational pursuits often involve taking out student loans. If obtaining anything short of high-demand professional or trade skills isn’t going to cut it in this Brave New Economy — and the national jobless rates hover above 10 percent as many economists project — it suggests that many freshly minted grads and their return-to-school adult counterparts will not secure stable employment by which to repay educational debts.
The next consumer debt “bubble” to burst the American economy before the effects of the Great Recession are entirely behind us may well be a student lending bubble. Louisiana state Governor Bobby Jindal isn’t the only one reading the writing on the wall. Other states are following suit, attempting to prevent a tsunami of student loan defaults at a time when more prospective students are clamoring for a university education and the academic loans to fund them.
What makes misguided career advisement particularly unforgivable, in the end, is that we Americans are only doing what we’ve been told to do by media, educators and the President himself: Earn new or improved academic credentials in hopes of securing a better future even if it means a prohibitive amount of debt.
Higher education is never a waste in the aim of creating an informed, well-rounded citizen. Economic betterment is also a useful reason to invest in education — assuming one’s skills aren’t so easily ravaged by globalization. As for the rest of the American public?
A rude awakening. And another swipe at an already ailing economy to boot.
Ah, but thankfully there is a silver lining: All hope is not lost for children who fail to become the academic superstars this Brave New Economy demands. Friedman and his pontificating friends may not appreciate it now, but America’s new untouchable may be Joe the Plumber.
Judging from the state of America’s aged and crumbling infrastructure, we’re going to need more Joes than we know.
The Social Critic 