How does an America with no middle class look like? Bureau of Labor and Statistics projects top two jobs for the next decade will pay roughly $20,000 a year. Approval rating of Congress at 10 percent. In comparison, Americans approved of BP’s handling of the Gulf oil crisis at a 16 percent rate.

A strong middle class has been at the core of what has been promoted as the American Dream.  How would America look like if the middle class simply vanished?  We may not need to wait too long at the current rate since we are quickly siphoning people off the middle class and throwing them into lower income brackets.  The vast majority of Americans do not buy into the propaganda promoted on the tightly controlled media outlets.  In fact, the latest Congressional job approval numbers are at a record low of 10 percent according to Gallup.  To put this low figure in perspective 16 percent of Americans approved of how BP handled the catastrophic Gulf oil spill at the peak of the blowout.  This low Congressional approval is all coming during a supposed economic recovery where 46,000,000 Americans receive a monthly charge to their debit card for food assistance.  Even government figures show the big job growth sectors of the next decade to be in low paying fields.  What would America look like without a middle class?

The era of the poor young worker

The recession has hit all groups hard but the deepest impact has been on young Americans.  Take a look at wages for young high school graduates:

young wage high school earners

Source:  Economic Policy Institute

The path is rather clear.  High school only graduates since the 1970s have seen their wages go steadily down.  Since the bulk of the workforce comes from this sector, it makes total sense that the average per capita income would be $25,000:

average-income-americans

This seems rather stunning that in the most prosperous nation in the world wages are actually going down or sideways for most Americans.  So many young Americans have caught onto the trend.  A high school diploma isn’t enough to be competitive.  Many decided to take on massive debt and go to college.  As we have discussed, higher education is in a massive bubble and the return on investment for college graduates may have peaked out overall:
college graduate wages

Since the year 2000 college graduates wages for both men and women between the ages of 23 and 29 has moved consistently lower.  Since some of the better paying jobs are in STEM fields, those that go to for-profit institutions and pickup degrees in random disciplines not only find themselves with a degree that doesn’t aid in landing a job, but are now in massive amounts of debt which is hard to get rid of, even in bankruptcy.

Most college educated population finding growth in low paying jobs

I’m sure that you’ve heard of the cab driving scientists all across places like Eastern Europe.  Places that push many people through the education system even in fields with no jobs.  You wouldn’t expect this from the number one economy in the world right?  The current forecast for fields with high job prospects is rather sobering and this comes from the government itself:

fastest growing jobs in low wage jobs

Source:  BLS

The two fields with the largest number of jobs being added come from:

-Personal Care Aides (median annual wage of $19,640)

-Home Health Aides (median annual wage of $20,560)

In other words, jobs that will help the aging baby boomers do things they physically can no longer do.  The figures above align perfectly with the per capita average wage of $25,000 (in fact the $25,000 is high for these positions).  While these jobs show massive nominal growth, the third top field is deceptive in the above chart.  Biomedical Engineers are the third “fastest” growth field on a percentage basis but the jobs added are small with 9,700 jobs over the next decade (or 970 per year).  Compare that to 607,000 for personal care aides and 706,000 for home health aides.  You can do the above math and see how the middle class is simply being pushed out of the system.

The need for the two income household in many cases is now driven by pure economics.  Both people need to work just to keep the household income steady so they don’t have to end up on food assistance:

median-household-income

Then people wonder why the birthrate has fallen during the last decade.  It also doesn’t help that young Americans have moved back home:

living-at-home1

Where is this recovery happening?  In the stock market?  Most Americans derive very little wealth from the stock market.  Most of the net worth of Americans is tied up in real estate and housing values are now at a post-bubble low.  Many of the companies have made giant profits by slashing wages and expanding overseas.  The silver lining is there is little way to outsource personal care aides and home health aides.  Even then, Japan is looking to add some competition:
japanese robot assistant

“(Tokyo University) Behind these brick walls of Japan’s top university, scientists are studying the future of household chores. And their solution to mopping, laundry and cleaning up the kitchen.

Well it lies in the hands of a robot known as AR, or “Assistant Robot.” AR has a host of high-tech functions which are possible because the robot can “see” three dimensional objects.”

Something tells me this robot doesn’t mind doing the household work on less than $20,000 a year.

More to the point though, you have the financial sector that has basically Congress on their dole and the American public fully realizes this.  The public understands the double standard at play.  Fierce austerity for the majority, crony capitalism and bailouts for the financial sector.  In other words, a healthy middle class is being replaced by an entrenched banking oligarchy.

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20 Comments on this post

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  1. jack stephens said:

    Yet the people who are on the losing end of this development vote for political representatives who are openly in favor of the status quo. So who do they have to blame?

    March 8th, 2012 at 9:59 am
  2. surfaddict said:

    Where the heck did you get that first chart? It must be adjusted for inflation, cuzz in 1986 I gladly worked ofr $4 / an hour which is off the scale!!

    March 8th, 2012 at 11:40 am
  3. droubal said:

    It is amazing, given the low confidence in congress, that we keep re-electing the same people.

    We need a lot more people to realize that they are not obligated to vote Democrat or Republican, there are other parties.

    Maybe they are satisfied with their representative and the numbers just refer to what they think of the other party, that they don’t vote for.
    I keep waiting for us to wake up, but it doesn’t appear to be happening.

    March 9th, 2012 at 7:15 am
  4. Henry Hub said:

    The reason that Americans keep reelecting people who look after Wall Street & corporate interests instead of the American people interests is because Americans are voting for or against Abortion, Gay Marriage, and flag burning, etc. They are their own worst enemy.

    March 10th, 2012 at 2:12 am
  5. shelly weier said:

    this has been long term policy–you cant have fascism with a strong middle class—it had to go

    March 11th, 2012 at 12:13 am
  6. Extexanwannbe said:

    America without a middle class will look like Mexico.

    March 12th, 2012 at 11:44 am
  7. weaver said:

    @surfaddict,

    In 1986, your $4.00 per hour would buy you 5 gallons of super unleaded gasoline per hour. (1986 avg. $0.95 per gallon.)

    http://www.randomuseless.info/gasprice/gasprice.html

    At the Fed’s 2% targeted inflation rate, a $100.00 bill becomes $75.00 every eleven years.

    So in addition to returning to 1996 household income these dollars are now worth about 64% of what they were then.

    March 17th, 2012 at 10:21 pm
  8. dot bot said:

    I was trying to figure a way to get back reason, logic, accoutibility, and responsibility to money without causing a “self-fulfilling” prophesy of unfaith and desolation:

    We could tie more debt to real debt for a senator or a reps self or family. We could make them carry around a symbolic sack of weight or shock them.

    We could have 100 people walk in and take the pain of what they’re asking. Or, they could cut more raises and checks but have to do laps.

    We could tie pork for rich to port to lower and middle class.

    We could tie requests to real productivity per person – cpi exports per person etc.

    We could shoot a prisoner each time we ask for more money to “pay ” for it.

    That kind of stuff.

    I want it all now path of least resistance and pain.

    April 2nd, 2012 at 2:53 pm
  9. dot bot said:

    With robots and goodwill we still have to pay on time and look out for each other.

    April 2nd, 2012 at 2:55 pm
  10. barron gulak said:

    Welcome, Future Shock!

    April 19th, 2012 at 1:35 pm
  11. Robert said:

    I don’t know what America with no middle class looks like, but if you want to see America with no class whatsoever, just turn on Housewives of _____ (take your pick)

    April 25th, 2012 at 9:45 pm
  12. H5mind said:

    It’s very easy to visualize the US without a middle class– anywhere in Latin America will do. From Mexico to Columbia, down to Chile and Argentina, you will see large metropolitan cities not unlike our own, complete with universities, hospitals, and skyscrapers. There will be running water, lights, and interstate highways. There will be traffic jams, taxis, and guys selling newspapers. And there will be a razor-thin middle class clinging desperately to their marginally elevated social and economic status, trying not to get mugged by the other 90% of the population living in abject poverty. The one percenters, as always, hold all significant positions in banking, government, and military. Although nominally democratic, these countries’ populations vote for their champions and end up with whichever kleptocrat the elite like. The coup is always a handy option– whether domestic or imported– to rectify any election which doesn’t go according to script.

    June 9th, 2012 at 6:37 pm
  13. Hillary said:

    I would have to agree with the previous commenter great addition to the post.

    June 19th, 2012 at 8:51 am
  14. Snazster said:

    H5mind has nailed it. I don’t blame the one percenters, obviously it is just human nature to seek more and if the rules allow people to alter the rules to make it even easier they will tend to do that. Instead of trying to fight human nature to keep society balanced, what is needed is a better system of checks and balances. I don’t begrudge anyone a fortune they’ve made (inherited wealth, when it is far beyond the point where it ceases to be money and represents only power over others is a different story). Nevertheless, I used to believe, when that one percent’s wealth grew to be too large a percentage of the overall wealth in existence, that something would break, probably catastrophically. H5 points out that there are worse possiblities. Studies have suggested that there is a high probability of 60% or more of the folks in the US being “occupationally displaced” by automation as soon or sooner than 2030 (before some kids already in school are ready to enter the college graduate workforce). Translation: the robot/computer will be at least ten times as productive at a tenth of the cost of a human. I can only see a three tier society at that point, 1) the owners, 2) the highly skilled and not yet automated workers (with maybe a few unskilleds here and there in niches), and 3) the 60% plus that cannot be employed profitably due to minimum wage laws and, even it those were repealed, still could not earn even enough income for subsistence. While GDP due to automation may be a degree or even two degrees of magnitude greater due to this automation. I see little to encourage me that human nature will provide much beyond soup kitchens and tenements (and free VR entertainment, maybe) to the disenfranchised majority.

    September 29th, 2012 at 1:06 pm
  15. John said:

    There is one, and ONLY ONE way to change what we are seeing happen in the US. We have to attack the problem at the core.
    THE PROBLEM: politicians are bought, paid for, and work for corporate America via campaign funding.
    THE SOLUTION: ALL campaigns, at the national level, are paid for via a $10/year tax upon each American citizen. In addition to this, each media outlet must provide to the public, 8 hours of time for candidate debate….as a condition of having an FCC license.

    Very simple solution.
    We need an amendment to the constitution to this effect.

    January 19th, 2013 at 11:58 pm
  16. Linn said:

    No, America without a middle class will not look like Mexico, because Mexicans have the freedom of individual enterprise. Americans have lost that freedom thirty five years ago, since the large corporations did not want us competeing with them. We will look like several houses with five families living in each one amid dozens that are falling down and empty.

    January 29th, 2013 at 8:05 pm
  17. Rami said:

    @ John “ALL campaigns, at the national level, are paid for via a $10/year tax upon each American citizen. ”

    A terrible idea. $3Trn divided between existing political parties. This is equivalent of letting them openly rob taxpayer money to the party coffers / to their own pockets.

    May 29th, 2013 at 9:08 am
  18. DDearborn said:

    Hmmm

    Why is it that so many wage comparisons start with 1979 which is of course at the end of a decade with higher inflation than any other period since the Civil War. Why is that again?

    August 13th, 2013 at 8:44 am
  19. dave said:

    Things never really change in this world. Since the dawn of time, there has been the RICH and the POOR, most of the time. Back during the Middle Ages, they were called the Nobles and the Serfs. For short periods, a Middle Class has popped up (America from the 1950′s until around 2,000), but the old ways seeem to always have a nasty way of coming back. And again, you have only the Rich and the POOR.

    December 28th, 2013 at 3:32 am
  20. JOHN said:

    I think like a few others have said Latin America is exactly what the USA will look like without the middle class, in fact as time goes on we will very much look like Latin America, very small “middle class” I think the current numbers put median earners at around 35K a year. Thats not enough to come close to living what most consider a middle class life style. So in some ways we are already seeing what it looks like. Also have you seen an increase in homeless people in your area?

    February 4th, 2014 at 12:04 pm

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