A crushing blow to male earnings – From 1969 to 2009 male earnings have fallen by 28 percent. The slow decline of the American middle class.
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The contraction of the US middle class continues to roll along. There are major generational rifts that are hitting the economy. For example between 1960 and 2009 the number of men working fulltime has fallen from 83 percent to 66 percent. A large number of people are categorized under “not making formal wages” and this group has tripled from 6 percent to 18 percent. It is a troubling revelation that provides more insight into the reality that half of Americans make $25,000 or less per year. It also sheds some light on the massive number of working poor that are also part of the 46 million Americans now receiving food assistance. The decline in wages is real and the massive impact in net worth is also a big indicator of the crushing blow being experienced by the middle class.
The demographics of the workforce
Part of the decline is attributed simply to the transition of our workforce:
Source: Washington Post
The demographics of the workforce have dramatically changed over time but this only explains part of the issue. If we look at the earnings of men we realize what the dismantling of the blue collar workforce has done to our economy. It is a troubling revelation to see that earnings for men have fallen a stunning 28 percent in 2009 dollars from their spot in 1969:
It is amazing to realize how deep the recession has cut into the wages of working men. Yet this is not a new phenomenon. As you can see from the chart above, the problems started in the 1970s as the manufacturing sector of our economy was gutted. There are two sides to the story when you chase after low wage goods. You typically will find that low wage jobs will also be part of the equation.
Going back to the manufacturing data, we can see the rather dramatic changes go hand and hand with the crushing blow that is seen in the manufacturing sector in our economy:
Manufacturing jobs peaked in the 1970s and have fallen rather dramatically since that time. It is interesting to see it perk up recently. Of course, many Americans are now jumping into the low wage side of the economy courtesy of persistently high unemployment. The problem with this is the protections given to the financial side of the economy at the expense of workers. The message is that banks with all the absurd bonuses need to be bailed out no matter the cost to keep the economy going. Yet for most workers, a fierce predatory system of capitalism is their reality. Essentially the investment banks bet on “real” companies in the economy and the financial system should serve as a clearing house for real companies. The problem is that we now have an entrenched workforce that makes their money speculating and gambling with taxpayer backing and serves more of a casino function.
We have case after case of this including this recent story:
“(Newser) A technical problem that briefly threw dozens of stocks into chaos Wednesday will cost Knight Capital Group $440 million, the trading firm said Thursday. Knight’s own stock plunged for a second day, erasing 75 percent of its value in two days. The company also said it is pursuing ways to raise money to fund the expense, raising questions about the firm’s viability. And at least two financial institutions announced they had halted trading with Knight, at least temporarily.”
You have many examples including billion dollar losses by the too big to fail banks. This debate is rarely discussed in the public. Is this really a path we want to continue going down? The income drop is astounding and also highlights potential issues we will have with having to fund millions of retirees. Many retirees are likely going to work or try to piece together income into their golden years since retirement wealth figures are so abysmal.