Can America’s Middle Class make a Comeback?

By Munir Moon | (Informed Comment) | – –

The middle class is getting crushed. But there is hope. The most common argument about the middle class destruction is the declining or stagnant income, which is true. However, the main culprits are the costs of healthcare, education, and housing that have increased at a much higher rate, making it impossible for an average American family to attain a middle-class lifestyle (see chart below). Furthermore, the tax policies have exacerbated the problem by creating after-tax income and wealth inequality, favoring the non-working income taxed at a lower rate than the working income. Despite the doom and gloom about the middle class making headlines, there are three major forces working together—women, millennials, and technology, which provide hope for the future.

51lr32j-rsl-_sy344_bo1 The Middle Class Comeback

One of the reasons for that optimism is women gaining ground with men in almost every segment of society, such as higher education, healthcare, business, and even politics. For the first time in United States history, a woman, Hillary Clinton, has been nominated for president by a major political party—getting closer to breaking the ultimate glass ceiling. Almost 50 percent of the law and medical degree earners were women in 2010 compared to only 10 percent in 1971. Women have surpassed men by two-to-one in earning four-year college degrees from 1980 to 2013, according to a report by the Institute of Education Sciences, part of the Department of Education.

Furthermore, women control $11 trillion, or almost 40 percent, of the nation’s investable assets. Even though they make up half of the population, they are still well under-represented in society when it comes to making decisions in private and public deliberations on the economy, education, healthcare, politics, and social issues. Therein lies the opportunity for women to grow their influence since it cannot get worse than what it is now. As women gain more parity with men, such as in the job market, they will contribute more money to the family income and will lead the way toward the middle-class comeback.

Millennial women are the first ones in modern history to start their working lives with near parity with men in terms of earnings, according a survey by Pew Research. In 2012, among workers ages twenty-five to thirty-four, women’s hourly earnings were 93 percent of men’s hourly earnings.

moon

Millennials, who represent 25 percent of the adult population, will be the largest voting bloc over the next few decades. About half describe themselves as politically independent. They are social liberals and fiscal centrists, according to a survey by the Reason Foundation. Their voices will shape the future of the country, particularly for the middle class. Millennials are transforming existing industries while creating new ones, whether it is in communication, media, or goods and services. They are creating jobs, enhancing purchasing power, and improving the quality of life for all, including the middle class.

Technology will force the existing private and public institutional structures to be efficient amid the digital age. Over the last thirty years, technology has made astounding changes. Smartphones and other technological products that are very complex yet very simple to use will continue to add productivity to the economy.

Sky rocketing costs of key factors adversely impacting the middle class, as mentioned above, offer a fertile ground for disrupters. These disrupters are in the process of transforming the healthcare and higher education delivery models. The net result of all these transformations will be lower costs of healthcare, education, and housing, which in turn will increase the purchasing power of the lower and middle class.

On the political front, Donald Trump and Bernie Sanders have already challenged and shattered the age old political process utilized by Democrats and Republicans. Political disrupters will take the power away from The Beltway Beast as an anti-establishment mood prevails. They will lead to the transformation of the political process of electing our leaders. That in turn will lead to the transformation of the tax structure, which would be fair and affordable, making way for the middle-class comeback.

Munir Moon is the president of Bertech, a Southern California-based small business that has been recognized three times as one of the top 500 fastest-growing small businesses by Inc. 500. He is a contributor at The Huffington Post and LAprogressive.com. He earned his B.S. in engineering, M.S. in economics and M.B.A. in finance from UCLA. He is married with three sons and lives in Los Angeles County, California. He is author most recently of The Middle Class Comeback: Women, Millennials, and Technology Leading the Way

3 Responses

  1. How are disruptors going to reduce housing costs? I kinda see it with health care and education, but not hosting costs.

    • I go to green technology sites and look up cheap housing technology all the time. You have to learn to sort out the serious efforts from the stuff with no economic grounding.

      But the main way you bring down the cost of living is by getting rid of car-centric sprawl. That means more young people moving to cities, reversing the path of their forefathers. Once you eliminate $50,000 three-ton pickup trucks in your life, and learn to drive fewer miles and use mass transit, you learn to walk again. And that yields health benefits. You also have a lot more entertainment options in the city, and some of them are free.

      But what we need is a way to keep housing supplies ahead of urban real estate speculation, and that requires a different model of land use. The one virtue of Houston’s lack of zoning is that it is possible to create dual-use buildings on the European model, with stores in the bottom and apartments above. But only recently has Houston had the housing density to cause such buildings to exist, and it’s being done more as a fashion statement in Downtown and Midtown than a necessity. If we could safely fold more forms of economic activity into residential spaces we might open up more of a city’s total acreage to housing. However, to truly stay ahead of the developers’ schemes to inflate prices, we might need floating housing complexes. Buckminster Fuller worked on this idea and claimed the Federal government was interested in his work as a means of low-income housing. Most of the world’s supercities are on the sea.

  2. The author does not really understand just how much technology has already negatively “disrupted” the middle class and will technology only make the middle class shrink and suffer more.

    While there will be new businesses, they will employ a minimal number of humans because it is now possible to develop and produce most goods and services using technology rather than humans.

    As CGP Grey points out in . . . “Humans need not apply”

    link to youtube.com

    technology is improving in capability and decreasing in cost EXPONENTIALLY. That is, faster than any human can duplicate.

    I can cite dozens of examples where technology has decimated the middle class and these changes are NEVER going to be reversed. Tesla producing thousands of car with very few humans – AT&T decreasing its workforce by 75% because of technology – Farmers increasing yield by 15% with fewer humans – and the list goes on.

    Just as we changed the nature of work when we made “mechanical muscles,” we have now accelerated the replacement of humans with technology by eliminating many human brain activities.

    Few people realize that 85% of the humans in the USA now have more computing power in their hands (smart phones) than the USA combined with the UK had during WW2 and for decades later. The pace of technology displacing humans has been so fast and widespread that humans can not comprehend its seismic shift.

    Today, any person can purchase a $35 Raspberry Pi computer that has several million times more power than the first IBM PC that cost thousands of dollars. When limitless computing power costs almost nothing, there is no need for humans.

    The world will soon discover that less than 3 billion humans plus technology can develop, produce and distribute **ALL** the goods and services that the earth’s 8 billion inhabitants need or want.

    So what do we do with the “extra” 5 billion?

Comments are closed.