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The Collapse of the Middle-Class Job


#1

The Collapse of the Middle-Class Job

Paul Buchheit

Our middle-income jobs are disappearing. That fact may be disputed by free-market advocates, who want to believe Barack Obama when he gushes, "We’re in the middle of the longest streak of private sector job creation in history."


#2

How wonderful it would be if We the People finally did benefit from the "...wealth derived from decades of new technologies funded by our tax dollars." instead of constantly being told that "We" need to tighten our belts while the Military Budget and Tax Avoidance by Powerful Entities goes unchecked.


#3

"These plentiful low-level jobs have padded the unemployment figures, leaving much of America believing in an overhyped recovery."

The author doesn't define what he means by "much" here. I would say that a very large number of Americans know that the recovery is overhyped. The majority of Americans indicate in polls that the country is heading in the wrong direction. Consumer spending habits have not recovered to pre-crisis levels, indicating that Americans still feel insecure. Or to put it another way, there's a reason that so many voters are rejecting the status quo by voting for Sanders and Trump. It's the economy, stupid.

Having said that, a guaranteed income is not a particularly great idea, at least if the amount offered is enough to actually be livable. For illustration purposes, let's set it at $25K. Anyone who makes less, the government makes up the difference. Sounds good at first, but why the hell would anyone ever go to work for less than that? Why would anyone take a part-time job for less than that? Employers would actually have to pay a lot more than that. If the choices are work as a fry cook for $26K a year or sit at home for $25K, people are going to sit at home. What you soon have is a program with expenses spiraling out of control. Consumer goods and service prices would also spiral out of control.

A much better option is a universal basic income. Everyone gets the $25K a year regardless of what else they do. Any employment income after taxes is kept. Then, you would have a system where people could choose whether to work or not and for how much based on their own preferences. Maybe it turns out that someone who already has the $25K would actually be willing to work as a fry cook for an extra $10K a year. Maybe not and employers have to offer more. By giving people the basic amount they need, you've empowered them to determine when and for how much more they are willing to work. It's a better system. Of course, you aren't going to pay for it with only a financial transactions tax. The 1% would need to be taxed directly.


#4

Most of the labor required for social media companies like Facebook is done by registered users who supply the content. The social media company simply supplies a platform. The users type away for hours or upload photos without being paid anything. Instead they are working for rewards such as likes, or more friends, or more followers. These companies make most of their money by obtaining personal data from the users and then selling it to advertisers. This results in very high paid jobs for executives and software engineers and a relatively small work force to pay. The actual equipment needed such as computers, tablets, and cell phones, and the Internet hardware made by companies such Cisco is largely produced by low paid workers in Southeast Asia. This type of arrangement has to result in income inequality.


#5

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#6

The number put out by the White House on the unemployment rate I believe is under 6% (correct me if I'm wrong) but the real number of over 30% and climbing. Jobs are not coming back, jobs are not being created except in the tech industry and that is die for a crash and burn. Obama is still pushing two trade deals (one in the Atlantic and the other in the Pacific) and both are going to involve the destruction (sovereignty) of a lot of nations. The next one in the White House (particularly Hillary who believes these deals are gold standards) will keep pushing to seal the deal on these monsters. The middle-class has been destroyed and the White Collar positions are on life support.


#7

Actually, Obama and his blue dog congressional rubber stamps are posturing to complete TPP and TTIP after the November election and before the January inauguration. They know how the voters feel and want to make sure the "deals" are in place to enable Hillary to start screwing us on day one.


#8

The current unemployment rate is 5% and I assure you that is in fact the REAL number. No, really it is. The real number is not 30%.

Where we get into trouble is that our leaders cite the real number of 5% and use that as the sole measure of how things are going. People with good, comfortable jobs are happy to go along with that assessment. But, it's tone deaf.

To get the full picture, you have to look beyond that one number. For example, if we look at the most recent data published just 3 days ago we see several areas of concern, such as all new jobs in April were in three industries. Every other industry either fell or remained stagnant. 6 million people continue to be involuntary part-time employees (they can't find full-time jobs) and that number has not gone down since November. Total job growth has fallen for the last three months. Wages were up in April, but primarily in white collar industries. Etc.

http://www.bls.gov/news.release/empsit.nr0.htm


#9

There are some other solutions to the income problem that Paul Buchheit is describing.

One is for the workers to share jobs more fairly by reducing the length of the work week. If we take control over the supply of labor so that there is a balance between Capital's demand for workers and the supply of labor then by the laws of supply and demand labor can negotiate a fair wage. The work must be shared fairly so that everyone works and we all work less.

Another possibility to be looked at is how money flows in the economy. Ideally a $20 bill flows through many hands in a year. Each time it transfers hands it adds another $20 to the GDP, so if it changes hands 10 times in a year that is $200 added to the GDP. Money put into working class hands flows more than money put into the hands of the elites who are more apt to put it into savings and non-productive speculation and rent seeking. Taxation reduces the flow of these $20 bills considerably, thus reducing the amount of productive work that can be done in the economy.

The money that was created and given to the banks in past years through qualitative easing has often been put into treasury bonds, or speculation. Little of it is invested into anything that will result in money flowing through the economy and thus this money does not much benefit anyone other than the elites. Had part of that created money been placed in the economy where we need it, and from there allowed to flow through the many hands then we would have benefited considerably more. The money could have been put into looking after seniors, into healthcare, roads and infrastructure, education, and many other needs. As these services all need workers the money paid to them would flow throughout the economy as the workers spent their income. If the elites want this money they would need to provide services that the workers need. Instead we have a system where the elites get the money from the government directly, bypassing the need for them to do anything for anyone in order to get it. The elites use the money to make more money but as the workers do not have much excess money coming in that has not already been claimed by the elites through debt and ownership the elites have little incentive to invest any more money in goods and services to make more money off the workers and the workers do not have money with which to employ each other. Blood from a stone describes what is occurring now.

Note that if too much money were to be put into the economy to pay for infrastructure and services that the excess money can be removed by taxation in order that we not have inflation. Several choices here: income tax, sales tax, transaction tax, etc. By taking some of the control of the creation and distribution of money away from the banks we then can use taxation mostly to balance the system to keep prices stable and to reduce inequality when it gets out of hand.

Another alternative to a guaranteed annual income would be public capitalism. With public capitalism the government would take some of the creation of money and use it create public companies to compete in the marketplace. This would be financed by public banking. The purpose of these companies would be to create jobs for all, to develop the skills in a modern economy, to maintain a trained and educated workforce, and to provide goods and services that are needed but not needed enough to be properly supplied by the Capitalists. The amount of public capitalism would vary with the demand for labor. When Capital needs labor then public capitalism will be cut back in so that Capital has access to the trained labor. When the demand for labor flags then public capitalism takes up the slack.

Myself, I would enjoy a guaranteed annual income as I have several research projects that suffer because I need to sell a considerable amount of time in order to buy enough time to do the research. I am not against the idea of a guaranteed annual income, but am pointing out some other possibilities exist for keeping working class income at a reasonable level. Currently I would favor public banking, taking from the banks some of the control over where newly created money gets placed into the economy so as to finance public needs. With that I favor changing the purpose of taxation to balancing the money supply rather than its current use of financing public needs.


#10

"A Solution: The Guaranteed Income"

"How to pay for it? A financial speculation tax on the rich and, for the poor, a tradeoff of safety net benefits for the security of a guaranteed income. "

Another solution is to close military facilities around the world At the rate of 10-15 installations per year it would take 20-25 years to make a serious dent in this extravagance that the nation cannot afford.
What to do with all the military men and women now no longer needed for this boondoggle? Put them to work on infrastructure rebuilding in the US. They are in the prime of their working life, disciplined and skilled in many different specialties that would be useful for our own nation building project. They are also committed to serving till their enlistments expire.


#13

A return to the income tax rates of the 1950s, when real conservatives ran the show in U.S. and Canada, would be good plan. Maybe back then, most people, including the bosses, had memories and experiences of World War and the Great Depression and knew how important a fair, equitable, just, peaceful society is.


#14

Prof. Bill Mitchell, Australia's most practical and rational economist has much to say on inequality: http://bilbo.economicoutlook.net/blog/?p=28413
He has pioneered the Centre of Full Employment which advocates a guaranteed job for those who turn up for work. For those interested here is a presentation by Mitchell:


While it is Australian-centric, it equally applies to the US monetary system and social governance.

#15

The Guaranteed Income otherwise known as the Universal Benefit Income has become a panacea for too many leftists who uncritically accept it. People who should know better - forget their Marxist economics

We are in a period when capitalism and the governments that represent its interests are increasing the rate of exploitation and reducing the level of social provision. That is not about to change and any redesign of income support systems such as the universal basic Income will be no panacea and the fight decent living standards will continue out of necessity. Why are governments and political parties considering UBI more seriously? Fearing social unrest due to unemployment and inequality there are leading businessmen who share an enthusiasm for basic income policy. Citigroup chief economist Willem Buiter issued a report arguing for “a guaranteed minimum income for all, or an ambitious negative income tax … to support those left behind by technological advance.”

“Red Tories” see a basic income either as a way to a simplified streamlined welfare benefits system or that it should even replace the whole welfare state. Right-libertarian hero Milton Friedman advocated a version of the idea as long ago as the 1960s: a negative income tax, in which below a certain income level, people receive a stipend from the government instead of paying taxes. Richard Nixon wanted to implement such a plan. Sam Bowman of the British free-market Adam Smith Institute says: “The ideal welfare system is a basic income.” The right-wing Cato Institute published a series of essays discussing variations on the theme of a guaranteed income. If labour is weak, then the likelihood is that a basic income will be meagre and conditional and fore-shadow the full-scale privatisation of public services. While left-wing proponents believe a basic income will strengthen the hand of labour, right-wing proponents back it for exactly the opposite reason. A basic income is not only a subsidy to employers; it is a union-buster. Libertarian economics commentator Steve Randy Waldman argues: “Supplementary incomes are a cleaner way of increasing labour bargaining power than unionization. Unionization forces collective bargaining, which leads to one-size-fits-all work rules and inflexible hiring, firing, and promotion policies, in addition to higher wages.”

John Schmitt, a senior research associate with the progressive Center for Economic and Policy Research says, “My fear is that it’s possible for a coalition of completely well-intentioned and idealistic – with no negative connotation to that – people on the left to support what would be a very generous basic guaranteed income, in a coalition with significant elements on the right, including the libertarian right, that has basically the motivation that this will undermine existing social welfare institutions.”

Firstly, the very idea of a basic level of income is about establishing a floor and many proponents are determined to locate that floor in the basement. A low and inadequate social minimum seems to them a great way to drive people into deeper poverty. While even the best basic income policy only sets a floor below which poverty cannot fall, union militancy strengthens labour’s hand to demand ever-greater wages and better conditions.

On the issue of Universal Basic Income, Toby Sanger, draws attention to the Speenhamland System, a wage supplement arrangement put in place under the English Poor Laws between 1795-1834, and the role it played in driving down wages. Low wage paying employers could rely on the tax base to pay their workers’ wages and employers who had been paying higher wages were under an incentive to lower them in order to obtain the same benefit. In the present context of vastly expanding low wage precarious work, this danger is one that should not be underestimated. E.P. Thompson reported in The Making of the English Working Class that the Speenhamland system had “a single tendency: to destroy the last vestige of control by the labourer over his own wage or working life.”

The basic income scheme will be used to undermine social and public services, and to provide a subsidy to employers that will drive down wages and workers bargaining power. A guaranteed income detracts from seeking fundamental solutions to the failure of our economic system and political systems to provide adequate reward and meaningful employment opportunities for all. There will be no capitalist road to socialism. There is only, as ever, the strength and determination of the organised workers movement.


#16

I was laid off from a job in the Information Technology field in Apr of 2014 and have been aggressively seeking employment in my field and very close to homelessness.

Over two years has produced an unsuccessful job search. With a Master's degree and over ten years of experience there should be employers out there that need my skills but there are not.

The exploitation of the H1 B visa program and most job descriptions that are geared for applicants that already work with the employer's systems makes the search to get employed not very good for an off the street applicant. All that seems to be available for professionals are low wage, part time jobs.

Many large media shills and the federal reserve are living in a cloud or just plain lying when stating the middle class is recovering. The US economy is on the verge of collapse if their aren't policy changes made, soon.