Guess What's Destroying the Middle Class?

[madbean]

I simply haven't found the topics to be very interesting as of lately.

I think it's mostly a case of being nothing new under the sun, as the Bible said. Seems like just about every thing has been discussed to death and everybody knows where everybody else stands.

[Kbg]

Very non PC but all these anecdotes have a similarity...Mom was a Mom at home. Imagine the US labor market if we cut the work force by say 30%. I think globalization and effectively doubling the labor pool in the  US have both contributed. Don't get me wrong I'm glad my daughters have options but economically it is what it is.

[barrett]

Very non PC but all these anecdotes have a similarity...Mom was a Mom at home. Imagine the US labor market if we cut the work force by say 30%. I think globalization and effectively doubling the labor pool in the  US have both contributed. Don't get me wrong I'm glad my daughters have options but economically it is what it is.

I don't think that is non PC. It's a fact that we have a labor surplus in the US and that one of the contributing factors is so many more women in the workforce, but should that necessarily contribute to the decline of the middle class? Sure, you can easily argue that more workers puts downward pressure on wages, but it seems to me that a way bigger factor is the manufacturing jobs just disappearing or being offshored.

Regarding the jobs going overseas or be automated out of existence, it would seem that that is just built into the our economic system. Profits need to keep increasing and much of that can come through cost cutting. In the short term that works great because stuff is cheap to buy. In the long tern there's nobody left with purchasing power.

Somebody please shoot a hole in that one for me because it's a depressing thought.

[Tortoise]

I don't know if this was mentioned already, but I think at least part of the drag on the middle class is illusory in the sense that part of the prior prosperity was illusory.

The cushy corporate and government pension plans of previous generations, which allowed many people to spend money that they would otherwise have been putting into retirement savings, were built on projections of very generous stock market returns decades into the future.

As the decades went by and the historic bull market in stocks finally waned, fewer and fewer companies and government organizations offered pensions, let alone generous ones. It had become clear that the financial assumptions underlying the pensions were far too optimistic and were based on historical data from a period of history that would be unlikely to repeat.

Another way of stating this is that part of the current drag on the middle class is the result of previous generations charging a lot of their corporate and public spending to future generations, and the bills are slowly but surely coming due.

So to some extent, the changes in the middle-class standard of living going forward may reflect a movement away from fantasy back toward reality.

[Xan]

I am one of the last to be a fan of government intervention in the marketplace, but I am becoming more and more a fan of the citizen's dividend.  Drop the minimum wage and do the dividend.  It would seem to me that the dividend is far less disruptive to markets, pricing, and businesses than a minimum wage.

[Pointedstick]

I am one of the last to be a fan of government intervention in the marketplace, but I am becoming more and more a fan of the citizen's dividend.  Drop the minimum wage and do the dividend.  It would seem to me that the dividend is far less disruptive to markets, pricing, and businesses than a minimum wage.

I agree. Heck, drop everything and do the dividend. Imagine how glorious that would be. Bye bye unemployment comp, food stamps, social security, medicare, medicaid, SCHIP, obamacare, and others… hello $1,000 tax-free per person per month. So simple. So effective.

[D1984]

I agree. Heck, drop everything and do the dividend. Imagine how glorious that would be. Bye bye unemployment comp, food stamps, social security, medicare, medicaid, SCHIP, obamacare, and others… hello $1,000 tax-free per person per month. So simple. So effective.

You couldn't really drop Medicaid/Medicare and Obamacare (unless you did some other kind of thoroughgoing health insurance reform that meant that medical costs per year that each person had to pay in cash out of pocket were capped at some relatively low amount). $1000 a month is chicken feed if you have serious health conditions (an actuarially fair policy for someone whose care costs, say $100K a year, will be priced at at least $8333 a month...if they can get a policy at all); without insurance (which no would would have to sell them with Obamacare repealed...and which they couldn't get from Medicare or Medicaid since those were gone too) they would be broke--and dead--very shortly.

[dragoncar]

I am one of the last to be a fan of government intervention in the marketplace, but I am becoming more and more a fan of the citizen's dividend.  Drop the minimum wage and do the dividend.  It would seem to me that the dividend is far less disruptive to markets, pricing, and businesses than a minimum wage.

I agree. Heck, drop everything and do the dividend. Imagine how glorious that would be. Bye bye unemployment comp, food stamps, social security, medicare, medicaid, SCHIP, obamacare, and others… hello $1,000 tax-free per person per month. So simple. So effective.

Wait, is $12k/ye enough to cover medical?  What about disability, leave that in place?

[Pointedstick]

Maybe there could be a subsidized federal TRULY CATASTROPHIC health insurance policy that you can get that covers very expensive ailments or chronic conditions or something. Maybe a subsidized end-of-life insurance policy too. I dunno.

But the general idea is that without all of these subsidies, the cost of various things would fall. Without all the ridiculous subsidies and mandates and regulations that grossly inflate the true cost of medical care, it seems insane to imagine that the average person would spend more than a few thousand dollars a year, if that. Most people are not half falling over dead with expensive medical problems that require a terrifying array of prescription drugs. Most people do not truly need to see a medical professional all that often. Most typical minor health problems solve themselves over time or can be self-treated with better diet and more physical activity.

And anyway, the idea of a citizen's dividend isn't to unemploy the whole country, it's to provide a baseline for life so unemployed/unemployable people don't die in a ditch, without distorting the economy too much. I think it is absolutely reasonable to expect that a single person can survive on $12k a year if they are unable or unwilling to find employment. A family of three would be getting $36k, on top of whatever money their work brought in. My own three-person family already lives on less than that per year. These numbers do not seem stingy to me. If the heads of that family want to spend 100k a year on extravagance, they can… they just have to get the supplementary $64k they'd need from their jobs.

[Tyler]

I think it was MTex that once proposed universal federal health coverage for all medical expenses over $50k a year (truly catastrophic stuff) with elective private insurance playing in the field under that.  That would offer life-saving care to all while drastically reducing health insurance costs at the same time by capping claims at $50k and keeping people on the hook for personal responsibility in their everyday health choices. 

Combine that with some sort of dividend replacing the minimum wage and most entitlements, and that's a recipe for a darn solid financial plan.  At the very least, I like how it would make these government programs so much more transparent and fair to all. 

As an aside, if the government handed out $1000 per person per month, that would cover all of my expenses.  I'll take it. 

[WiseOne]

Love the idea of backstopping catastrophic medical expenses and instituting a citizen's dividend.  Yes I remember that health insurance thread - we were all in favor I think.

I was thinking more about the cost of medical care, and I think a truly enormous factor is the amount of unneeded care that goes on, in the name of evidence-based medicine.  There are some things that are worthwhile beyond debate:  treating diabetes by controlling blood sugar, epilepsy surgery, cancer treatments, immunomodulatory therapy for multiple sclerosis and other autoimmune disorders etc.  Yet, these are only a small slice of total medical spending.

The use of giant sized clinical studies to demonstrate tiny improvements in outcome from preventive tests or treatments are in themselves proof that the benefit is so small, it's not worth it.  You shouldn't need to treat 20,000 patients to see an effect; if it's worthwhile, 100 or 200 patients should suffice.  Yet, once these giant studies are done, large numbers of people are now coerced into adding on a new drug or getting a new recurring test.  And, we seem to have gotten to a place where no one is allowed to go through life without frequent physician visits, multiple drugs etc.  To be honest, I haven't been to a primary care doctor in years and long ago decided against many flavors of regular screening.

Imagine if we all rebelled against "evidence based medicine" and the attendant polypharmacy that results, plus made a few sensible steps to limit the enormous pot of wasted spending in futile end of life situations (don't get me started on what happens after cardiac arrest, for example).  If this is a major reason for the middle class going down in flames, then it is really important to rethink the path we are on.  What good is squeezing out that last 0.01% of heart attack risk, when it's done at the social cost of effectively destroying the middle class's quality of life?

[Mountaineer]

If this is a major reason for the middle class going down in flames, then it is really important to rethink the path we are on.  What good is squeezing out that last 0.01% of heart attack risk, when it's done at the social cost of effectively destroying the middle class's quality of life?

I know you are discussing medicine, but your point is exactly why I think the "climate change" hysteria is killing us - literally and figuratively.

... Mountaineer

[madbean]

What good is squeezing out that last 0.01% of heart attack risk....

Reminds me of the first time I had my cholesterol checked. I think I was about 55, so about 11 years ago. I remember when the test came back the lab had written in bold letters in red ink so the doctor didn't miss it that I had a 10% chance of having a "heart related incident" in the next 10 years. I remember thinking damn, those are pretty good odds. You mean there is a 90% chance I WON'T have a heart attack in the next 10 years? That's great news. The doctor didn't see it that way however. He was very concerned and wanted to put me on cholesterol medicine right away. I refused and he was the first of several doctors that eventually fired me as a patient (and just for the record I went to see him because of stiffness in my hands which I eventually had to figure out myself because he never did).

Having watched my Dad waste away in a nursing home eating up his life savings until he died and now watching my mother start down the same road I can't help but wonder what is really so bad about dying of a heart attack? Seriously. My Dad used to tell me over and over again a story about a friend of his who died of a heart attack while watching television and drinking a cup of coffee and he was still holding the cup of coffee in his hand without spilling a drop when his wife found him. Is there a better way to die than that?

[Kriegsspiel]

That's probably a close second to being sexed to death.

Number one when taking into account not spilling a cup of coffee, though.

[Cortopassi]

Just had 3 eggs for lunch, and crabcakes fried in bacon fat for dinner.

Don't want to start anything here but I have done enough research and am glad to see the tide is turning on the whole saturated fat and cholesterol mistakes of the past 30-40 years.

My hope is that in the next 10-20 years we:

1) Real cold fusion or some other relatively limitless power.  That may cause a lot of heartache short term but would have huge benefits long term.  At a minimum I would hope it could keep us out of the Middle East!  So maybe problems can be solved if power wasn't an issue.
2) Nanotech/gene/stem cell or other star trekkie type medicine where it is simple and cost effective for most to be healthy until the day they die.

What that all does to jobs/wars/etc remains to be seen.  I just hope it happens in my lifetime and humans survive the fallout.

[WiseOne]

Having watched my Dad waste away in a nursing home eating up his life savings until he died and now watching my mother start down the same road I can't help but wonder what is really so bad about dying of a heart attack? Seriously. My Dad used to tell me over and over again a story about a friend of his who died of a heart attack while watching television and drinking a cup of coffee and he was still holding the cup of coffee in his hand without spilling a drop when his wife found him. Is there a better way to die than that?

As the saying goes..."you gotta die of SOMETHING.".

The cholesterol medication, even if it worked, isn't going to "prevent you from dying" - all it can even theoretically do is prolong life by an uncertain length of time.  And there's nothing to guarantee the quality of that extended time either.  Especially if it involves taking 10-15 medications, all with attendant side effects.

As Mountaineer put it...it is almost at the level of hysteria. Simple solution though.  My mother figured all this out on her own btw.  She is almost 80 and went to see a primary care doctor just once in the past 15 years or so.  The PMD in question tried to convince her to get a mammogram.  She refused.

[MachineGhost]

I'm arguing that the problem arises because it is beyond the ability of many people to develop a financially efficient lifestyle in a world where it's way easier to consume on a large scale than it was 30 years ago.  I grew up in the 1970s and there just weren't as many consumer options then as now.  So I guess you could blame globalization in a way, but I tend to think that the development of suburbs with oversized houses and built-in need to use cars to get everywhere is at least as much to blame.

Yup, but I'll add credit cards to that list.  That made the suburban shopping mall possible.  I fondly remember going to a couple of spanking brand new multi-floor malls in the late 70's.  It was the new new new thing for the time.  From 1983:

[align=center][img width=800]https://s-media-cache-ak0.pinimg.com/73 ... 34fdd0.jpg[/img][/align]

A cute movie, BTW.

[MachineGhost]

But we're talking about averages. I think it's pretty obvious that average is harder now that it was before. What does this mean? I don't know. But it doesn't seem like a positive development for society in general.

I think we're now in that hairy transition phase between capitalism and post-capitalism.  With the demise of unions which is what all but perpetuated the middle class for decades and offshoring of low cost, middle and tech skilled jobs to China and now Vietnam, the transition will not be easy.  Reshoring uses a lot more automation and robotics.  What exactly can we do with all these sub-educated and unemployable "Great Unwashed"?  $16 an hour is almost an unbelievable stretch for flipping burgers.  That's twice the average Social Security check!  Great Inflation here we come.

[MachineGhost]

I don't know about San Francisco, but the middle class is alive and well in New York City -  in upper Manhattan (above 125th street) or the outer boroughs, outside of the upscale Manhattan or Brooklyn neighborhoods.  Aren't there neighborhoods like this in San Fran or around it?  Oakland certainly has its middle-class neighborhoods if that counts.

If you're absolutely determined to live on Park Avenue or Central Park South on a middle class salary, then...yes I suppose you'd be highly dissatisfied that your wages haven't kept up :-)

I think the definition of "middle class" changes depending on location.  Here, you would need a six figure income to live an upper middle class lifestyle and then that barely covers everything.  So either you have a single lucky breadwinner earning that much or both parents have to work and both earn >50K.  So by default, everyone else is pretty much lower middle class or working class.  It is virtually impossible to tell them apart because everyone is so concerned about materialistic appearances.  The ones with any sense (i.e. non-upper class white people) left long ago for greener pastures (i.e. Texas, Northwest, Midwest).  I see the stark difference because I went in the opposite direction, unfortunately!  It's not easy at all to downgrade your expectations, lifestyle or even the environment, so I don't feel anyone really does it voluntarily.  I can think of only two valid reasons why anyone in their right mind would permanently move here if they're not already upper class: 1) Silicon Valley 2) aspiring actor/actress or to do porn.  This is also some sort of lesser modeling industry in LA but I haven't looked too closely into that.  So basically, if you're wealthy, are a trust fund kiddie or are ridiculously attractive, the world is your oyster and you can live in expensive, tony enclaves and avoid all the "Great Unwashed".

[Pointedstick]

The ones with any sense (i.e. non-upper class white people) left long ago for greener pastures (i.e. Texas, Northwest, Midwest).  I see the stark difference because I went in the opposite direction, unfortunately!  It's not easy at all to downgrade your expectations, lifestyle or even the environment, so I don't feel anyone really does it voluntarily.

Isn't this the whole goal of ERE? Besides, at least two posters on this very forum have indeed downgraded their lifestyles and moved away from California to flyover country states: Tyler and me.

Besides, leaving California is hardly something I would call a downgrade. Where I live, the taxes are lower, the cost of living is lower, the laws are more permissive, and the weather is nicer (if you like weather ). Just about the only things one would miss are the dynamism of a youth culture (which is irrelevant if you aren't actually actually like that) and the fast-paced high-paying job environment (which is irrelevant if you're already retired or your work is location-independent).

[MachineGhost]

The ones with any sense (i.e. non-upper class white people) left long ago for greener pastures (i.e. Texas, Northwest, Midwest).  I see the stark difference because I went in the opposite direction, unfortunately!  It's not easy at all to downgrade your expectations, lifestyle or even the environment, so I don't feel anyone really does it voluntarily.

Isn't this the whole goal of ERE? Besides, at least two posters on this very forum have indeed downgraded their lifestyles and moved away from California to flyover country states: Tyler and me.

Besides, leaving California is hardly something I would call a downgrade. Where I live, the taxes are lower, the cost of living is lower, the laws are more permissive, and the weather is nicer (if you like weather ). Just about the only things one would miss are the dynamism of a youth culture (which is irrelevant if you aren't actually actually like that) and the fast-paced high-paying job environment (which is irrelevant if you're already retired or your work is location-independent).

I was talking about moving to California.  Implicit in that was always upgrading your life to achieve the American Dream.  But in reality, leaving California would be an upgrade on many, many metrics.  The thing is if someone is upper class already, they don't think about any of this because they're simple immune to worrying about it (other than their pathetic annual bitching about taxes they can easily afford).  They're out of touch and they probably don't even care.  And smugness about being in the top 1% feels extremely good, constantly reinforced by the top 1% company you hang out with.

In my mind, ERE seems like a fallback crutch for those that did not or cannot possibly achieve the American Dream.  Has that become the epitome of practical American success nowadays?  Leaving aside all the conspicious-consumption-shopping-mall-materialism that the Valley used to represent (I feel Republican Orange County is much better representative for that lifestyle now), ERE is now a race to the bottom and that bothers me.  That kind of mass downward mobility is not good for society.  Imagine if China was going in reverse as California has been!  What SF/LA has that Detroit and other shitholes do not is enough exclusive enclaves for upper class people and overpaid six-figure tech/media industry jobs for smart/beautiful people to generate or attract the wealthy upper class that can then afford to live there.  Within that context, them paying higher taxes almost seems justified but it does not rectify the core problem of a rotting foundation.

Maybe I am too envious.  But what really gets my goat about all these upper class people is they don't produce a hill o' beans of value creation via working that corresponds with their ridiculous incomes.  It is not a pure meritocracy any more than Wall Street is.  I don't care if they're keeping up appearances and are broke at a higher level, they're living the 1% lifestyle that 99% won't ever in their lifetimes.  That is not how capitalism is supposed to work.

[Pointedstick]

What is "The American Dream," anyway? If ERE represents abandoning it, then it must really suck.

In what way is ERE a race to the bottom? If anything, ERE grants you the luxury of being able to spend a lot of money on true quality that will last rather than spin your wheels endlessly skimping to buy crap that needs to be replaced soon because it's all you can afford in the moment.

[MachineGhost]

Having survived the great depression and WWII, my Grandparents were grateful to own a two bedroom one bath home in the 1950’s.  When they were able to afford a window A/C unit and a color TV with remote in the late 1960’s they thought they were really living large. But during this whole time of prosperity they never forgot the hardships of their youth. They lived below their means as a way of life. The window A/C unit was only run for a short time during the evenings right before bed or on Sunday’s right before the Sunday meal; Texas heat. All meals were homemade and going out to eat was a treat reserved for very special occasions. They managed to live, for them, a very comfortable life on the combined salaries of a “road worker”? and “cafeteria lady”?. Their true happiness came from taking care and pride in what they did own, and of course, their relationship with friends and family.  I miss them both!

I really admire stories like this, but that kind of simple lifestyle just cannot fly in today's age of 24/7 narcissistic media psychomanipulation.  Continual human happiness is contingent on what you and other people own and have; unhappiness is when you don't have something that others do.  This is biological.  You'll never eradicate it, but like Spock, it must be managed, controlled and nipped in the bud.  That's not fun compared to giving in.

[MachineGhost]

No, food is cheaper.

But at what cost?  It's mostly nutritionally devoid, monoculture "food" destroying our inherited agricultural diversity and heritage.... so much that now we're resorting to GMOs and dietary supplements to fix the unmitigated damage.  All just to feed fat fuck obese junk food eating Ugly Americans.   Sometimes I don't think a dystopian movie could have been better written than what is going on today.

[MachineGhost]

Off topic, but it turns out Pepsi is removing aspartame from Diet Pepsi and replacing it with sucralose and ace-k. Idk why they don't just use stevia?

It's mouth feel, aftertaste and supply issues.