What Killed the Middle Class

The comments below are an edited and abridged synopsis of an article by Charles Hugh Smith

Smith lays out the core characteristics of classic middle-class security. By these standards, perhaps one-third of American households have the same security and assets as previous generations who identified themselves as middle class.

What Killed the Middle Class | BullionBuzz

The primary drivers of the erosion of the middle class are:

1. The shifting of pension and healthcare costs and risks from the state and employers to employees.

2. The decline of safe, secure high-yielding investments as central banks have driven savers into risky, crash-prone assets (stocks and junk bonds).

3. The decline of scarcity value in college diplomas that were once the ticket to middle class security.

4. The rise in big-ticket costs: higher education, healthcare and housing. Even as wages stagnate, these costs continue rising, claiming a larger share of household incomes, leaving less to save/invest.

5. The transition from a stable economy with predictable returns to a financialized boom-and-bust economy that wipes out middle-class wealth in the inevitable busts but does not rebuild it in the booms.

6. The regulatory and administrative barriers to self-employment, forcing most of the workforce into wage-slavery and/or dependence on the state.

7. The rising exposure of the US workforce to highly educated, lower-cost competing workforces in a globalized economy.

8. The decline of labour’s share of the US economy: The slice of the pie distributed to earned income is declining.

9. The share of the earned-income slice going to the top 5% is rising.

10. The wealth of the middle class is tied up in the family home, a non-income producing asset prone to the swings of housing bubbles and busts.

That’s a lot of knives plunged into the middle class. Rounding up the usual suspects won’t restore a vibrant middle class; that will require a systemic transformation of the US economy and society from the ground up.

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