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Labor bubble

KevinKohler

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Most folks refer to the 50s, 60s, and to some extent the 70s, when they talk about the golden years of American production and exportation. It was this time period that the middle class emerged as the dominant force driving our economy. And a great many, even MOST, of the jobs that enabled this growth...were union jobs.

I believe the reason unions thrived was because the US more or less enjoyed a monopoly on most types of production for most of this time period. Europe was rubble. The Japanese were slightly better off, but they were still playing catch up, technologically speaking, in a few areas. And Russia...well, Russia was communist, and I heard that didn't work out to well for them. So, mass produced goods were largely US made. This meant that sales were such that, even with low prices, both profits, and union wages could be high, without hurting the bottom line. True?

Would that, then, be a bubble? Was/is our middle class, hailed by many as the driving power of the American economy, nothing more than the byproduct of monopolization on a global scale?

And if so, then is it fair to say that said middle class will never return in force?
 

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Most folks refer to the 50s, 60s, and to some extent the 70s, when they talk about the golden years of American production and exportation. It was this time period that the middle class emerged as the dominant force driving our economy. And a great many, even MOST, of the jobs that enabled this growth...were union jobs.

I believe the reason unions thrived was because the US more or less enjoyed a monopoly on most types of production for most of this time period. Europe was rubble. The Japanese were slightly better off, but they were still playing catch up, technologically speaking, in a few areas. And Russia...well, Russia was communist, and I heard that didn't work out to well for them. So, mass produced goods were largely US made. This meant that sales were such that, even with low prices, both profits, and union wages could be high, without hurting the bottom line. True?

Would that, then, be a bubble? Was/is our middle class, hailed by many as the driving power of the American economy, nothing more than the byproduct of monopolization on a global scale?

And if so, then is it fair to say that said middle class will never return in force?
We had much less income disparity back then, and I suspect the fact that our middle class developed and flourished during the mid 20th century was the result of increases in wealth and productivity being spread pretty much proportional between all income classes. Sometime during the 1970's, income and wealth growth started skewing to the richest of us, and the middle class stagnated.

I think that is is perfectly possible for the middle class to do well again, but I think that it would take some changes in public policy.
 

specklebang

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As it happens, I don't agree with you but I sure would like to hear your thoughts on why the "skewing" began. I think we're close in age so it's odd that we have different memories of reality.

Rich people have always gotten richer. Having money makes it easier to make more money. Poor people generally have poor ways and keep themselves poor through bad decisions. The "middle class" is very substantial and it still is.

...and what are these "public policy" changes you think would make "the middle class do well again"? Aren't you one of the middle class?


We had much less income disparity back then, and I suspect the fact that our middle class developed and flourished during the mid 20th century was the result of increases in wealth and productivity being spread pretty much proportional between all income classes. Sometime during the 1970's, income and wealth growth started skewing to the richest of us, and the middle class stagnated.

I think that is is perfectly possible for the middle class to do well again, but I think that it would take some changes in public policy.
 

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As it happens, I don't agree with you but I sure would like to hear your thoughts on why the "skewing" began. I think we're close in age so it's odd that we have different memories of reality.

Rich people have always gotten richer. Having money makes it easier to make more money. Poor people generally have poor ways and keep themselves poor through bad decisions. The "middle class" is very substantial and it still is.

...and what are these "public policy" changes you think would make "the middle class do well again"? Aren't you one of the middle class?
Yes, I am one of the lowly middle classers, but I suspect that I am a good bit (as in maybe 20 years) younger. I have absolutely no idea why incomes started skewing to the wealthy, and I don't base such claims on my memory, all I know that it is a fact proven by historical data.

I was actually thinking about starting a thread on that subject, but I really didn't want to hear the rants by those on the far right who would claim that the rich are more personally productive and smarter than they were 40 years ago.
 

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But here are a few theories:

• Our population has become desensitised to income disparity, basically just accepting that if the median worker gets a 3% raise, the boss should get a 20% raise
• the lowering of the top income tax rate may have affected income disparity
• inheritance, the passing on of unearned multigenerational wealth
• shifts away from unionization
• increased consolidation of power amongst the wealthy
• greed is now considered to be good, and lying, cheating and stealing are now acceptable ways of obtaining it.

It's probably a little of all of that.
 

KevinKohler

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What changes? More unions? I'm fairly anti union, as I see them now. If I owned a business, I would literally burn it to the ground if it looked like a union was about to slime it's way in.

Increases to minimum wage? That royalty screws the folks making just above minimum wage. Ruins morale. Etc. and, increases prices of goods and services. You can say market competition will keep those prices down, but if we made a graph of the cost of living over the years, vs the increase to minimum wage, the two lines would more or less mirror each other, with a few variances in some states, like CT. And besides, when 1% of the population owns 80% of everything, not a lot of market competition happening there.

Harsher death/estate taxes? A, that'll never happen, because our politicians are the products of inherited wealth, and B, it's pretty "un-American".

Increased progressive tax rates? That's the only way I see it happening. That, and the decreased work week. But countries that have those things are not fairing well. France. Greece. Those folks hardly work at all, and it's showing. Italy too.

I want consumers to spend more. That means increases to the spending power of those most likely to spend.

But I honestly don't think the blue collar, middle class man will ever return. It was a bubble, and it popped.

Maybe it's just the state I live in, I don't know. Median income here is around 48k, which I make slightly more. But to be middle class here, I need to be making at least 80k. I don't even know how the people making 9 an hour do it here.
 

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For the record, I'm 32. All the info I have about the 50s, 60s, and 70s is from my parents, books, some TV, and the Internet. Oldest thing I can wax poetic about are skating rinks, and video arcades. Those were great.
 

specklebang

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I think we're simply seeing evolutionary process. There is no resemblance between the agricultural, post-industrial and pre-technology age and modern times. The US was a self-contained economy then and now we must compete with the 200 some countries that share the planet with us.

The way we work, what we do and how we prepare our new generation is undergoing a massive change. So, yes, low-skill labor is no linger as valuable as it once was. But it's not a bubble in the classic sense.

We still have a substantial middle class despite all the weeping and moaning some put forth.


Most folks refer to the 50s, 60s, and to some extent the 70s, when they talk about the golden years of American production and exportation. It was this time period that the middle class emerged as the dominant force driving our economy. And a great many, even MOST, of the jobs that enabled this growth...were union jobs.

I believe the reason unions thrived was because the US more or less enjoyed a monopoly on most types of production for most of this time period. Europe was rubble. The Japanese were slightly better off, but they were still playing catch up, technologically speaking, in a few areas. And Russia...well, Russia was communist, and I heard that didn't work out to well for them. So, mass produced goods were largely US made. This meant that sales were such that, even with low prices, both profits, and union wages could be high, without hurting the bottom line. True?

Would that, then, be a bubble? Was/is our middle class, hailed by many as the driving power of the American economy, nothing more than the byproduct of monopolization on a global scale?

And if so, then is it fair to say that said middle class will never return in force?
 

KevinKohler

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Where are these middle classers? Where do they work? What do they do? And are they hiring?
 

Fisher

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Most folks refer to the 50s, 60s, and to some extent the 70s, when they talk about the golden years of American production and exportation. It was this time period that the middle class emerged as the dominant force driving our economy. And a great many, even MOST, of the jobs that enabled this growth...were union jobs.

I believe the reason unions thrived was because the US more or less enjoyed a monopoly on most types of production for most of this time period. Europe was rubble. The Japanese were slightly better off, but they were still playing catch up, technologically speaking, in a few areas. And Russia...well, Russia was communist, and I heard that didn't work out to well for them. So, mass produced goods were largely US made. This meant that sales were such that, even with low prices, both profits, and union wages could be high, without hurting the bottom line. True?

Would that, then, be a bubble? Was/is our middle class, hailed by many as the driving power of the American economy, nothing more than the byproduct of monopolization on a global scale?

And if so, then is it fair to say that said middle class will never return in force?
No, it would not be fair, nor is your seeming conclusion that unions lead to all that wealth. Not that many people go to college with the aspirations of working in a factory. The middle class is fine. They just watch too much Bravo TV and think they need to live like the House Bitties of Wherever and they then make bad financial choices. The problem isn't that they aren't making money--it is that they are blowing it on things that do not create wealth for them like Escalades and BMW's in their driveways, plasma TV's, iCrap, and on and on and on.
 

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No, it would not be fair, nor is your seeming conclusion that unions lead to all that wealth. Not that many people go to college with the aspirations of working in a factory. The middle class is fine. They just watch too much Bravo TV and think they need to live like the House Bitties of Wherever and they then make bad financial choices. The problem isn't that they aren't making money--it is that they are blowing it on things that do not create wealth for them like Escalades and BMW's in their driveways, plasma TV's, iCrap, and on and on and on.
Is frugality sound policy on the account of the primary spenders in a consumer economy?
 

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What changes? More unions? I'm fairly anti union, as I see them now. If I owned a business, I would literally burn it to the ground if it looked like a union was about to slime it's way in.
I'm not particularly for state laws that give unions an unfair advantage in negotiations, however there is logic in having collective bargaining to even out negotiating power. I'm no recommending more unionization, I'm just saying that the movement away from unions may have been a contributor to the skewing of income.

Increases to minimum wage? That royalty screws the folks making just above minimum wage. Ruins morale. Etc. and, increases prices of goods and services. You can say market competition will keep those prices down, but if we made a graph of the cost of living over the years, vs the increase to minimum wage, the two lines would more or less mirror each other, with a few variances in some states, like CT. And besides, when 1% of the population owns 80% of everything, not a lot of market competition happening there.
I would imagine that increases in minimum wage would increase the income of most everyone who is a lower paid worker, not just minimum wage workers, while the wages of those in the top percent or so would probably tend to stagnate a little, which would reduce income disparity. Again, I am not suggesting huge increases in the minimum wage, only that it needs to at least keep up with increases in our aggregate productivity.

Harsher death/estate taxes? A, that'll never happen, because our politicians are the products of inherited wealth, and B, it's pretty "un-American".
No tax is harsh to a dead person. I'm talking about possibly higher taxes on unearned freeby income. Since when did Americans think that they are entitled to free money that they didn't personally earn, without having to pay any taxes?

Increased progressive tax rates? That's the only way I see it happening. That, and the decreased work week. But countries that have those things are not fairing well. France. Greece. Those folks hardly work at all, and it's showing. Italy too.
Increasing the progressivity of our income tax in no way implies higher income tax rates. It can very well mean lower taxes for the masses. I actually think that only "excess" income, or income that is not earned though personal productivity should be taxed. Tax on work and personal productivity is one of the two most harmful taxes to both the individual and our overall economy.

I want consumers to spend more. That means increases to the spending power of those most likely to spend.
Me too. That means either lower taxes or higher incomes for the worker/consumer class. You just shot down every idea that I had which did either.
 

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No, it would not be fair, nor is your seeming conclusion that unions lead to all that wealth. Not that many people go to college with the aspirations of working in a factory. The middle class is fine. They just watch too much Bravo TV and think they need to live like the House Bitties of Wherever and they then make bad financial choices. The problem isn't that they aren't making money--it is that they are blowing it on things that do not create wealth for them like Escalades and BMW's in their driveways, plasma TV's, iCrap, and on and on and on.
What you are suggesting is great for the individual, more savings and investment, and less spending. However, if everyone reduced their spending, unemployment would increase, thus spending would decrease even more, and business profits would decline as they are based upon sales, and overall incomes would decrease. So what money would people use to save and invest with, and what would they invest in - companies loosing money?

You are basically suggesting that we would be better off if we had another depression. Rediculous.
 

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Is frugality sound policy on the account of the primary spenders in a consumer economy?
Individual policy and government policy are too different things. I have seen enough people here lament the growing wealth gap to use it as a basis of policies to take from the wealthy when it is related to numerous things, including that the middle class in not amassing wealth because they are wasting it.

What you are suggesting is great for the individual, more savings and investment, and less spending. However, if everyone reduced their spending, unemployment would increase, thus spending would decrease even more, and business profits would decline as they are based upon sales, and overall incomes would decrease. So what money would people use to save and invest with, and what would they invest in - companies loosing money?

You are basically suggesting that we would be better off if we had another depression. Rediculous.
Yes, your response is Ridiculous. At least we agree about that.

"Max out your credit and waste all your money paying us interest if you want to be a true American!!!" That should be the Capital 1 Motto.
 

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Individual policy and government policy are too different things. I have seen enough people here lament the growing wealth gap to use it as a basis of policies to take from the wealthy when it is related to numerous things, including that the middle class in not amassing wealth because they are wasting it.



Yes, your response is Ridiculous. At least we agree about that.

"Max out your credit and waste all your money paying us interest if you want to be a true American!!!" That should be the Capital 1 Motto.
Frugality =\= living within ones means.
 

Fisher

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Frugality =\= living within ones means.
Living within one's means does not create wealth for the individual. It is what they do within their means that decides that. If you make $30K a year and are buying a Benz, then you are making poor investments within your means.
 

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Living within one's means does not create wealth for the individual. It is what they do within their means that decides that. If you make $30K a year and are buying a Benz, then you are making poor investments within your means.
They should have bought a Toyota, instead?
 

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For the record, not once has anyone said anything about helping poor people become middle class. I simply want them to be able to spend more money.
 

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Or a used car and saved the difference to make a downpayment on a house.
Reality seems to elude you. First, used cars cost MORE than new cars, unless you have the cash to buy them outright, no financing. Unless you buy a beater for 500 bucks. Which typically means that, unless you are pretty handy with cars (most aren't, auto shop is no longer taught in HS), you'll be buying another within months. For people making 9 bucks an hour, saving 5 grand is gonna take a couple years, even at the most staunchly frugal. So, in the meantime, what do they drive? So, yeah, the new civic financed at 5% costs less than the used one financed at 20+%.

House? Do you even know what it takes to get approved for even an FHA loan these days?


And none of this addresses the very real damage this mindset applied broadly would do to our economy.
 

Fisher

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Reality seems to elude you. First, used cars cost MORE than new cars, unless you have the cash to buy them outright, no financing. Unless you buy a beater for 500 bucks. Which typically means that, unless you are pretty handy with cars (most aren't, auto shop is no longer taught in HS), you'll be buying another within months. For people making 9 bucks an hour, saving 5 grand is gonna take a couple years, even at the most staunchly frugal. So, in the meantime, what do they drive? So, yeah, the new civic financed at 5% costs less than the used one financed at 20+%.

House? Do you even know what it takes to get approved for even an FHA loan these days?


And none of this addresses the very real damage this mindset applied broadly would do to our economy.
No you are eluded by the reality is that if you make $9/hour and pay 20% interest on anything it is because you make poor financial decisions, not because you make $9.00 per hour. FHA loans are 0% down loans which is why it is harder to get one, especially if you cannot afford to put anything down. Those are also the loans where the PMI doesn't drop off at 78% so you are going to be paying an extra 1 1/2% until your refi with 20% equity because you didn't save up a down payment because you couldn't afford to because you chose to buy a brand new car, most of the profit from which went overseas which you apparently think is good for the american economy.
 

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Most folks refer to the 50s, 60s, and to some extent the 70s, when they talk about the golden years of American production and exportation. It was this time period that the middle class emerged as the dominant force driving our economy. And a great many, even MOST, of the jobs that enabled this growth...were union jobs.

I believe the reason unions thrived was because the US more or less enjoyed a monopoly on most types of production for most of this time period. Europe was rubble. The Japanese were slightly better off, but they were still playing catch up, technologically speaking, in a few areas. And Russia...well, Russia was communist, and I heard that didn't work out to well for them. So, mass produced goods were largely US made. This meant that sales were such that, even with low prices, both profits, and union wages could be high, without hurting the bottom line. True?

Would that, then, be a bubble? Was/is our middle class, hailed by many as the driving power of the American economy, nothing more than the byproduct of monopolization on a global scale?

And if so, then is it fair to say that said middle class will never return in force?
depends on how we respond to the global economy and the coming post-labor economy. many people complain about the public sector, but when your economy is seventy percent consumer spending, it helps if those consumers have jobs. if the private sector can't pick up the slack and pay good wages, someone has to. either that, or we will have to reconsider our resource distribution model. i'd vastly prefer people actually doing something to get the money, though. there's plenty that needs to be done; just take an hour long drive, and you'll see multiple examples. also, our energy model is idiotic, and i see replacing it as a major opportunity.
 

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I feel this bubble is due to three things, over-dependance on education, wage/wealth disparity, and automation.

There will never again be the day that sweeping factory floors or shining shoes will start a career. The local high school is trying to hire janitors, but only if they have a BA in Custodial Engineering. There's just no true "entry level" positions. Everything is specialized and expects a high degree of education. This is one cause of the labor bubble, because it only rewards the people who are already rich enough to go to college. My college tuition was payed with student loans but, I worked two jobs just to pay rent and eat. For most people, they have to have someone backing them financially, because student loans are a joke. That makes it extremely difficult, to the point of practical impossibility, for most poor people to get a college degree. The ultimate effect is an increasing wage gap between the poor and the middle class, and essentially lowering the careers of the middle class to what the poor used to do; a college grad would be happier than a pig in mud to actually get a job flipping hamburgers, because it would atleast be employment.

The wage/wealth disparity is getting a lot worse in America. With typical CEO/Executive pay exceeding a 200:1 ratio to the average employee, it dramatically cuts the upward mobility of the average employee. Staying at one job, being loyal and competent, and not playing power games, is essentially the best way to stay a low paid worker and never be rewarded. With so fewer career opportunities and so little upward mobility, the middle class is not only stagnant, they have to fight just to stay stagnant. The rich are rewarded for being rich, they are NOT better workers. I won't deny that CEOs have a stressful job and work long hours, but a 200:1 ratio is just despicable. For those that say it's a "motivation", I say the jackpot on a scratch-off lotto ticket is a "motivation" to lose your money. The career path of the modern American is dependent on your starting wealth more than anything else, and the rest is luck, with an absolute minimum coming from effort and intelligence. Having a career in modern America shares quite alot with winning the lottery.

Automation is the biggest force that drives the middle and lower classes out of low-skill jobs. Some say this is just a sign of the times, and a call for more education. But, we don't need 10 million art therapists, and a million historical archaeologists, and 100 million business administrators, etc. Just educating the population won't actually make jobs available to them once they have the degree; the problem was never a lack of available workers, there just aren't any jobs. As automation increases, it puts more and more stress on the population to go after careers in skilled trades, but there just isn't enough demand for skilled workers. This all stems from the way automation profits the rich; putting people out of work is profitable. Either we, regulate automation to force employers to hire against their best interest and essentially force every industry to be a public works project, or embrace a new form of society that removes wealth from the equation.

In the end, it's not even a question of whether the labor bubble can be sustained, it can't. The question is when is the bubble going to burst. I encourage the burst, by the way, for this will be the dawn of the next phase of humanity. The system is just too broken to fix, we need a complete economic collapse before we can build it up better. I propose the Project Venus solution, essentially socialist utopia; the problem with people being pushed out of work is not with finding work for them, it's with the idea that those people NEED to work. If the economy pushes people out of the industry, that should be interpreted as a sign that we don't need those workers in any industry. If we implement an autonomous wealth distribution system, and completely take commercialism out of the equation, only public/government workers will be necessary. After that system is in place, an industry collapsing or playing power games will have no influence on the economic well being of the society or the individual.
 

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I'm getting really exhausted of the "they/you are too lazy/stupid" meme.

Remember what happened to that girl that said "let them eat cake"?
 

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No you are eluded by the reality is that if you make $9/hour and pay 20% interest on anything it is because you make poor financial decisions, not because you make $9.00 per hour. FHA loans are 0% down loans which is why it is harder to get one, especially if you cannot afford to put anything down. Those are also the loans where the PMI doesn't drop off at 78% so you are going to be paying an extra 1 1/2% until your refi with 20% equity because you didn't save up a down payment because you couldn't afford to because you chose to buy a brand new car, most of the profit from which went overseas which you apparently think is good for the american economy.
Of course the 20% interest isn't because of the wages earned by a particular person. They are high because the risk is high. Duh. And FHA loans require a minimum down payment of 5k. Learn your facts. The interest rate on FHA loans are fixed, either 30 year, or 40, though 40 year loans are rair. A 25-30% down payment on a 200k house is pretty tough to swing even for moderately wealthy people, without say, selling a house. Hondas are made in the US, just not by union labor. But you, being a good, party line towing, mainstream republicrat, don't mind that, right?
 
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