The Economist: As jobs fade away
The middle-class has been shrinking slowly for years, but in the fallout from the Panic of 2008, the process has accelerated. I remember from history class the upheaval caused by the Industrial Revolution, and wonder if we are now in for stormy times as well.
Americans were keenly aware of growing inequality even before the recession; in 2007, the top 1% of earners took home 23.5% of all income earned, the highest share since 1928. Since the crisis, they have been incensed, and frustrated, by the return of good times to Wall Street while Main Street languishes.
Stratospheric salaries in the financial sector are a meaty target, but middle-class weakness has more to do with deeper economic shifts. In recent decades the American economy has become increasingly polarised. Jobs have been plentiful for low and high-skilled workers, but employment opportunities for middle-skilled labourers have become much scarcer. While the Great Recession dealt a blow to Wall Street oligarchs, it greatly accelerated the withering of the broad middle.
Technology is the main culprit. Automation and outsourcing have claimed whole classes of jobs. Among them are routine but vital tasks that were labour-intensive before the computing revolution: manufacturing and number-crunching jobs that used to pay handsomely. The economy now needs workers to do what can’t be done by machines or call-centres in Bangalore, which leaves iPad design and caretaker work but not enough in between.
How to maintain a stable middle class amid sweeping technological change is a problem the developed world is only beginning to appreciate.
At first, industrialization caused even greater disparities of wealth, but fortunately, that became less permanent, and a broad middle class developed. But the process was painful, and often bloody.
What if our new technology-based economy does not lend itself to a broad middle class, but the historical divide that mankind had always endured -- most very poor, with a few rich?