Tuesday , November 12 2019
Home / LewRockwell / The Political Parties and the Media Have Abandoned the Working ‘Middle Class’

The Political Parties and the Media Have Abandoned the Working ‘Middle Class’

Summary:
Where is the line between “working class” and “middle class”? Maybe there isn’t any. Defining the “middle class” has devolved to a pundit parlor game, so let’s get real for a moment (if we dare): the “middle class” is no longer defined by the traditional metrics of income or job type (blue collar, white collar), but by an entirely different set of metrics: 1. Household indebtedness, i.e. how much of the income is devoted to debt service, and 2. How much of the household spending is funded by debt. 3. The ability of the household to set aside substantial savings / capital investment. 4. The security of the households’ employment. 5. The dependence of the household wealth on speculative asset bubbles inflated by central bank

Topics:
Charles Hugh Smith considers the following as important:

This could be interesting, too:

Tyler Durden writes India’s Factory Output And Electricity Demand Plunge To Decade Lows Amid Economic Downturn

Tyler Durden writes America Needs A War On Waste – 100 Examples Of Federal Taxpayer Abuse

Tyler Durden writes Jimmy Carter Hospitalized For Brain Surgery

Tyler Durden writes ‘Solutions Are Obvious’ – The US Higher Education System Is Broken

Where is the line between “working class” and “middle class”? Maybe there isn’t any.

Defining the “middle class” has devolved to a pundit parlor game, so let’s get real for a moment (if we dare): the “middle class” is no longer defined by the traditional metrics of income or job type (blue collar, white collar), but by an entirely different set of metrics:

1. Household indebtedness, i.e. how much of the income is devoted to debt service, and

2. How much of the household spending is funded by debt.

3. The ability of the household to set aside substantial savings / capital investment.

4. The security of the households’ employment.

5. The dependence of the household wealth on speculative asset bubbles inflated by central bank policies.

6. The percentage of the household income that is unearned, i.e. derived not from labor but from productive assets.

7. The exposure of the households’ employment to automation, AI or offshoring.

8. How much of the household income is government transfers: benefits, subsidies, etc.

After writing about the middle class and America’s class structure in depth for over a decade, it seems to me the actual, real-world class structure is something along these lines:

1. No formal earned income, dependent on government transfers, possibly supplemented by informal “black market” income; no family wealth.

2. The Working Poor, those laboring at minimum wage or part-time jobs with few if any benefits. This class depends on government transfers to get by: EBT (food stamps), housing subsidies, school lunch subsidies, Medicaid, etc. Highly exposed to reductions in hours, tips, gigs, etc. and layoffs.

3. The “muddle class” which muddles through on earned income, much of which goes to debt service (student loans, auto loans, mortgages, credit cards) and skyrocketing big-ticket expenses: rent, healthcare, childcare, etc. Unable to save enough to move the needle on household capital, any net worth is dependent on speculative asset bubbles continuing to inflate. Highly exposed to layoffs or destabilizing changes in employment status: from full-time to part-time, loss of benefits, etc.

This article from WSJ.com describes the Muddle Class: Families Go Deep in Debt to Stay in the Middle Class

4. The Protected Class with secure income/earnings and benefits: this includes the nomenklatura of government employees, mid-level technocrat / managerial employees in academia, government-funded non-profits, etc., and retirees with Medicare, Social Security and other income (pensions, unearned investment income, etc.) and family assets (home owned free and clear, substantial 401K nest eggs, etc.)

5. “Winner Take Most” Corporate America / market-economy households: top managers and salespeople, entrepreneurs, successful business owners, speculators in financialization/asset bubbles, marketers, those earning substantial royalties, etc. Most work crazy-hard and make sacrifices, as per this article from The Atlantic: Why You Never See Your Friends AnymoreOur unpredictable and overburdened schedules are taking a dire toll on American society.

6. The wealthy and super-wealthy. Many continue working hard despite being worth tens of millions or hundreds of millions of dollars, as per this article from NYT.com: Why Don’t Rich People Just Stop Working? Are the wealthy addicted to money, competition, or just feeling important? Yes.

7. The upper reaches of this class constitute a Financial Aristocracy / Oligarchy / New Nobility, those who have leveraged mere wealth into political, social and financial power.

8. The Mobile Creatives Class, currently small but expanding, which essentially obsoletes the entire status quo of working for an employer (often to get benefits), going heavily into debt for a college degree, vehicle, house, wedding, etc., hiring employees and paying outrageous prices to live in an overcrowded, soul-destroying city, etc.

I’ve written often about Mobile Creatives, but the basic idea is multiple income streams and forms of capital provide security rather than depending on the state or an employer: Career Advice to 20-Somethings: Create Value as a Mobile Creative.

Where is the line between “working class” and “middle class”? Maybe there isn’t any. The old definitions of working and middle class were social more than financial–the middle class was better educated (school teacher, etc.) than the working class (factory worker, skilled tradesperson) but both could aspire to owning a home and giving their children a more secure life than they had started with.

The working class was not limited to the working poor: working-class jobs provided security and social mobility, just like white-collar middle class jobs.

What differentiates classes now is debt, employment security and the ability to build household capital that isn’t just a sand castle of speculative bubble “wealth.” The worker with tradecraft skills (welding, logger, etc.) has more security and earning power than a college graduate with few skills that can’t be outsourced or automated.

Many college graduates work in sectors that are highly exposed to layoffs and downsizing once the economy contracts: food and beverages, hospitality, etc.

Charles Hugh Smith
Charles Hugh Smith is an American writer and blogger. He is the chief writer for the site "Of Two Minds". Started in 2005, this site has been listed No. 7 in CNBC's top alternative financial sites. His commentary is featured on a number of sites including: Zerohedge.com., The American Conservative and Peak Prosperity. He graduated from the University of Hawaii, Manoa in Honolulu. Charles Hugh Smith currently resides in Berkeley, California and Hilo, Hawaii.

Leave a Reply

Your email address will not be published. Required fields are marked *