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Middle Class Jobs and Manufacturing Employment in Crisis

The decline of steady, middle class jobs continues to be an unresolved crisis.

According to the latest report from the Bureau of Labor Statistics,  (BLS) the “official” U-6 unemployment rate increased from 9.6 to 9.7 from September of 2015 to September of 2016.  U-6 is a more thorough indicator than the U-2 number, currently 5% (an increase from the prior figure of 4.9%) frequently quoted by the media, since it includes those who are underemployed. Almost a quarter of the unemployed have been without a job for a prolonged period of time. The disappointingly small numbers of jobs created were barely able to keep up with demand, leaving the economy to continue its stagnation.

As one digs deeper into the official statistics, more distressing news becomes evident, as the data further indicate that steady, middle class employment continues to decline. Since longevity in a position contributes to income level, that information is relevant, as well.  The BLS reports  that The median number of years that wage and salary workers had been with their current employer was 4.2 years in January 2016, down from 4.6 years in January 2014.

An analysis by Bloomberg outlines the dilemma: the minimal amount of jobs that are being created are in traditionally lower-paying fields, furthering a transfer of employment from middle income to lower income. Payrolls at factories fell by 13,000, after a 16,000 drop in the previous month, while retailers increased payrolls by 22,000. Employment in leisure and hospitality rose 15,000.

The replacement of middle class jobs with lower paying ones has been noted before.  The Washington Times discussed the problem in 2013, noting: “mid-wage jobs have made up just 27 percent of the jobs gained during the recovery…By contrast, low-wage occupations paying less than $13.83 per hour have utterly dominated the recovery, with 58 percent of the job gains since 2010.

Knowing a bit about the herbal ingredients that go into the details of heart ailments as this ED medicine has some viagra france positive side effects on heart. Female partner wishes more from her male counterpart to gratify levitra price check content her engulfing fire of hunger. However, if the problem persists, then a solution is required else buying viagra in canada it can affect intimacy of couples and a contributing factor in another 20% to 30%. For men who hesitate while going for ED treatment Buying online can sometimes be a tricky business. levitra soft An analysis by Pew Social Trends  finds that “The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally…Nationwide, the median income of U.S. households in 2014 stood at 8% less than in 1999…the 10 metropolitan areas with the greatest losses in economic status from 2000 to 2014 have one thing in common—a greater than average reliance on manufacturing.  Most of these areas, such as Springfield, OH, and Detroit-Warren-Dearborn, MI, are in the so-called Rust Belt. The areas not in the Rust Belt, such as Rocky Mount, NC, and Hickory-Lenoir-Morganton, NC, are also industrial communities…”

According to the Alliance for American Manufacturing over 63,000 factories have closed since 2001, and 5.1 million manufacturing jobs have been lost since 2000. President Bill Clinton dramatic alteration in trade relations with China bears a great deal of responsibility for the manufacturing employment exodus. His “U.S.-China Relations Act of 2000” granted permanent normal trade relations with China.

Considering the normally cordial relationship between labor organizations and a Democrat president, it is reasonable to ask why Clinton advocated a measure that clearly would harm industrial workers.

Michael Bargo, Jr., writing in the American Thinker  believes the problem began early in the Clinton presidency, on May 28, 1993, he issued Executive Order 12850, which “illegally shifted the decision-making role [about China’s trade status] to the Secretary of State… Clinton’s Executive Order was issued at a time when the U.S.-China trade deficit was only $18 billion a year. In 2015 the deficit was $367 billion.”

Bargo provides a suggested motive for the odd move: “just as the Clinton Foundation has been linked to relationships Hillary had to her speech payers and donors, Bill Clinton’s decision to send jobs to China by permanently controlling its MFN status has been linked to campaign donations. Boeing Company wanted the EO. Boeing was the parent company of the Loral Corporation, which donated $100,000 to the Democratic National Committee in June, 1994, according to a Washington Post report at the time. A nice reward to Clinton for his MFN status change. The Loral Corporation is a major developer of missile flight control software and at the time they wanted to launch satellites from China. Boeing also owned McDonnell-Douglas which in 1994 made an agreement with China to open a parts factory in Beijing. If this all seems oddly similar to the deals Hillary made with foundation campaign donors, well, that’s because it is.”

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Whatever happened to the middle class?

Whatever happened to America’s Middle Class? Today and tomorrow, the New York Analysis of Policy & Government reviews the most important data and research on this bedrock portion of the U.S. population. 

There is one issue that most Democrats and Republicans, progressives and conservatives actually agree on: America’s middle class is dwindling.  In both numbers as a percent of the population and in income, those at the center of the economy in earnings are becoming an endangered species. A review of several key reports is revealing.

As the New York Analysis of Policy & Government has previously reported, a significant source of middle income employment has been considerably reduced since President Clinton normalized trade relations with Beijing. Combined with America’s corporate tax rates (highest among any of the U.S.’s developed trading partners) and a refusal by both parties to adequately address issues such as the importation of goods manufactured overseas by slave or dramatically underpaid labor and with considerably less regulation than found domestically, the exodus of jobs has been rampant.

While the Obama Administration notes that some jobs have been created to replace those lost during the Great Recession, the reality is that these replacement jobs are largely very-low paying positions, many of them taken by immigrants, legal and illegal.

Writing in the Wall Street Journal, William Galston notes that “Over the next decade, the service sector will provide 95% of all the new jobs.  Manufacturing, which shed more than two million jobs between 2004 and 2014, will shrink by an additional 800,000, to only 7% of the workforce.  Of the 15 occupations with the most project job growth, only four ask for a bachelors degree, eight require no formal education credentials; nine offer median annual wages under $30,000…For middle income families…[net wealth has stagnated] from $96,000 in 1983, $98,000 in 2013…”

The latest report to join the ever-increasing number of worrisome analyses about the middle class comes from the Pew Research Center. Rakesh Kochhar and Richard Fry note that:

“Americans in middle-income households have lost significant ground since 1970, according to a new Pew Research Center analysis of government data. The middle class has long been the country’s economic majority, but our new analysis finds that’s no longer true. Meanwhile, the middle class has fallen further behind upper-income households financially, which now hold a larger share of aggregate household income than ever before in the 44-year period examined.”
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Pew summarizes its report in five points:

1.Middle-income Americans are no longer the nation’s economic majority. In early 2015, there were 120.8 million adults in middle-income households, matched in number by the 121.3 million adults who were in lower- and upper-income households combined. This is the culmination of a long slide in which the share of adults in middle-income households has fallen from 61% in 1971 to 50% in 2015.

  1. The decline in the middle represents both economic progress and polarization. The shift shows progress in the sense that a larger share of Americans now live in upper-income households. Fully 21% of American adults in 2015 were upper income, compared with 14% in 1971, a 7-percentage-point increase. The increase in the share of upper-income adults was greater than the change in the opposite direction. Some 29% of U.S. adults were low income in 2015, compared with 25% in 1971. But the data also show increasing economic polarization: As the distribution of adults thins in the middle, it is bulking up most at the extreme ends of the income distribution, the lowest and highest tiers.
  2. 3. Over the long haul, America’s middle-income households have seen their income grow.From 1970 to 2014, these households’ median income increased from $54,682 to $73,392 (in 2014 dollars), a gain of 34%. Lower-income household incomes have grown, too, but not as much: 28% over the same 44-year period. Upper-income household incomes have grown most, up 47% over this period. However, the nation’s economic progress over the past several decades masks financial setbacks since 2000.Because of the recession in 2001 and the Great Recession of 2007-09, overall household incomes fell from 2000 to 2014. The greatest loss was felt by lower-income households, whose median income fell 9% over this period; the median for middle-income households fell 4%, and that for upper-income households fell 3%.
  3. The shareof U.S. aggregate household income held by middle-income households has plunged,from 62% in 1970 to 43% in 2014. Meanwhile, the share held by upper-income households increased from 29% to 49%. This shift is driven both by the growing size of the upper-income tier and more rapid gains in income at the top. There is also a growing disparity in the median wealth (assets minus debts) of these income tiers. Upper-income families, who had three times as much wealth as middle-income families in 1983, more than doubled the wealth gap to seven times as much in 2013.
  4. Over the years, certaindemographic groups have fared better than others in moving up the economic ladder. Since 1971, older Americans (ages 65 and older) and African Americans have made notable progressin moving up the income tiers. But overall, both groups are still overrepresented in the lower-income tier. Married adults also made significant progress over this 44-year period, and women overall made greater economic gains than men.

“Americans without a college degree stand out as experiencing a substantial loss in economic status since 1971, as do young adults ages 18 to 29. Hispanics overall are also more likely to be in lower-income households than in 1971, a change driven by the increasing share of immigrants in the Hispanic population in the past four decades.”

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U.S. manufacturing hurt by political miscalculations

U.S. manufacturing is in a state of crisis, and it may be a self-imposed dilemma for America. The January 2015 report from the Federal Reserve notes that there are fewer jobs in that industry than at the start of the Obama presidency, when there was 12,561,000 manufacturing jobs in the nation.  By January of 2015, that number had been reduced to 12,330,000.

The crisis has its antecedents long before President Obama took office, during the tenure of President Clinton.

In October 0f 2000, Clinton signed legislation granting permanent normal trade relations to China. The measure had been bitterly opposed by conservatives, human rights groups, and unions. The move was consistent with his controversial policy of enhancing relations with Beijing, which included selling them  supercomputers and nuclear technology,  The moves are now seen as playing a significant role in building China’s sophisticated and aggressive military.

The change in U.S. trade policy eliminated potential tariff increases on Chinese imports. In addressing the issue, the Federal Reserve notes: “Our estimates reveal a negative and statistically significant relationship between the change in U.S. policy and subsequent growth in manufacturing…We find that U.S. imports of the goods most affected by the policy change increase substantially after 2001, and that this growth is driven by imports from China.”

Richard mcCormick, writing in the American Prospect back in 2009  noted that For American manufacturers, “the bad years didn’t begin with the banking crisis of 2008… Since 2001, the country has lost 42,400 factories, including 36 percent of factories that employ more than 1,000 workers (which declined from 1,479 to 947), and 38 percent of factories that employ between 500 and 999 employees (from 3,198 to 1,972). An additional 90,000 manufacturing companies are now at risk of going out of business. Long before the banking collapse of 2008, such important U.S. industries as machine tools, consumer electronics, auto parts, appliances, furniture, telecommunications equipment, and many others that had once dominated the global marketplace suffered their own economic collapse. Manufacturing employment dropped to 11.7 million in October 2009, a loss of 5.5 million or 32 percent of all manufacturing jobs since October 2000. The last time fewer than 12 million people worked in the manufacturing sector was in 1941. In October 2009, more people were officially unemployed (15.7 million) than were working in manufacturing.”
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Manufacturing has a singularly vital role in the U.S. economy. Senator Christopher Coons (D-Delaware)  notes that “Workers in manufacturing jobs earn 22 percent more in annual pay and benefits than the average worker in other industries, according to the National Association of Manufacturers. Every new manufacturing job we create adds another 1.6 jobs to the local service economy, and for every dollar in manufacturing sales, another $1.34 is added to the economy. Investments in manufacturing have a stronger impact than investments in any other economic sector.”

The Economic Policy Institute recently reported that “Manufacturing industries generated $2.1 trillion in GDP (12.5 percent of total U.S. gross domestic product) in 2013. But even these figures do not fully capture manufacturing’s role in the economy. Manufacturing provides a significant source of demand for goods and services in other sectors of the economy, and these sales to other industries are not captured in measures of manufacturing sector GDP but are counted in the broader measure of its gross output. U.S. manufacturing had gross output of $5.9 trillion in 2013, more than one-third (35.4 percent) of U.S. GDP in 2013. Manufacturing is by far the most important sector of the U.S. economy in terms of total output and employment. The manufacturing sector supported approximately 17.1 million indirect jobs in the United States, in addition to the 12.0 million persons directly employed in manufacturing, for a total of 29.1 million jobs directly and indirectly supported, more than one-fifth (21.3 percent) of total U.S. employment in 2013.

“The manufacturing sector is also a particularly important provider of jobs with good wages for workers without a college degree. This can be seen in the manufacturing wage premium—the dollar amount by which the average manufacturing worker wage exceeds the wage of an otherwise comparable worker outside the manufacturing sector. The average wage premium for all U.S. manufacturing workers without a college degree was $1.78 per hour (or 10.9 percent) in 2012–2013.”

The ongoing weakness in the U.S. economy and job market, combined with Beijing’s continuing and dramatic military buildup, should encourage a timely and thorough re-examination of American trade relations with that nation.