Our Economic Future

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Several smart people have pointed out that new manufacturing jobs today aren't paying much more than service sector jobs.  Possibly those jobs might be full time, however, the average wage is somewhere in the $10 to $15 an hour range.  This works out to $20K to a little more than $30K a year.  In other words, the working poor.

 

Recent studies showed slightly more than half of Americans making less than $30K a year.  We might be creating new jobs but increasingly they are lower wage and in many cases part time, gig, temporary or contract.  The new majority and new normal will be the working poor, even if manufacturing returns in some form from Asia.

 

What's the macro result?  More people living in basic apartments and/or with extended family (more common at the beginning of the 20th century).  The two car family down to one or no cars forcing millions onto inefficient, unreliable, underfunded and overcrowded public transportation.  Gone will be the staples of the middle and upper middle class-vacations and travel, dinners out, college for children, and new clothes and home items.

 

Even more scary is how will this impact a massively leveraged society.  Americans and Europeans carry even more debt today than 2008, excluding mortgage debt.  Companies are over leveraged.  What happens if there is significant default.  Will the Treasury and Fed (and ECB) again print trillions to bail out bankers and investors, no strings attached?  Will there be a jubilee?  How about the national debt.  If tax revenues plunge while demand for services rises how will  government react?  Monetize the debt through the Fed even more than today?  Or simply print (digitize) any shortfall, foregoing issuing treasuries.  What will happen to the dollar?

 

Finally, how will Americans react?  Just go along with the new paradigm while pining for days of old?  Social revolt?  What happens if public services are curtailed or withdrawn?  What happens when companies of all sizes either contract or go out of business?

 

I know one thing.  For the first 53 years of my life I lived the American Dream as my parents did.  From here on out unless I am lucky my quality of life will diminish.  I might not make it much past 65.  Morality rates are already falling, suicide and overdose rates rising.  Public education if failing.  People no longer have access to sufficient medical care.  Infant morality is up.

 

For those of us that have traveled to poorer countries we have seen the future.  A small but incredible wealthy upper class, a middle and upper middle class around certain major city centers (what of the professional class that survives) and mostly poor people. 

 

Maybe this dynamic could be stopped but there is no public or private will to do so.  Americans as much as they complain seemed resigned to this fate.  This is the likely future whether hawking laptops at Best Buy or working on a mostly automated assembly line.

Comments

A. Jones Added Dec 5, 2017 - 5:26pm
Recent studies showed slightly more than half of Americans making less than $30K a year.
 
Post a link to your source for that statement.
 
See:
 
http://www.businessinsider.com/us-census-median-income-2017-9
America's middle class is booming.
"Between 2015 and 2016, US median household income rose 3.2% from $57,230 to $59,039, according to a new report released by the U.S. Census Bureau on Tuesday.  It's now the highest income year on record, beating the previous high of $58,655 in 1999 (all numbers are adjusted for inflation)."
 
A "median" is a datum point lying at the midpoint of a group of data. Since the median income in the US (according to census data) is $59,039, it means half of working Americans make more than amount, and the other half of working Americans make less than that amount.
 
I think you invented that $30K number.
Jeff Michka Added Dec 5, 2017 - 5:28pm
Geo Romey sez: Finally, how will Americans react?  Just go along with the new paradigm while pining for days of old?-Gee sounds like how you cultivated your WB "personality." You repeatedly gone to the nostalgia well, then have told everyone to give up, because nothing can be changed, then you write an article like this?  Hypocrite!!! Modifying the last para in your "article:" Geo Romey, as much as he complains seemed resigned to his fate. 
opher goodwin Added Dec 5, 2017 - 5:32pm
George - that is what is happening. With automation and a glut of workers there is gross exploitation and hugely increased profits. I think the inequality and division is creating an unpleasant society. There are a lot of disillusioned people with no prospects.
George N Romey Added Dec 5, 2017 - 9:49pm
No I did not. It came from the Federal Reserve report. Your report is bogus. And there’s been more than one report showing a little more than half of Americans under $30K.
Doug Plumb Added Dec 5, 2017 - 10:59pm
I see the future trending like this: Only the economically creative will earn money in the future as machines will do everything else. Crowd funding will be the way for a lower income person to reach higher status. It may not be direct wealth gain but they may achieve their dreams with this, beit an interesting set of videos or sailing around the world. If you are funny and people like you then crowd funding may support you. That is the only way I can imagine.
Doug Plumb Added Dec 5, 2017 - 11:01pm
Everyone goes along to get along with no sense of duty toward preserving freedom so we get what we deserve as we lose our economic power to Chinese sweat shops.
Bill Kamps Added Dec 6, 2017 - 6:59am
George, I wonder how what you say squares with the fact that here in Houston, middle class housing is rising in price, and middle class houses rarely stay on the market more than a couple of weeks, if that.  In my area of the city houses  rarely stay on the market a week.
 
This despite large layoffs in the oil industry, where most jobs lost were in the $100-200K salary  range.
 
When I say middle class housing I am talking about houses in the $300-800K range.  In Houston those are generally houses in the 2000-3500 square foot range.  Depends on the area of course.
 
I would think that if the middle class was getting clobbered that housing in this range would be soft, especially after all the layoffs we have had.  Certainly in the past when the  oil business has had large layoffs housing prices here have fallen.  Not now.
 
Perhaps the government reports on earnings are under reporting because people are working multiple jobs?  Nothing wrong with gigs, if you have more than one and they pay enough.  I have more than one source of income, so  if you look at just the salary on one job, it is not that high, taken together it is pretty high.
 
I honestly dont have an explanation for the strength in the housing market given the layoffs we have had.  However it doesnt square with the daily statements you are making about the middle class.
George N Romey Added Dec 6, 2017 - 7:29am
Bill nearly half of Americans have less than $400 in savings. Remember a lot of home sales today are cash sales to investment firms. They believe that the future will be rentals. It’s one reason rents have been pushed up because of demand for rental property.
The Burghal Hidage Added Dec 6, 2017 - 7:58am
Its Greece times better than 60 fold, George. Can't say when, but it will happen.
The Burghal Hidage Added Dec 6, 2017 - 7:59am
the central question then becomes one of, as you say, how we react to it. thats what matters, not the politics of it
Dino Manalis Added Dec 6, 2017 - 8:27am
That's why we need a stronger economy with a constantly tight labor market to raise wages and salaries across the board.
Bill Kamps Added Dec 6, 2017 - 8:28am
George, perhaps.  If investment companies are buying these homes, then someone is paying rents of $3-4000 per month, and it takes income to do that.  These houses are not sitting empty.   Either way, a strong housing market, does not tell a story of a middle class that disappearing.
George N Romey Added Dec 6, 2017 - 10:26am
Bill I have the answer.  Debt. It has soared since 2008 on a personal level.  Its how people are giving the illusion of a good life.  Its how corporations are propping up a share price by never ending stock buybacks paid for by debt.  Its how our government spends an excess of $2-$3 billion a day more than its taking in. 
 
Do some research.  Americans have created an amazing talent for giving the illusion that they are economically well off.  In the meantime they take out credit card after credit card, which the banks are only to happy to give since there are few solid credit risks to be had.  Ditto for unsecured lines of credit and unsecured loans to payoff the credit cards and start the process all over again.
 
In the interim, the good jobs are disappearing.  The factory jobs opening up are paying $13 an hour, not $20-$25 an hour.  Financial jobs used to be at least six figures, now they are hiring younger people willing to do them for $60K a year.  Ditto for HR managers and even some IT work.  Companies are outsourcing key administrative areas to the lowest bidder and that lowest bidder needs to pay rock bottom wages and salaries to earn a profit.
 
Go back and read about the 1930s.  Even in the Depression there were those that claimed the economy was vastly improved.  The 25% unemployment rate back then was considered under reported.  Just like today we have an unemployment rate that has no basis to reality, particularly to underemployment.
 
Then go back to this recent election.  It was always about Americans and their economic health which Obama didn't to squat to improve, albeit yes the President is limited.  HRC living in her bubble of the rich didn't get it, and by the time she did it was too late (although that didn't stop her from faking it).  Trump may not be cultured, well learned, or diplomatic but one thing he has is street savvy. He saw the anger and ran with it.  He won most of the counties in this country.  Something like that would not be happening if we had a strong middle class.
 
 
 
Donna Added Dec 6, 2017 - 11:27am
Middle-class income in the US by state - Business Insider


www.businessinsider.com/middle-class-income-us-state-2017-9
 

Sep 14, 2017 - SOURCE: U.S. Census Bureau, 2016 American Community Survey... The American middle class just got a little richer. On Thursday, the US Census Bureau released its 2016 American Community Survey, an annual survey that measures various economic, social, and housing data among US residents ..
 
George,Bill,
Read this..it clearly states that yes it has come up, but it is also hard to average, since all states have there own median guidelines. For example, in NY it will be extremely higher than in Maybe Tennessee, or Mississippi.
There is another study just released regarding rents, and how they have gone up tremendously, but the pay has not kept up.  
Bill Kamps Added Dec 6, 2017 - 11:42am
George, Im not so sure.  One does not put a house on a credit card, and  I dont believe investors are buying the houses, and then people are borrowing to pay the rent.  If housing prices are strong, and demand is high, that is usually a  sign of a healthy economy, not one propped up artificially.  That is not to say there are no problems, there are always problems.  However, I have also lived in Houston when times were not so good, and housing prices were falling, so I can see the difference in a local economy.   Restaurants are not closing, local businesses are doing well. 
 
I think there is a difference between pay and income.  One of my paychecks is not as large as it used to be, but I now have multiple sources of income, which I didnt have before.  A lot depends on how these numbers are gathered.  If salaries are reported by employers, it will look like pay is going down, if they take if off my 1040, then it will look like income is going up. 
 
You dont believe government information on unemployment, and you shouldnt.  However, why cant government information on income also be wrong ? Are they properly aggregating all various kinds of income that people have ?
 
I just think things are not bad to the degree that you say every day here, out in the real world things would look different.
George N Romey Added Dec 6, 2017 - 12:28pm
Bill my sources are always independent sources, and multiple sources.  I do not trust government stats as most have been rigged (like the unemployment rate) to not tell the entire story. The way the government calculates the unemployment rate was first changed under RR in the 80s then under Clinton in the 90s.  There will always be a middle and upper middle class around our major city centers just as there is in South America.  Go to Rio and walk the streets of Ipanema or Leblon and you would see a very different picture than the Favelas in areas such as Gloria. 
George N Romey Added Dec 6, 2017 - 12:30pm
Donna remember in states like CA, NY and CT the super rich skew the numbers.  Come to a city like Miami.  The super rich and the super poor, very much like South America.  Miami has a very small middle class for its city size.
Donna Added Dec 6, 2017 - 2:00pm
George,
I live in rural NY, we have one small city with many who are above the income for middle class,all are from NYC and have moved up state, and are pushing prices up, which pushes locals out.
We have more poor, and low income, than we do rich.Standard rent in my area for a 2 bedroom apt. is 1500. with nothing included. This being a real lousy place to rent.
Now if one has 2500, to 3000 a month to pay for rent, the apt, is in better location, with much better living conditions. Most mortgages are now on small 1/2 acre lots, or 1, due to taxes being so high, one can not afford all..
So Bill,
15.00 an hour, pays how much of all these bills? 
Due to health and other personal issues i gave up a job, and am now on a one income at less than 30,000 a year.Before taxes. Tell me how good i should have it? 
BTW i help my mom who gets only SS, which they now want to get rid of as it is an entitlement, one that we have paid for all of our lives, but hey who are we to say, why or when we should get robbed by the Government.
George N Romey Added Dec 6, 2017 - 5:01pm
Donna the abysmal numbers I quoted factor out the impact of the 1%. Those making outrageous amounts skew results, that’s how far they are from the average norm. Yes if you have certain IT skills your in great demand. Few of us do,
Charles Frankhauser Added Dec 7, 2017 - 12:10pm
The amount of time required to complete a tax return seems excessive due to the record keeping requirements, especially in the case of businesses. What about just a computerized scale of tax rates for various income brackets?  That approach would also apply to the postcard tax return I saw being held-up on TV. Technology could come to the rescue of rental housing with global warming raising the water levels thereby opening a market for small boat living similar to the tiny house craze sweeping the country.  Real estate taxes are nonexistent on the water, heat bills will decrease with the warmer temperatures, fresh fish provide healthy meals, solar power will provide laptop connections with the Internet allowing drones to deliver merchandise to boats at sea.
Todd Flora Added Dec 7, 2017 - 1:08pm
George, we know you mean MORTALITY rate, not morality rate... but for the sake of our eyes, you should probably edit it in the two places you have it misspelled. ... also, "public education IS failing." Not if.
John Wagner Added Dec 7, 2017 - 1:50pm
George, 
Too much like Eeyore. I wish your personal situation would pick up, but the overall economy is not as grim as you perceive. It's true that the US economy has not done too well over the past decade, but even with that, things are not as completely rotten as you claim. 
 
Now, I'll grant it's possible that the future will be grimmer than the past. However, I tend more toward optimism, myself. But as of today, middle-class America is definitely more prosperous than 50 or 100 years ago. Here's my post on this general topic: 
https://caseforcapitalism.wordpress.com/2017/06/29/is-middle-class-stagnant/ 
 
FYI - the disagreement between you and someone else about median income being $30k vs $59k likely relates to confusing individuals with households. $59k is a household number that involves more than one worker. Higher household income is driven by both higher income per worker AND the number of workers. Here's what 2016 Census data shows: 
 
Lowest quintile: $13k avg income, 0.43 workers, income per worker $30k
 
Middle quintile: $59k avg income, 1.36 workers, income per worker $43k
 
Highest quintile: $214k avg income, 2.04 workers, income per worker $104k. 
michael d zitterman Added Dec 7, 2017 - 3:42pm
https://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act
 
George,
You have offered an excellent description of a "problem", which I assume is intended to be an effort to begin a discussion with the goal being a solution to end or, at least, mitigate this problem.
 
Whereas it may appear hyperbolic, the core of our problems lies within our Legislative Branch, which, possibly, should be subjected to RICO (Racketeer Influenced and Corrupt Act).
 
I will offer one egregious example.
 
Whereas I was, literally, thrilled that Donald Trump was elected on November 8, 2016, I believe the tax plan which he is promoting is insane, inane, massively inequitable, cannot be approved by rational minds, and if passed, would be destructive to our nation’s economics. 
 
The Plan that President Trump is advocating includes so many inappropriate changes, but the two most egregious may be ending the Estate tax and the “repatriation” concept, which should be treated as a conspiracy to embezzle from non-corporate taxpayers for the benefit of businesses with offshore operations.  Please review:
http://writerbeat.com/articles/18921-ANY-POLITICIAN-PROMOTING-ldquo-REPATRIATION-rdquo-SHOULD-GO-DIRECTLY-TO-JAIL-i-e-DO-NOT-PASS-GO-DO-NOT-COLLECT-200
Please don’t despair.  There are equitable, rational, and logical adjustments which will repair the damage done by our Legislative Branch.
mz                                                                                                                                 Dec. 7, 2017
mikiesmoky@aol.com
 
 
 
 
michael d zitterman Added Dec 7, 2017 - 3:55pm

Jones,

 
You may be confused by the "facade" of our economics.
 
It has been pounded into us that our GDP has grown just slightly less than 2%, during the past decade.
 
Had the Fed (Bernanke, et al) not infused almost $5 trillion during the past 7 years, we would have been in a severe recession, i.e., we are running on fumes.
 
Now, the Fed is suggesting it will begin reducing its balance sheet.
Yeah, right!  Facing $600 billion annual deficits, not including the nonsense being promoted, I don't think they will be repurchasing any part of the $5 trillion sitting on its balance sheet.
 
Will insanity prevail?
 
Impossible.
 
mz
Dec. 7, 2017
mikiesmoky@aol.com
 
 
michael d zitterman Added Dec 7, 2017 - 4:01pm
Todd,
 
Re: "George, we know you mean MORTALITY rate, not morality rate... but for the sake of our eyes, you should probably edit it in the two places you have it misspelled. ... also, "public education IS failing." Not if."
 
By any other name, a rose is still a rose..............
Cliff M. Added Dec 7, 2017 - 4:02pm
George,
    I was listening this morning to Bloomberg Business news and the topic was how can we have an unemployment rate of 4.2% that should go lower with no wage growth. Something doesn't pass the smell test .In the past wages began to recover much earlier in the business cycle. This time we are late in the cycle and wage growth and recovery has been minimal.
Bill Kamps Added Dec 7, 2017 - 4:21pm
Donna, I dont understand your point.  Yes, if someone makes $15 per  hour they are not a member of the middle class, and I haven't said otherwise.
 
What I have said, is that middle class housing, should be falling in price, if the middle class is disappearing.   It is not, at least not in Houston, which has also suffered massive layoffs in the oil industry.  So somehow the middle class is surviving despite George's daily rants.  That doesnt mean everyone has it great, everyone has never had it great.
 
George, I have been to Rio multiple times.  Along the beach live the rich, and the  rest of the city is a shit hole and very dangerous.  Some of it worse that others, with the flavelas, yes the  worst.   I didnt see much  middle class.  I dont understand your point.  Houston is not Ipanema, we dont have a strip of a world class beach.  It also lacks  many of the advantages of New York and LA, and so I would think is a pretty middle class city.  If this city can prosper despite massive layoffs in one of its most important industries, then maybe the country isnt quite on the brink as you think, and we might last another 50 years instead of the 2-3 you seem to imply.
 
I realize nothing will change your mind that the collapse of the US is imminent.  Im sure the black smiths of the 1920s thought much  the same. 
 
 
John Wagner Added Dec 7, 2017 - 4:53pm
What's interesting to me is how different people interpret things differently. I have visited a couple dozen countries, and lived in a couple of them. I have seen real poverty. It made me appreciate the American system of free enterprise that has helped us escape poverty. It made me grateful. Just by being born in the US we are highly likely to be in the global top 5% of income. From a global perspective, many of us are even One Percenters. 
George N Romey Added Dec 7, 2017 - 5:01pm
Cliff we have a massive underemployment problem not an unemployment problem. Most of the new jobs created are low pay and:or part time. With so many crummy service sector jobs new manufacturing jobs aren’t going to pay much more. Remember for the government a job is a job.
michael d zitterman Added Dec 7, 2017 - 5:32pm
Cliff,
 
Think "fumes".
 
mz
michael d zitterman Added Dec 7, 2017 - 5:36pm
Bill K,
 
RE: "...and we might last another 50 years instead of the 2-3 you seem to imply."
 
You may have fallen victim to the greatest human frailty: tendency to believe that which one wants and needs to believe".
 
mz
michael d zitterman Added Dec 7, 2017 - 5:37pm
John W,
 
Think "fumes".
I know I am being redundant, but it is necessary.
 
mz
michael d zitterman Added Dec 7, 2017 - 5:41pm
George,
 
RE: "Cliff we have a massive underemployment problem not an unemployment problem."
 
We have both.
 
http://writerbeat.com/articles/11328-THE-CONCEPT-OF-ldquo-MINIMUM-WAGE-rdquo-IS-A-CANCER-TO-OUR-NATION-S-ECONOMICS-SINCE-IT-TENDS-TO-CREATE-A-PERMANENT-UNDERCLASS-AND-
 
mz
Edward Miessner Added Dec 7, 2017 - 5:58pm
George,
 
It's not so much that Americans are resigned to the present post-1980 neo-liberal order, they've literally <b>bought in</b> to it. Which will make it especially difficult to get any collective action out of Americans and progressively moreso as conditions worsen.
 
AJones,
 
RE: your dispute with George about most Americans making less that 30,000 a year: with a median household income of $59,039 that equates to about $29-1/2K per wage earner in a typical household. And households in the bottom 80% could easily have one wage earner making less than 30K a year. Your fact and George's fact (or assertion) are not mutually exclusive!
 
John Wagner Added Dec 7, 2017 - 6:08pm
Annual inflation-adjusted growth rates of median personal income for different time periods: 
 
1974-1981: (1.1%) negative
1981-2000: 1.7% 
2000-2007: 0.4%
2007-2016: 0.1%
 
Takeaways: 1970s were bad. 1980s and 1990s were decent. 2000-2007 was very weak. 2007-2016 was worse than weak. 
 
Part of the problem with cash income gains over much of this time period is that the higher cost of health insurance has crowded out cash pay. 
Fred Friedman Added Dec 7, 2017 - 6:45pm
Restrict immigration. We are allowing too many poorly educated immigrants with few skills to come here and take jobs that Americans can do just as well. These immigrants lower wages across the board for Americans with modest incomes. Revise welfare policy to create a more secure safety net for low income citizens by expanding the earned income tax credit, double the personal tax exemption for individuals, allow companies to sell health insurance across state lines so people can purchase insurance based on their needs and not government mandates, expand the Schipp program that provides health care to low income children, allow low income people living in housing projects to buy their apartments and turn them into home owners with a stake in maintaining a safe and well ordered community, provide vouchers to students who want to escape dysfunctional public schools and choose schools where they can actually get an education worthy of the name. These things cost money and in order to pay for them phase out subsidies for wealthy farmers, close tax loopholes, stop bailing out banks that fail due to incompetent management, end the mortgage deduction for property owners who are wealthy enough to live without it, raise the retirement age to 70 to keep the social security system solvent, bring all citizens into the social security system regardless of how much they make, reduce the cost of Medicaid by limiting it's use to those who are truly needy; in it's place the federal government can fund health clinics in schools and local communities that can provide preventive care for low income children. This can be accompanied by allowing medical students to reduce by half the amount of loan money they have to pay back if they agree to spend a year or two in a center serving low income people. The benefits of preventive care will surely reduce health expenditures in the long run. Couple that with tort reform and quick prosecution of those who engage in medical malpractice. A social safety net should encourage work and upward mobility not dependence and entitlement. There are other reforms that can be made but this seems like an excellent start
Cliff M. Added Dec 7, 2017 - 6:50pm
John, The cost of my health insurance for a family of 4 almost tripled from the late 90's to 2010. Add the cost of rent's which have risen substantially along with decent transportation. Along the coast's that have major urban areas it is expensive to live to say the least.
Here's my situation,
 
Rent- 2001/$700 month  2017 $1381 month  (2 bedrm.apt)
health insurance
         2001/$650 month $10 copay  2010/$1900month/$50 dollar copay
Cost of   New Work Truck  1985/$9000  1992/$15,000  2015/$30K
 
Income 1990/$65K   2000/$90K  2009/$90K  2012/$30K  2017/ ????
 
John ,I ran out of fumes a while ago. Just don't know how to quit and give in.I live in North east New Jersey 10 miles from NYC.
 
 
 
michael d zitterman Added Dec 7, 2017 - 9:26pm
John W,
  RE: Takeaways: 1970s were bad. 1980s and 1990s were decent. 2000-2007 was very weak. 2007-2016 was worse than weak. 
 
PERSPECTIVE:  Contemplate the last period without the $5 trillion infusion by the Fed.
 
mz
michael d zitterman Added Dec 7, 2017 - 9:29pm
Fred F,
 
Please review:  http://writerbeat.com/articles/16980-EQUITABLE-TAX-RECONFIGURATION-PLUS-would-create-gt-4-GDP-growth-and-4-6-million-jobs-per-year
 
mz
michael d zitterman Added Dec 7, 2017 - 9:32pm
Cliff M,
 
The contemplated tax Plan, if not monumentally changed will be destructive to our economics.
 
mz
mikiesmoky@aol.com
Cliff M. Added Dec 7, 2017 - 11:40pm
greed at work here
Bill Kamps Added Dec 8, 2017 - 7:36am
You may have fallen victim to the greatest human frailty: tendency to believe that which one wants and needs to believe".
 
Perhaps Cliff.
 
Then again, people have been predicting doom and gloom like George for as long as I can remember, which is about 50 years or so.  So far no end of society as we know it.   Betting on what people like George say, has never been a winning bet.  Some day it might  be, who knows? 
 
"Predictions are very difficult, especially about the future"  Yogi Berra
George N Romey Added Dec 8, 2017 - 8:30am
What Bill doesn’t realize is that our economy such as it is has been propped up never ending money printing, absurdity low interest rates, endless government spending for social programs, financial hocus pocus and total bullshit stats like the unemployment rate. Take away that and it would be 1933 all over again. In fact in many ways it is. I suggest Bill do what I’ve done. Talk to someone running a food pantry or faith based charity in even a relatively affluent area.
Bill Kamps Added Dec 8, 2017 - 9:28am
George, I am not saying there aren't poor, and people arent suffering.  That has always been the  case, and there may well be more of that going on today than in the recent past, because of the effects of the 2008 recession and many of the other things you point out.  I dont disagree with many of the symptoms you observe.
 
However, just because there are poor people, and there are people displaced from the middle class, does not mean the country is failing on a grand scale where there will be a fundamental change in how the country is run, and how the economy works.  That is a big leap, from saying some in the middle class are under stress. 
 
You are taking a few data points, and extrapolating into a place where the country has never been.  Generally speaking that doesnt work, just like those who have predicted gold will go to $10,000.  It is possible, but not likely, and not something I am willing to bet on.
 
Every day we have to make plans for our future based on what we think will be the situation in 3-5 years so we are prepared.  I am not willing to make changes in my behavior based on your predictions, because I think you are exaggerating what will be the result of the stress the country is in.  I dont think that is an unreasonable point of view. 
 
My financial situation is healthy largely because I have seen the deterioration in the industries I have worked, and switched jobs multiple times.  So yes, I see the issues, but those issues have been happening since society moved off the farm.  It is not new, and it doesnt mean the end of the economy.
 
You are predicting that the people in the country are going to revolt because times are so difficult.  I am saying that when housing sales are robust, when car sales are setting a record, then people are not going to revolt.  Yes a good chunk of it is propped up with debt, but that has been the case since the invention of the credit card.  So again not a sign that the country is coming apart. 
 
You are saying "this time it is different".  This time the country's economy is ending as we know it.  I am simply saying, its possible but not likely.  Nearly always predicting the status quo is the more reasonable bet, than predicting a revolutionary change.
Cliff M. Added Dec 8, 2017 - 10:01am
Bill, We are now in a time of "Irrational Exuberance". Remember what happened last time we were here. Look at what happened with bitcoin yesterday and recently.
John Wagner Added Dec 8, 2017 - 10:08am
So many issues. Here are a few random comments. 
 
No way is 2017 as bad as 1933, even absent the government intervention that George mentions. All the doom-and-gloomers here are entitled to their opinions, but they are opinions. I basically agree with Bill. Some individuals may be suffering, but the overall economy is not bad enough to label it as suffering, or even close to 1933. To a large extent, being positive or negative is a choice. As Abe Lincoln said, "I expect a man is about as happy as he makes up his mind to be." Being positive increases the odds of success, for an individual or a nation. 
 
George and MZ assume that govt intervention like QE, 'printing' money, spending, etc is good for the economy. I understand this is a conventional Keynesian view, but that does not make it right. It is at least debatable. I think the best you can say for govt intervention is that it might potentially help make a recession shorter or shallower. But in the longer run, more likely harmful than helpful. 
 
As for wages rising slowly compared to unemployment rate, I think the unemployment rate has been understated over the past decade because a lower percentage of people is working. Taking retiring baby boomers out of the picture, the labor force participation rate for 25-54 year-olds is 81.8% now, compared to 83.3% in late 2007 just prior to the 2008-2009 recession. i.e., 1.5% less of the prime working age group is working. People who are not "looking for work" are not reflected in the unemployment rate. If we take the lower working rate into consideration, the current unemployment rate would be ~1% higher. Meaning the 4.2% we see now is really more like 5.2%. Still low, but a reasonable explanation for why tight labor markets have not pushed up wages more. Labor markets are not as tight as suggested by the usual U3 unemployment rate. 
George N Romey Added Dec 8, 2017 - 10:27am
John you have totally not read what I wrote.  QE is only good for a very small segment of the economy, typically the financial and investment class.  It does zilch for the real economy and far more likely destroys it.  I've never heard of anyone getting a job because of a stock buy back.
 
Second, again you miss the boat on unemployment.  Its underemployment, which unemployment numbers never taken into consideration. A part time retail job paying $10 an hour is just as much a job as a CEO making seven or eight figures.  Also, when a company eliminates one full time job and splits it into two part time jobs (very popular in retail and other like industries) that's counted as two new jobs. 
John Wagner Added Dec 8, 2017 - 10:50am
George, other than my 1933 comments, my overall comments were not directed at just you.
 
On govt intervention: You and 1-2 others stated that govt intervention has helped keep the economy from being really bad. Your comments about five boxes up said "our economy ... has been propped up [by] never ending money printing, absurdity low interest rates, endless government spending for social programs..." 
 
On slow wage growth despite low unemployment: I was not commenting on your underemployment comment, so did not miss any boat. I agree with what you say just above, There is underemployment and too many part-time workers who would prefer full-time (maybe a million).
 
I don't necessarily agree that new jobs being mostly low-wage is a problem. I've heard so many times, going back to the 1980s, how new jobs are low-wage. Maybe low-wage jobs are the ones mostly lost due to recession and therefore low-wage jobs are the ones mostly gained during recovery. That is just a thought, not backed by research or data. 
John Wagner Added Dec 8, 2017 - 10:56am
Cliff, you say "greed at work here." This is one of my favorite excuses. Tell me, when exactly was greed not at work? Answer: never. Greed is always there, an ignoble aspect of human nature. Why is greed more of a problem now? 
Cliff M. Added Dec 8, 2017 - 11:25am
John, Greed has become the dominant factor in the politics and economics. One of our representitive's recently stated that the main reason to pass the tax cut was to appease their contributors who said if they don't pass it there will be no more $cash. The same thing happened with the GOP healthcare repeal mess. What was supposed to repeal , replace and improve the insurance mess was nothing more than another tax cut for the wealthy disguised as something else.In the richest country in the world more has become not enough for the wealthy while the general welfare of the majority is ignored and exploited. I believe we have entered a second gilded and like before only drastic changes will give the country back to the majority. trillions of dollars are currently stacked in warehouses while exploitation of the ordinary citizen is the new game.Opportunity for many has vastly declined.
Bill Kamps Added Dec 8, 2017 - 11:35am
Cliff, well you are correct, it is very likely a correction in the financial markets will happen.  They happen every so often.  Doesnt mean that the financial system will collapse as George predicts. 
 
Cliff, you also right that Washington it not helping us out.  From time to time it has done things to help, but mostly over time it has been a negative.  Nothing new there.
 
Cliff, you are correct, opportunity for many has declined.  We could say the same at many times in our history.  There are new opportunities for those who are prepared and lucky, and there are lost opportunities for those who didnt see the end of their industry coming.  I have had to switch industries twice, and will likely need to do it again in the near future. 
 
Every cycle is always a bit different.  Whether it was the end of the farm economy, or the downsizing of factories to implement automation, workers were never really the priority.  So it takes some effort and luck to prosper.
 
Greed has driven investment, and the people making the investments dont care about workers unless they can make them some money.  If you can make someone money, you are valuable to them, if you cant, then  you are not so valuable to them.
John Wagner Added Dec 8, 2017 - 11:44am
Sorry, Cliff, not buying it. Greed is part of human nature. Human nature is not much different now than 10 years ago, or 20 years ago, or back in the gilded age. Blaming greed is just a lazy rationale that people trot out to explain all the things they don't like or don't understand.
 
Even if all the events and reasons you mention are true (they're not), that does not mean greed can be blamed. To be clear, I am NOT praising greed; I'm just saying that it's ever-present, so not a good rationale for why things happen. To wish greed was gone is pure fantasy. 
Cliff M. Added Dec 8, 2017 - 12:08pm
John, The GOP has tried to pass some bills that are extremely unpopular.(healthcare 20% approval rating ) and the tax cuts which garner only a 30% approval rating and thats being generous. Explain to me the motive behind this.This is a pretty new phenomena. They used to call these unicorn bills and they were rarely seen. This appears to be a direct attack on democracy.
John Wagner Added Dec 8, 2017 - 1:03pm
Cliff, 
I don't see anything new here. It is an old question whether representatives in a representative republic should do exactly what their constituents want or what they they themselves think best. 
 
As for why the GOP is trying to pass the bills you mention, a good (if cynical) rule of thumb is that politicians will do whatever will get them elected or reelected. That's GOP or Dem. 
 
Regarding repeal of Obamacare: The GOP said repeatedly over the years that they would repeal it. They campaigned on it. So even in the murky world of politics they felt obligated to make some effort to repeal.
 
Now, let's turn your question of "why do something unpopular?" to the original passage of Ocare. After all, opinion polls showed it to be unpopular. And Scott Brown ran for Senator in Massachusetts specifically pledging to be the vote that killed Ocare, and was elected, the first Republican Senator elected in Mass for 50 years or whatever. And the same general point could be made about the 2010 election in total. All clear signs that Ocare was unpopular... so why did Dems continue to push it? 
 
Regarding the recent tax reform: I assure you that tax cuts are popular with voters. I don't know for sure, but the specific tax bills being debated now are probably unpopular because (a) most of the tax cut is on the business side, (b) the reforms have not been well explained to the public, and (c) most people don't really understand the topic. 
 
As it relates to my prior comments, the point is, we can't really blame greed for any of this, because it's always there. 
George N Romey Added Dec 8, 2017 - 1:08pm
Greed has always been there but from the end of WW2 until the 80s it was kept in check.
Edward Miessner Added Dec 8, 2017 - 1:13pm
John Wagner, you forget the hijacking of democracy in our fine republic by the money powers: i.e., the corporations, multi-millionaires and billionaires. It didn't just happen overnight. It happened very slowly over the course of three and a half decades or more, then suddenly, all at once. It is now extremely difficult for one to get elected to local, state, federal without a huge campaign war chest. Where is the money going to come from to fill that chest, hmmm? This is why we mere citizens are reduced to being a bunch of extras whose only duty is to be a bunch of extras to the electoral drama who show up at the election times and cast our votes. Some democracy. Some republic!
Edward Miessner Added Dec 8, 2017 - 1:14pm
On edit: local, state and federal office.
George N Romey Added Dec 8, 2017 - 1:38pm
Well said Edward! We are promised much but delivered very little.
John Wagner Added Dec 8, 2017 - 1:41pm
So, the argument is that rich people were not influential in the past. It's just been the last three or four decades that money has been important. Rich people and the ever-ominous corporations have just popped onto the scene and they really impact our elections like never before. 
 
How about this for an alternative view:
Government is now bigger and more complicated than ever before. This bigness and complexity is why special interest groups (of all types) now lobby politicians more than ever before. The bigness means political favors are worth more. The complexity means that political favors can be better hidden in the tax code or legislation. Whether corporations and special interest groups lobby (a) to gain sleazy special favors or (b) to protect themselves from something that govt proposes to do, in both cases their desire to lobby is increased by bigness and complexity. Then, since lobbying increases, political offices become more valuable to the office-holder. So then it becomes worth it to spend larger sums to get elected. Stated the opposite way, if govt was tiny and influenced little, then lobbying would be less beneficial, and political office would be less lucrative, and candidates would spend less to get elected. 
Edward Miessner Added Dec 8, 2017 - 2:07pm
George, thank you. :^)
 
John, rich people and corporations were very influential in the past, prior to 1933. The three and a half decades I mentioned started from 1945! (Should have mentioned that.) Once Reagan was elected, the money powers were effectively in the catbird seat and trade unions started losing power to the extent that they are now almost extinct. They used to have a lot of power up to the 1980 election.
 
And as far as big government is concerned, it's not just the regulatory state, it's also the national security state which intervenes in order to guarantee US corporations access to markets, basically.
Cliff M. Added Dec 8, 2017 - 2:09pm
John, The tax cuts being proposed are unpopular not because people are unclear about them .Healthcare reform with Obamacare was popular up until a public option and the final passage which catered to the special interest's.It's time politicians start doing what is in the best interest of the majority and not doing what is in their and their political cronies interest's.
Cliff M. Added Dec 8, 2017 - 2:16pm
Ed, Sad but true.
Edward Miessner Added Dec 8, 2017 - 2:19pm
Cliff M., yes, and hopefully we can start changing things back. However, given how Americans are consumed with just trying to get by and with technological distractions (like Facebook), I am not optimistic.
George N Romey Added Dec 8, 2017 - 2:30pm
Big government is a byproduct of big business, not the welfare state. The 1890 Sherman Anti Trust Act has essentially been thrown out the window.
 
From 1945 until about the late 70s Treasury and Fed policy were geared towards full employment and wages, presumably as the memories of the Great Depression were still around. Once Baby Boomers began to take the reigns of government and commerce in the late 70s lessons were soon forgotten. Since the velocity of money goes both ways as the 30s showed a downwards trend is hard to halt. It took WW2, a massive infrastructure program and the most desirable employee demographic at the time, young males between 18 and 35 our of the workforce to arrest the slide:
John Wagner Added Dec 8, 2017 - 4:24pm
I don’t understand this fascination with the 1930s to the 1970s. Yes, a time of high union membership. Maybe that was good for political spending, I don’t know. But the US became the world’s largest economy, and one of the most prosperous, prior to the 1930s. And much of the 1930s to 1970s except for the 1960s was not so great for consumers. 
 
George, exactly how did big business lead to big government? Explain how that worked, please. That makes no sense to me. Few business people clamor for more taxes, regulations, and oversight. Govt contracts, sure. But that is a tiny part of govt. 
 
To me, it makes much more sense to say that as Western societies became wealthier, they could afford more government, and so govt grew. And then business tried to coopt as much govt power as they could, as I described in my last comments. 
Cliff M. Added Dec 8, 2017 - 5:45pm
John, What is it called when the wealthy take the politics of power and money when they don't need it ? Is this good business or something else.Taking the power and money that will do undue harm to millions of people?
Edward Miessner Added Dec 9, 2017 - 4:03pm
John,
 
And businesses grew large in the Nineteenth Century and moreso in the early twentieth.
 
"Few business people clamor for more taxes, regulations, and oversight."
 
No, but the larger businesses don't mind govt regulation, because they can contribute to everybody's campaign and get their people appointed or hired at the regulatory agencies. Ergo, regulatory capture. And when these people's time is up at the govt bureaucracy, they go back to the private sector to help it deal with the regulations in place, sometimes even the business they used to work at.
John Wagner Added Dec 9, 2017 - 6:27pm
Cliff, I don't even know what you mean when you say, "the wealthy take the politics of power and money when they don't need it." What does that even mean? Maybe if you can explain what you mean I can tell you what I call it. 
John Wagner Added Dec 9, 2017 - 6:37pm
Ed, OK, businesses got bigger in that time period... what about it? It makes sense that businesses grew as the population grew and the people became more prosperous. 
 
I think you are incorrect when you say that large businesses don't mind regulations. They do. I think it would be more accurate to say that large businesses can deal with regulations better than small businesses. I certainly agree with that. Large businesses have teams of people to deal with it, small businesses do not. And at times large businesses coopt the power of govt to squelch competition from small businesses. That's also true. 
 
If your point was to invalidate anything I've said, I don't see it. I agree with what I've just typed, and I assume you do too. But it doesn't change my earlier comments about big government being the core of the problem. If this is supposed to support George's claim that big business created big govt, I still don't see it. I'd love to see a rational explanation for that claim. 
Edward Miessner Added Dec 10, 2017 - 4:05pm
John, I suggest you read up on the original Progressive movement of the 1890s, 1900s and 1910s and how government started to become large during that time in order to deal with the rise of monopolies and trusts. Also look into our first expansion overseas with the Spanish-American War and how sentiment was ginned up among the people by the yellow-journalism at that time. This was all in response to the closure of the US Frontier and the Long Depression that started in 1873 and lasted until at least 1879, some say 1896
John Wagner Added Dec 11, 2017 - 11:06am
Ed, so you're saying that government got big in the Progressive Era in response to monopolies? I must disagree.
 
First, the desire for bigger government existed regardless of monopolies. Progressives bubbled with excitement for things like eugenics, Prohibition, and the as-yet untried socialism and fascism. Progressives wanted government to do more. All in the name of ‘scientific’ progress, of course.
Many American Progressives learned this ideology from exposure to German universities. They wanted more govt control of businesses as well as more Bismarckian welfare statism. This mindset existed quite apart from any monopolies.
The problem for them is that it was hard to graft Progressive ideals onto an American culture that prized individualism over collectivism. Progressives needed good excuses to seize more control. For Woodrow and others, WWI provided such an excuse.
But apart from WWI, it’s more accurate to say that the Progressive Era only planted the seeds for big government, and never came close to actually achieving big government. Government in the Progressive Era was tiny compared to what we have now. Govt spending at all levels in the 1920s was less than one third of today (11% of GDP versus 36%). Regulations were also much, much lighter.
 
Now, monopolies. True monopolies are very rare. There are only three typical paths for monopolies to come into existence. The first is when some service is provided by dedicated infrastructure that cannot realistically be duplicated, like the water lines into your house. The second is when govt grants a monopoly or in some other way enables it. The third is when one company grows so large that all competitors are driven out of business.
That third type is the great concern of Progressives. It’s exceedingly rare, if govt power is limited. Why? Because if people are allowed to keep their economic freedom, new competitor companies can start up, and people can import from foreign competitors.
Even the famous Standard Oil of Rockefeller never achieved true monopoly. And the dominant market position it did have was dropping before it was broken up.
People are often fearful of dominant companies, but market forces always have a way of eroding their power. As silly as it sounds today, General Motors was once considered too dominant. People thought Walmart was unstoppable, now Amazon threatens them. Remember Nokia, Blackberry, and LP records? I could go on and on.
 
Even more fundamentally, WHY do monopolies concern people? It’s a concern that monopolies will abuse consumers, right? I share that concern. That’s one reason I want govt power to be limited. Absent govt intervention, no business becomes large unless it satisfies lots of customers. Standard Oil got big because it was efficient and delivered lower prices to consumers. Rockefeller drove down the price of kerosene tremendously, from something like $1 to $0.05. Did that harm consumers? No! And it happened because consumers enabled it.
Rockefeller abused competing companies, not consumers. Yes, Rockefeller drove many competitors out of business in his ruthless drive for efficiency. It was these competitors that hated Rockefeller so much and helped give him so much negative press. And of course they tried to use govt power to stop Rockefeller and help themselves.
It was a similar story when A&P was driving mom-and-pop grocery stores out of business in the first half of the 20th century.
I understand that changes like these can create turmoil and uncertainty and make people nervous. But it’s consumers that drive the bus in a capitalist economy. As long as govt is limited and consumers are free to choose, they will choose businesses that give them what they want. Consumers liked the low prices and one-stop-shopping of A&P supermarkets and the much lower kerosene process from Rockefeller.
Edward Miessner Added Dec 11, 2017 - 3:50pm
John, I didn't say the govt GOT big in the Progressive Era, I said it STARTED to get big. How big was the govt in the 1880s compared to the 1920s, hmmm? 3%
 
And there was a reason why anti-trust laws were passed, beginning with the Sherman Act in 1890. There was also a reason why Standard Oil had to be broken up. It seems that once they got rid of the competition, they raised the price of the oil products. Railroad companies did this sort of thing with impunity. James Vanderbilt, President of the NYCRR, stated in response to how much the railroad should charged, said, "Whatever the traffic will bear."
 
The last big monopoly that was broken up was ole Ma Bell and it took awhile for AT&T to put all the pieces back together...
John Wagner Added Dec 11, 2017 - 5:15pm
Ed, you're giving me smart-ass attitude about the govt spending when you don't even understand the data. The 3% you cite is for federal govt only. The data I mentioned was for ALL levels of govt (fed, state, and local). Federal only in the 1920s was 4%, so my point is still valid. Unless you want to claim that 3% in the 1880s rising to 4% in the 1920s really supports your claim that govt STARTED to get big. 
 
I stand by everything I said about monopolies. I gave you several examples of companies losing their dominance without govt intervention. There are many more. Progressives then and now trust government too much and free-market competition too little. You should be more suspicious of the business competitors that tried to use govt wrangling to stop Rockefeller (and A&P). What, only the winning businesses are to be despised? And in case you don't know, Ida Tarbell, the muckraking journalist that did so much to tarnish Rockefeller, had a father who was driven out of business by Rockefeller.
A. Jones Added Dec 11, 2017 - 10:21pm
Greed has become the dominant factor in the politics and economics.
 
Gravity has become the dominant factor in plane crashes.
A. Jones Added Dec 12, 2017 - 5:15am
the average wage is somewhere in the $10 to $15 an hour range.
 
The average wage measured in terms of dollar amount is irrelevant to economic well being. The only important measure is the purchasing power of the wage; i.e., can it purchase more things today than an equivalent wage could purchase, let's say, 40 years ago. If so, then the worker is ahead, in spite of whatever number is printed on his paycheck.
 
Additionally, the assertion that the average wage is $10-$15/hour is incorrect. See:
 
https://www.bls.gov/news.release/empsit.t24.htm
(Bureau of Labor Statistics, Average hourly and weekly earnings of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted(1)
 
As the BLS data show, by the end of November 2017, the average hourly wage for non-supervisory employees was $22.24/hour. BLS calculates average weekly pay for this sector as $749.49/week. That comes to about $38,973/year.
 
The Federal poverty level for the entire U.S. in 2017 was $13,660/year for an individual worker (i.e., a household of 1 person). To get that number, I averaged the poverty level for the 48 contiguous states plus the poverty levels for Alaska and Hawaii.  For that information, I went to this site for summaries of the data on the U.S. Department of Health and Human Services site.
 
Now,
 
38,973 per year / 13,660  per year = ~2.9.
 
So the average yearly income for an individual worker in a non-supervisory job in the U.S. for 2017 was about 2.9 times greater than the Federal Poverty Level (for all 50 states) for the same year.
 
To compare purchasing power of 2017 wages with those in, e.g., 1977, you'd first have to research the rate of inflation since that time and the average, non-supervisory hourly wage from that time, and convert today's dollar-value and average wage into its equivalent 1977 dollar-value and average wage. That way, you're looking at the same kind of unit for measuring the two average wages. Then you'd have to obtain a catalogue of common consumer goods (e.g., a Sears Roebuck catalogue) and compare the prices of goods one typically bought in 1977 with similar goods one typically buys today (e.g., television sets, refrigerators, tires, coffee makers, etc.). With a little more research, you can locate many food prices (milk, eggs, bread, juice, chicken, beef, etc.) and compare them with today's prices. By comparing the number (or fraction) of labor hours an employee had to work in 1977 to earn enough to buy, for example, a color TV, with the number of labor hours an employee has to work today to buy a flat-screen TV, you'll find that in almost all cases, the cost of the good — measured in terms of "how many hours a worker must labor to earn enough to buy that good" — has gone done over the past 40 years, in spite of a chipping away of the dollar's purchasing power from inflation.
 
That increase in purchasing power over 4 decades came about completely because of increases in productivity. The glaring exception to this general rule has been for those goods in which there's little or no free market, and in which government has become heavily entangled: medical care; health insurance; education; and rental housing.
 
And finally,
 
Because of technological progress, many goods today have no real equivalents from 1977. IBM electric typewriters are in the Sears catalogue from that year, but no one buys typewriters today; they buy laptop computers that do far more things than a typewriter. However, when you do the comparison explained above, you'll find that even when comparing a high-end laptop (e.g., an Apple MacBook Pro or Apple Air) with an IBM Selectric, the number of labor hours an employee must work today to earn enough to buy that Mac is less than the number of hours an employee in 1977 had to work to earn enough to buy an IBM Selectric. So not only are many prices for common consumer goods lower today than they were 40 years ago, but the quality is far better.
Edward Miessner Added Dec 12, 2017 - 5:50pm
A Jones,
 
$10 to $15 an hour could be the median average wage (50% make more, 50% make less) whereas $22.24 an hour could be the mean average wage (sum of all the gross wages divided by the total number of hours worked). There's a difference.
A. Jones Added Dec 12, 2017 - 7:59pm
https://fred.stlouisfed.org/series/MEPAINUSA672N
Federal Reserve Bank of St. Louis
 
Real median personal annual income in the United States for 2016 was $31,099: 50% of working individuals earned more than that; 50% of working individuals earned less than that.
 
The Bureau of Labor Statistics calculates a median individual weekly income of $865.00. Assuming an individual employee works a regular 8-hour day but is not paid for a lunch hour (so that he's paid for a 7-hour workday), the median hourly wage would be the median weekly income divided by 35 (7 hours per day x 5 days = 35 hours per week of paid labor).
 
$865/35 = $24.71/hour
 
That's quite a bit more than the $10-$15 median wage claimed by others in this thread.

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