In the USA, the middle class is trapped and almost disappears in a neutral gear. Most of these families can be believed to have raised wages in more skilled employment in the socio-economic ranks. This may not be the case, though, as most Americans now face several problems that have contributed to a middle class divide. Many Americans currently suffer from current economic difficulties and other difficulties and these problems must be dealt with in a non-cavalier manner. The crises being faced by the middle class today are worse than those which existed before the Great Recession. For the past three decades, the American middle class has been undergoing major changes caused by a growing inequality on incomes, a stagnant growth of wages, an increase in debt and reliance in part time work causing a decrease in the population of individuals in this group.
There are numerous ways of defining the ‘American middle class’ but all definitions are grounded on the idea that this is a group of people who are neither part of the upper class or the lower class and so they fall in between the two (Rauch web; Banerjee and Duflo 4). For the purpose of this paper, the American middle class refers to a group of people whose income is in the middle fifth of the income ladder in America, their wealth comprises of the middle three fifths and those whose total spending falls in the middle fifth.
Experts agree that the middle class are part of the most significant group of people in any society based on their roles in the economy and other sectors. Based on their positioning on the economic ladder, the middle class populaces are indispensable in any population. Whatever impacts them has a rippling effect to the rest of the country. They keep the economy moving because they are the spender, the most productive people because they work and they ensure the stagnation of the economy (Banerjee and Duflo 50; Madland web). Anything that affects the middle class impacts the rest of the country.
A great percentage of Americans are currently earning minimal wages and a greater percentage of these belong to the middle class. Income for the rich keeps growing while the rest of the Americans remain stagnant and this form of inequality means that the levels of poverty remain high. Apparently, the income for the richest 1% of Americans has grown by 31% within four years while that of the rest 99% has not grown by even 1% (Kurtz web). This is evidenced by the growing number of Americans who are reliant on food stamps. A report by CNN Money shows that by the year 2013, around 48 million Americans were on food stamps (Kurtz web). This is immensely high considering that it is the highest since the food stamp program commenced in the late 1960’s.
Income inequalities should cause worry in any population considering that a high population of people living in poverty also affects the economic growth of a country (Banerjee and Duflo 50). Most of the time, poor people are incapable of affording proper health care and education and this makes them completely reliant on a government or the rich. Eventually, the rich are forced to cater for the needs of a population that is unproductive due to poor education and waning health. Such a situation deters the growth of a country from all fonts.
Stagnation in the Growth of Wages
A major issue facing the American middle class today is the stagnation in the growth of wages. The growth of wages in this class of people is confirmed as normal to the extent of becoming stagnant especially after an inflation-adjusted basis. The issue is that while the wages remain the same, other significant services including medical and education have increased outpacing the growth of wages. As explained by Doob, members of the middle class are wholly reliant on their resources to obtain these services (161). Inability to pay for medical services may lead to the development of health issues and this impacts productivity. At the same time, lack of proper education makes it impossible for the middle class to obtain well-paying jobs. Inflation in these two significant fields and stagnation in the growth of wages makes life difficult and most of the members of the middle class end up in the lower class.
Increase in Debts
High dependence on and the liberal use of credit has become paramount for the middle class as confirmed by the Federal Reserve. Parents are rarely able to clear this debt by the time they are out of active employment and children are forced to take up the responsibility of repaying loans and other forms of credit. Instead of saving money for retirement, all the funds are diverted to paying debts and this destabilizes the budget (Rauch web). An unbalanced budget implies that middle class families have to struggle and dig deeper into their already overly-driven pockets. Families that are incapable of managing these problems fall to the lower class while the remaining groups are highly stratified.
Dependence on Part Time Jobs
As explained by Kurtz, the current American job market is a gaping hole and this is attributed to the fall in 2010 (web). America has not been able to rise from this problem and most people tend to rely on part time jobs. The middle class are no longer part time workers by choice but are forced to by the fact that jobs are scarce. Finding a job that suits the needs of an individual is an unfruitful task. The lack of proper education also contributes to the lack of skilled labor needed by the few proper paying job slots available (Rauch web).
There are those organizations that managed to rebuild after the fall in the year 2010, but they are only a fraction of what they used to be. As a result, the job slots are much fewer and most of them tend to favor growing in regions that provide cheap labor such as China. A report by CNN Money confirms that only 568000 jobs have been created since the year 2010 yet more than these were lost (Kurtz web). With no stable jobs, the middle class families are incapable of saving or budgeting effectively and this contributes to their movement to the low class group. Consequently, this group of Americans are withering away and falling into the abyss of low class.
The only way of salvaging the middle class in America is to ensure that the pseudo ecosystem created by this population is maintained and made constant. A central insight towards this is suggested by Madland who suggests the maintenance of consumption by ensuring that there is sufficiency (web). Through this approach, it is possible to get rid of the existing output as well as create more opportunities for investment. The middle class drives the economy and investments are necessary to meet this requirement. However, the same middle class should be given the ability to consume the goods and services provided by these new investments.
It is imperative for policy makers to come up with policies which will encourage consumption and increase investments even during recession (Madland web). The middle class is responsible for creating a demand that is high enough to stimulate consumption and this keeps the economy growing. It is possible to increase consumption in the middle class through a regular increase of minimum wage. Instead of offering part time jobs, the government and other private investors can afford to give full time jobs to members of the middle class. These steps would be highly effective in combating the problems currently facing the middle class.
The middle class in any nation are the driving force of an economy because they are the ones who work and spend. Any changes in this group of people should be a source of worry to the rest of the nation. The current American middle class has stratified and reduced greatly and this is attributed to income inequality, stagnant growth of wages, reliance on debts and dependence on part time jobs. All these factors contribute to the fall of most middle class to low class. Most of them can no longer afford good health care and proper education. The best solution is to ensure that there is sufficiency especially in wages which will encourage investors and thus develop a spending habit that will maintain the ecosystem created by the middle class.
Banerjee, Abhijit V, and Esther Duflo. What is middle class about the middle classes around the world? Massachusetts: Massachusetts Institute of Technology, Department of Economics, 2007. Print.
Doob, Christopher B. “The Badly Besieged Middle Class”. Social Inequality and Social Stratification in US Society. New Jersey: Pearson, 2013. Print.
Kurtz, Annalyn. “7 setbacks for the middle class.” CNN Money, Jan 24, 2014. Web.
Madland, David. “Growth and the Middle Class.” Democracy Journal, no. 20. N.d. Web.
Rauch, Jonathan. “The End of Middle Class Growth: What It Means for the Future of Work, Family, and the Economy.” The Atlantic, Dec 6, 2012. Web.