Sunday, November 27, 2011

It's All Downhill from Here

On CNN today Ali Velshi and his guests were discussing the unemployment situation, and they were telling kids in college that they'd better learn Chinese or some other second language, and to start thinking of themselves as new immigrants to this country. It sounds pretty fatalistic to the ones who are already unemployed today...especial older workers.

Excerpted from New York Times: The country’s golden age was from roughly 1945 to around 1973 - when working life was most secure for many Americans, particularly white, middle-class men.

Since the 1970s, after computers, automations, and outsourcing, a general guideline these days is that people are rewarded when they can do things that take trained judgment and skill — things, in other words, that can’t be done by computers or lower-wage workers in other countries.

A college degree is no longer the guarantor of a middle-class existence. To get a good job, you have to have some special skill that employers value. But there’s also a pretty good chance that by some point in the next few years, your boss will find that some new technology or some worker overseas can replace you.

It’s hard to see any great future for high-school dropouts or high-school graduates with no technical skills. They most often get jobs that require little judgment and minimal training, like stocking shelves, cooking burgers and cleaning offices. Employers generally see these unskilled workers as commodities — one is as good as any other — and thus each worker has very little bargaining power, especially now that unions are weaker. There are about 40 million of these low-skilled people in our work force. They’re vying for jobs that are likely to earn near the minimum wage with few or no benefits, and they have a high chance of being laid off many times in a career.

Back in the 1970s there were all sorts of stabilizers that pushed working-class wages up and kept rich people’s wages lower. The minimum wage was almost 50 percent higher than it is now (inflation adjusted, naturally). Unions were stronger and had more government support. The United States taxed the rich much higher relative to the working class. (The top bracket was taxed at 70 percent in 1978; now it’s 35 percent.) Regulations largely limited the profitability of banks and kept bankers’ financial compensation low.

The new rules, combined with the other major changes, have effectively removed both the floor and the ceiling. It’s easier for some to make a lot more money and for others to fall much further behind. That has meant a huge increase in inequality.

The top 1 percent of families now makes 26 times the average of the other 99 percent (the ratio was 11-to-1 in 1979). The top 0.1 percent makes 130 times the bottom 99 (up from a 38-to-1 ratio 40 years ago). And the inequality is not just between classes. The average wages of the average American have stayed largely flat for decades, but those averages hide a lot of volatility, as more people find themselves at the extremes of wealth or poverty.

Republicans largely claim that the new rules will make the country richer and, in the long run, will be beneficial to everyone willing to put in the hard work. Few Democrats call for a return to record high taxes and trade barriers — after all, the free flow of cheap goods has helped many, particularly the poor.

But many do want a return to the spirit of the old rules, when the government sought to make life more equal, more stable and, for some, less rewarding. The rest of us, meanwhile, should go to school, learn some skills and prepare for a rocky road.

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