Sunday, August 7, 2022

Would You Flip Burgers For $12 an hour? I Thought Not

 I live near a Sonic Drive-In restaurant that has been closed lately during business hours. At first, I thought it closed for good, but yesterday I saw a big HelpWanted sign out front.

Sonic is looking for  "crew" workers--$10 per hour. It's looking for cooks--$12 an hour. And it's looking for managers--$15 an hour.

I had a lot of low-end jobs when I was young, and I did them willingly. I saved some of the money I made working for a buck an hour and banked it at the Anadarko Bank & Trust, where it earned three percent interest.

I was willing to do those jobs because I was confident about my future. Someday, I told myself, I would have a middle-class job and a middle-class lifestyle.

 Yesterday, as I drove by that closed Sonic Drive-In, I found myself wondering how many young Americans are willing to work for $10 or $12 an hour.

Before the pandemic, many adults in my town were willing to work low-wage jobs. But then things changed.

During the pandemic, many unemployed Louisianians received enhanced unemployment checks--equivalent to an annual salary of about $40,000. According to a 2020 Brookings report, $40,000 a year puts a family of four in the middle class.

Forty thousand dollars a year not to work; that's a pretty sweet deal. How many people who got that deal are willing to flip Sonic burgers or do other menial work for 40 hours a week only to earn an annual salary of $25,000? 

Not too damn many, judging from the Help Wanted signs I see all over Baton Rouge. 

According to the Wall Street Journal,  the national economy created about half a million jobs last month, and that unemployment is down to only 3.5 percent.  That's terrific news.

However, remember that the 3.5 percent unemployment rate only measures people looking for work. Millions of Americans aren't looking.

They certainly aren't looking for the countless minimum-wage service jobs in the United States: big-box store clerks, airport baggage handlers, burger flippers, and receptionists.

Years ago, economists predicted that the United States would transform itself from being a manufacturing economy to a service economy.  In the future, the pundits predicted, manufactured goods would be assembled in Asia while Americans would perform high-end services--medical care, research, financial services, legal services, and education.

That prediction turned out to be a pipe dream. It is true that Americans don't manufacture much anymore, but most of them aren't working in high-end service professions.

No, Americans are finding tons of jobs in the low-end service sector: jobs that pay between $10 and $15 an hour: hotel maids, fast-food cooks, delivery truck drivers, and retail sales workers.

Until the Covid pandemic, many Americans were willing to do those jobs, at least until they could find something better. However, once they got a taste of what it was like to raise their living standard by not working, they became unwilling to lower their living standard just so they could go home at the end of the day smelling like a hamburger.

That's my opinion anyway. Would you like fries with it?

Ten bucks an hour to smell like a hamburger? 

Thursday, August 4, 2022

The Middle Class is Shrinking, But You Already Knew That

In recent years, the Brooking Institution published a series of papers as part of its Future of the Middle Class Initiative. In a 2020 paper, Brookings defined the Middle Class as the middle 60 percent of household income distribution--"not poor, but not prosperous either."

How much income must a family have to be considered middle class under the Brookings definition? Its paper says that the average middle-class income is about $70,000, and a family of three would have to have an income of between $40,000 and $154,000 to be middle class.

In that same paper, Brookings reported on income growth among American households between 1979 and 2017. According to the paper's analysis, the bottom 20 percent of American families (the lower class) saw income growth of 86 percent, and the top 20 percent (the upper class) saw income growth of 111 percent.

In contrast, the middle class saw income growth of only 49 percent in that same period.  In other words, the middle class lost ground--especially compared to the wealthiest American families. 

In a 2022 paper, Brookings examined wealth accumulation across generations.  This paper is accompanied by dizzying charts and data, but I think a fair summary is this: Rich people tend to stay rich across the generations, and poor people are more likely to remain poor.

I am somewhat jaundiced about all this Brookings analysis. First, anyone who claims (as the 2020 Brookings paper did) that a family of three living on $40,000 a year is a middle-class family has not lived with two people on forty grand a year. That definition is simply not accurate.

Secondly, I believe the American middle class is disappearing so fast that it is misleading to even speak of a middle-class America.

Robert Reich, President Clinton's Labor Secretary, wrote a book in 1991 titled The Work of NationsReich said that the top 20 percent of income earners--"the fortunate fifth"--were prospering in a global economy and lived in a different world than the rest of us.  The Fortunate Fifth live in gated communities or secure luxury apartment buildings, send their kids to private schools, and have little interest in what is happening to the rest of us.

I think Reich's 1991book was prescient in its analysis.  Today, the wealthiest Americans tend to be clustered on the East and West Coasts. Many have acquired their wealth by financial manipulation and speculation. Their interests and desires are endorsed by the elitist media, national political leaders who cater to corporate lobbyists, and the nation's wealthiest universities.

In short, the Fortunate Fifth doesn't give a damn about the bottom 80 percent, who see their lifestyles declining rapidly due to inflation, growing household indebtedness, and diminishing opportunities to prosper.

As I said, America is disappearing as a nation of middle-class families prospering in a democratic society. Our country has become an oligarchy--controlled by powerful people who don't care about the shrinking middle class and, in fact, despise us. 

Perhaps that is why the people traveling from coast to coast in private jets refer to the places where most Americans live as flyover country.