The Hollowing-Out Middle Class & How to Avoid Being a Victim
Strategies for thriving amid the decline of good jobs.
Posted Dec 18, 2016
The middle class is hollowing out.
Is it really?
The government trumpets and the media parrots the so-called “unemployment rate” of 4.6%. ShadowStats.com reports that that statistic doesn’t include the discouraged workers, which when added, equals 22%,
In our supposed recovery, the Labor Participation Rate—the percentage of Americans 18-64 who are working—is 62.7%, the lowest since 1978.
Real median household income is lower today than in 1999.
Will it get worse?
Alas, the number of good jobs, those paying a stable, middle-class income plus benefits, is declining further. Even politicians’ and educators’ ever-proposed magic pill—technology careers, as I have long predicted, will be a poor career choice--A just-released CareerCast report lists computer programming among the top 10 most endangered careers. That's because any career in which the work product can be sent over the internet is increasingly subject to offshoring to low-cost countries. That’s especially likely in programming careers because two of the world’s most populous nations—India and China--have armies of programmers willing to work for dramatically less than what U.S. software developers demand, not counting the federal and state government mandated costs on employers: ObamaCare, Paid Family Leave, ever rising costs of Unemployment Insurance, Worker’s Compensation, Medicare, Medicaid, Social Security, increased minimum wage, mandated time-and-a-half overtime pay for more employees, and increased employee rights to sue for hostile environment, wrongful termination, and discrimination based on race, ethnicity, gender, age, and sexual orientation. All that atop paid vacation days, holidays, and sick days,
So, it's no surprise that the cost of employing Americans likely contributes to a number of major corporate bankruptcies, up 26% in 2016 alone.. Here are a few examples among well-known names that declared bankruptcy just in 2016: Don Pablo the nation’s 2nd largest chain of Tex-Mex restaurants, Cosi--the East Coast soup, salad and sandwich chain, Hometown Buffet, Johnny Carino’s, and my own favorite eatery--the Sweet Tomatoes salad and soup buffet restaurant. Then there’s Aeropostale, Nasty Girl, Radio Shack, and Sports Authority, with Sears, K-Mart, 9 West shoes, and 99-Cent Stores on the brink according to Fitch rating service. So alas, the well-intentioned fight to make employers pay a higher minimum wage, ObamaCare, paid family leave, and more employee rights to sue employers is contributing to many workers ending up with 0 pay and 0 benefits.
In addition to jobs lost from bankruptcy, automation has already killed millions of jobs, and not just ATMs replacing bank tellers, automated checkout replacing supermarket checkers, warehouses with automated pickers (Amazon uses 30,000.) Now, for example, there now are robot replacements for fast-food workers, from sushi to burgers. Even that fail-safe job, barista is at-risk, Bosch now makes an automated barista. How long do you think it will be before Starbucks and Peet's replace human baristas? Starwood Hotels use robot "butlers" for room service and Hilton is piloting replacing live concierges with Connie the Robot. At some Targets and Lowes' OSH, robots instead of people help you find what you want. And just opened, there’s Amazon Go—supermarkets where customers don’t even need to check out. You just walk out and the items are automatically charged to your credit card. Visit a Tesla factory: few people, lots of robots. And people-light, robot-heavy manufacturing is a worldwide phenomenon—Even in low-labor-cost China, huge FoxConn, which makes the iPhone, is planning to go 100% robotic. Automation makes even offshoring unnecessary. A New York Times headline: “U.S. Textile Plants Return, With Floors Largely Empty of People.” This week’s New Yorker cites an example, “A factory in Gaffney, South Carolina now produces 2.5 million pounds of cotton yarn a week with fewer than 150 workers. Robots always come in on time, never need breaks, annoy customers, nor require a single one of that long list of government-mandated benefits. An article in this week's New Yorker is titled, "Our Automated Future: How Long Will It Be Until You Lose Your Job to a Robot?"
We bailed out GM with cash in exchange for GM stock. We were told we’d make our money back when the stock hit 53. It never came close so the government sold the stock at a huge loss--We lost $16.6 billion. And how many jobs did we save for our $16.6 billion? Well, in the late 70s, GM employed more than 800,000 workers. Now? GM reports 209,000 worldwide and it didn't break out how many were U.S. jobs. GM has reported that in early 2017, it will at least temporarily shut five of its U.S. plants. In addition, it will cut 2,000 jobs from other U.S. plants. Manufacturing jobs coming back? Only politicians could claim that. And of course, not so far into the future, we’ll have driverless trucks, buses, cabs, and trains.
Lest you think the middle class is immune, accountants, analysts, home appraisers, insurance underwriters and adjusters, are being, at least in part, replaced by automated versions. Your mammogram may be read in India. Much legal work is now offshored or automated---for example, e-discovery. The Harvard Business Review just reported that companies such as Fidelity and Vanguard are working on automating back office jobs and even investment advising.
Even journalism is getting crushed. In part that’s because of the rise of citizen journalists willing to write for free. For example, I’ve written 20 essays for TIME and despite my having tried to negotiate, they said the pay is zero, not minimum wage, zero--Take it or leave it. And now, journalism is facing yet another threat--automation. Computer programs are aggregating a mass of information on a news topic and synthesizing it into a well-sourced article. Already, the Washington Post used robot-written updates in covering the 2016 presidential election.
What to do?
In other articles, for example, this one in TIME, I’ve discussed what society might do to address the decline in good jobs. Here, I offer suggestions for individuals.
Choose an offshore- and automation-resistant career. Here are a few that might particularly appeal to Psychology Today readers:
Counselor. Pick a niche likely to remain in-demand: dating, parenting, eating disorders, anger management. There are niches likely even to burgeon: interracial relationship counseling, transgender counseling, immigrant counseling.
If you’re not entrepreneurial, consider working for an employee-assistance program. Those provide counseling to corporate and government employees. Some employee-assistance counselors work directly for those organizations. Others work for firms that provide employee assistance to other organizations.
Fundraising. Nonprofits’ lifeblood is money. And not surprisingly, among the best paying non-profit jobs is development specialist, people who specialize in extracting maximum dollars from wealthy individuals and corporations. A psychologically oriented person could well be suited to such a position. You may not even need to be a “closer." Some development specialists say the key is friend-raising, building a "relationship" so the prospect is more likely to donate without an "ask" or at least be responsive to a single nonchalant request.
Start your own business. That enables you instantly to become CEO even if you’re an unemployed, uneducated felon. Of course, self-employment is risky but there are ways to reduce the risk. For example, see my article, The Un-MBA. Here, I’ll offer additional ideas.
Many psychologically oriented people feel they’re not natural businesspeople. While there are born entrepreneurs, that can be sufficiently learned. Instead of sitting and paying for a bachelor’s or master’s in business, you may find it faster, cheaper and more practical to do the following:
Find an intriguing business idea that is not new---The leading edge too often turns out to be the bleeding edge. Also avoid popular fields such as biotech, high-tech, finance, and the environment. Those tend to attract high-powered people. Unless you too are a star, pick an arena with less-fierce competitors.
So, for example, find an under-the-radar business-to-business niche. Here's how you might do that. Think about the pain points in your current or previous workplace or ask others if they have any. For example, many businesses complain about their customer service departments. If someone raises such a pain point, contact a few other businesses to see if they are experiencing the same problem. If so, you may have a viable business idea. In the customer service example, perhaps you can offer training or help the customer base to use the employer’s website’s Help section rather than phoning customer support, which costs the employer more.
Once you have a likely viable idea, it’s a matter of excellent execution. The best idea will fail unless the execution is of high-quality: good product, good service, fair price, on-time delivery, and adequate profit margin. Beware of trying to compete on price. Unless you’re a Wal-Mart or Amazon, low margins usually lead to failure--You make mistakes and you don't have the money to try to recover. You’re broke.
Succeeding in any business requires a psychologically attuned person: connecting with your customers and employees, assessing who really would be a good employee, etc. But if you’d like the business’s product or service to be directly psychologically oriented, how about a niche coaching business, for example, helping self-employed helping professionals to counsel better, market better, or manage their finances. Or provide a tutoring service, for example, helping psychology students with their statistics course or in writing papers or their thesis.
If you’re not a natural entrepreneur, consider hiring a successful person in your target business to be your consultant in developing your business plan and assisting you through your launch. Often, local people will be reluctant to help you for fear of it hurting their business so you might seek out someone in another geographic location, perhaps someone with lots of excellent Yelp reviews.
Also, the Small Business Administration offers many good articles and trainings. You might want to pay particular attention to becoming a government contractor—there’s no customer with deeper pockets.
Per the aforementioned New Yorker article, there’s a growing consensus that, no matter who is President, good jobs are going away. Ideas for stemming the problem such as those I’ve proposed in my previously mentioned TIME article are probably inadequate.
Indeed, the New Yorker article says we probably need to give up on trying to facilitate good jobs for everyone and instead provide a guaranteed annual income. One novel approach to that: The government would give every 10-year-old a funded 401k that's invested in corporations that benefit from automation---Google, Facebook, Amazon, etc. If s/he ends up earning above a certain amount, it’s taxed. Otherwise, s/he lives, albeit probably modestly, on the 401k's return on investment.
But that’s macro and futuristic. You, as an individual, may more likely thrive by adopting one or more of the strategies proposed here.
Marty Nemko is a career and personal coach. His newest book, his 8th, is just out in a new 2nd edition: The Best of Marty Nemko.