Sunday, April 15, 2012

Can Barak Obama or Mitt Romney Help the Middle Class?

The middle class is down for the count. It's become increasingly irrelevant in today's economy. President Obama and Mitt Romney both say they have the right medicine for the economic resurgence of the middle class. They're both wrong, according to a very insightful article by Geoff Colvin of Fortune Magazine. There's nothing either could do from the office of President to solve this problem.

That's a harsh and dismal forecast for a widening group of Americans still facing high unemployment and stagnating pay. Middle class workers are angry, and in large part don't understand who they're angry at or why. According to Colvin:
"The sorry situation of the middle class began long before the financial crisis and recession. Incomes in the broad middle have gone nowhere for more than 20 years after rising slowly but steadily through most of the 20th century. Why? Many theories have been advanced, but the one that holds up best is set out by Harvard economists Claudia Goldin and Lawrence Katz in articles and a book, The Race Between Education and Technology. The economy continually demands higher-level skills from workers, they argue, and for most of the 20th century the U.S. workforce kept up. In 1900 few people stayed in school past eighth grade; by 1970 a large majority finished high school, and many went on to college. American workers became the world's best-educated and earned the rewards.

"Then, in the 1970s, America's level of education stopped rising. The high school graduation rate peaked at 77% in 1969 and has since dropped to about 69%; college rates, too, stopped rising. The economy kept demanding more workers with advanced skills, but we stopped producing more. At the same time, other countries relentlessly educated their people, so the U.S. workforce fell from No. 1 in the world to the middle of the pack. Result: The minority of workers with advancing skills became more valuable, while the broad middle got flat or even falling pay."
Colvin goes on to explain that the infotech revolution makes upper-class workers more productive. They can earn more, they can buy things more competitively and they can invest more wisely. They get richer. The lower class, on the other hand, hasn't been hurt much by infotech, as their jobs are place-based. They lay bricks and cook in restaurants -- things that require people on site, and haven't been automated.

Jobs of the middle class, however, have been automated out of existence, making them increasingly irrelevant to the economy. As an example, Alvin Toffler, in his book Revolutionary Wealth calculates that ATM machines have probably replaced 200,000 bank tellers, a job that most would consider middle class. Today, if you carry on luggage, there's only ONE airline employee involved in the entire process of ticketing, payment, printing boarding passes, checking in and boarding an airplane -- the person at the gate who actually scans your boarding pass. One more step in using face recognition to comparing yourself to your government ID photo, and that job's replaced by automation as well. All those jobs in the airline industry used to be considered middle class jobs.

Goldin and Katz lay the problem squarely at the feet of the US educational system. The fix is obvious but clearly not easy. We need a complete overhaul of our education system, starting before Kindergarten. With apologies to those in that profession, what we're doing isn't working, and it's been getting worse for 40 years. I've spent enough volunteer time with educational institutions to know that this is a huge and seemingly intractable problem. It has to be solved locally -- it's something the federal government has clearly demonstrated it has no ability to fix. Of course, the most powerful union in America will need to be dealt with along the way.

The most plausible fix (to me, anyway)? More school. Year-round school. Our 180-day school year originated in an agrarian society that needed kids available for summer farm work. Japanese have 243 days of school per year. Germans have 240. American kids' reading and math proficiency relative to grade level declines at every grade. Why not require, if not of all kids, that at least those kids behind in reading or math take remedial classes in the summer, thereby catching them up with their peers by the fall? The KIP schools, piloted in the Bronx decades ago has proven that year-round school works. Why can't we take advantage of that example?

As business owners, this middle class that's unprepared for the workplace needs of this century should be a critical concern, both economically and ethically. How can we let such a large part of our population continue to decline in prosperity, largely because they don't know any better? What can we do to turn this ship around?

I welcome your comments and ideas.
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Terry Weaver

Chief Executive Boards International
Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it

1 comment:

  1. My response to a friend, didn't bother to change the perspective...This tells me 2 things. 1. Education should be more of a priority (it should almost always be MORE of a priority) and 2. voting for Romney will do no good then, so you should probably not bother :)

    My issue with this is A. he doesn't really identify what the problem is with the education system and B. it's ok to blame the school calendar, though, it is a pretty weak solution for him to pose, alone.

    First, test scores, particularly in comparison to other countries, or school district to school district are incredibly deceiving because in the US we attempt to educate 100% of our kids, whereas in China, for example, only more well-to-do families can afford to send their kids to decent schools, and often they are the only ones measured. So, we end up comparing all of our children (averages) to their more well off children. The same is true district to district. Becky teaches in Kettering. Her school has 40% of students on a "free & reduced lunch" program, in other words, economically disadvantaged. But, they are held to the same standards as Oakwood or other districts which often have NO sub groups (minorities, emotionally disabled, ESL (English as a second language). In addition to this, Ohio has ruled our school funding system (based on property taxes, meaning more money for "public" schools in affluent districts) unconstitutional for years, but no more fair system has been put in place somehow.

    Anywho, that is my education rant, and of course, I see it from a biased point of view. I just think it is a cop out excuse in this article, and he fails to identify a real problem, beyond throwing the system, in general, under the bus.

    In regards to the schedule though, my wife or I wouldn't oppose that. Year round typically just means that the breaks are more often, but shorter. It is typically the same number of days in the end.


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