The US economy today borders on schizophrenic. To be sure, we are seeing signs of positive momentum. The last three months have delivered almost 250,000 new jobs per month on average. Great news, but at the same time, unemployment is growing and now exceeds nine percent. Both consumer confidence and small business confidence is higher than where they were last year. But confidence has been falling rapidly for the past few months.
Were Charles Dickens to show up as a commentator on the evening news, he would have a ready vocabulary to describe our current economic situation: This recovery is very much A Tale of Two Cities. After years of record low interest rates, multiple stimulus packages, and the expansion of tax cuts and credits, we are in the midst of a very real recovery, but it is a recovery characterized by asymmetry. Banks and major corporations are flush with capital — large businesses are recording record profits — but job growth is tepid, unemployment remains high and small businesses are struggling.
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The job growth problem is even more nuanced than that. It turns out that the hiring we are seeing is at the extreme ends of the spectrum. To ensure strong profits, corporations are cutting out the middle layers of management — the middle-class. In their place, they are hiring at the very low end and promoting at the high end. Senior management compensation is up nearly 25% this year ($9M for the average S&P 500 CEO), to levels higher than in pre-recession days, according to executive compensation research firm Equilar.
On the other side, we have job growth coming in at the bottom of the pyramid, mostly minimum wage and temporary positions. Take last month's job creation, for example. Out of the 260,000 jobs created in April, a whopping 60,000 jobs came from one company: McDonald's. There is nothing wrong with flipping burgers for a living, but it will not pull us out of a recession.
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This has left 17 million college-educated Americans with jobs well below their educational levels. If the middle-class are filling the jobs available for the less educated, then the poorest Americans will largely be left jobless.
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Without middle-class jobs, our society will enter into a "Stagnant Age" of two classes: rich and poor.
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http://blogs.hbr.org/cs/2011/05/americas_vanishing_middle_clas.htmlRead the entire thing. Although DUers recognize the general idea of the article, it is completely stated here.
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