Has Globalization Failed the US Middle Class?

The debate over whether globalization has failed the US middle class has been a significant topic in recent years. This article explores the multifaceted factors contributing to the loss of middle-class jobs and the varying definitions of what constitutes the middle class across different contexts.

The Diverse Definitions of the Middle Class

The concept of the middle class is not universally defined, making it challenging to measure its resilience and decline. Here are some of the definitions used by different entities:

Definitions by Household Income and Assets

Agencies like the Insurance Industry define individuals aged 30 to 69 with household incomes between $40,000 and $100,000 or investable assets between $25,000 and $100,000. Individuals aged 25 to 29 with similar income or assets are also included. The Middle Quintile includes individuals with incomes between $48,300 and $85,600 and no specified net worth. Individuals with incomes between $44,000 and $72,000, and no specified net worth. Individuals with incomes between $72,000 and $112,000, and no specified net worth. Individuals with annual incomes up to $250,000, and no specified net worth, as advocated by entities like the Obama/Pelosi Team. The Newest Democratic Party method includes the second and fourth income quintiles, adjusted for inflation using the personal consumption expenditures (PCE) price index. According to the OECD, the middle class consists of households with incomes between 75% and 200% of the median. In the US, this translates to incomes between $23,400 and $62,400. Wealth is not considered as a factor, so a household with a net worth of $3 billion but negative income would still be classified as middle class.

These definitions highlight the complexity of defining the middle class. The inclusion and exclusion of factors like net worth and investment values significantly impact who is considered middle class.

Globalization and the Decline of Middle-Class Jobs

Economists and policymakers often link the decline of middle-class jobs to globalization. Several factors contribute to this phenomenon:

Increased Competition Based on Skills and Productivity: Globalization has fueled international competition, leading to a shift towards more skilled and productive jobs. This has left many lower-skilled middle-class workers displaced. Automation and Technological Advancements: The integration of advanced technologies, such as robotics and artificial intelligence, has enabled the automation of many jobs. These technologies can work 24/7 and provide consistent quality, further reducing the demand for human labor. Economic Displacement and Wage Depression: The displacement of middle-class workers has resulted in an oversupply of candidates for unskilled jobs. This has led to a downward pressure on wages, exacerbating the economic challenges facing these individuals and families.

For those who advocate for the capitalist system, globalization has played a role in the elimination of certain middle-class jobs. However, the overall impact can be mixed, as technology has also created new opportunities for skilled workers. The shift towards more skilled jobs has led to a reorganization of the labor market, with middle-class jobs being either lost or transformed.

Conclusion

The failure of globalization to sustain the American middle class is a complex issue with multiple causes. Defined by diverse and sometimes conflicting criteria, the American middle class faces challenges linked to both skill-based competition and technological innovation. While some may argue that globalization has reduced the availability of middle-class jobs, it is important to recognize the broader economic context and the emerging opportunities for those with specialized skills.