The “middle class” myth: Here’s why wages are really so low today

He talks about people working in meat processing as being middle class if they get a good wage. WTF? In my mind middle class jobs are doctor, lawyer, professor, politician. Then the aristocracy are upper class. I guess you don't have an aristocracy in the US who I don't know what counts as upper class there.

While by no means do I disagree with the article as a whole, this seems obviously false. Why would you not expect a higher wage for a more dangerous job, even if otherwise it doesn't have a higher skill or knowledge barrier to entry? I know I'd certainly want to make more money shoveling taconite into a blast furnace compared to taking fast-food orders. Given two such jobs at the same wage, I'd take the second one.

A response could be summarized as: "Times, they are a' changin'"

* There are 50% more people in the US than there were in 1965, the year used as an example in the article. Up to 316MM from 194MM [1]. This means more people competing for jobs, which weakens the power of unions. Many of those people are immigrants from countries where the US dollar goes a long way. It's hard to bargain when there are dozens of applicants lined up, many of which have at least a two year degree.

* Market consolidation happened. This means that workers can't easily move to another job if they don't like their wages. Consolidation also means more competition with big enemies and fiercer battles for margins. Small companies have room to negotiate. Big companies live and die by quarterly earnings reports, and lowering wages is always a convenient go to.

* Unions cause obvious financial problems. Most unions do far more good than harm. But there are multiple examples of cutting open the golden goose. Many unions have collectively bargained too well, nearly bankrupting their employers with poorly calculated pensions and benefits. Once a union fights hard to earn a concession they can almost never give it back, no matter how damaging it becomes.

Unions are not bad things. Corporations have a fiduciary responsibility to get as much work out of employees for as little compensation as is practical. It's good to have that balanced by organizations who have a responsibility to their members to get as much from the corporation as is practical.

The lack of unions and organized labor isn't what's ailing the middle class of this country. Capitalism is a greedy optimization function. At the extremes it doesn't do "middle". Not to discuss a different topic, but ideas like basic income combined with increased automation could be like a collective bargaining for every citizen. By making work effectively optional, employers will lose some of their leverage and employees won't have to be on the defensive.

[1] http://www.multpl.com/united-states-population/table

What "laws of the free market" are those?

For starters - Unions are great, I mean, just ask Detroit how awesome they are. The unions absolutely buried that city in unfunded pensions:

http://www.freep.com/interactive/article/20130915/NEWS01/130...

"Even in recent years, when no one questioned that the health care tab had been ballooning, city leaders failed to cut costs because of intense pressure from unions. Adverse court and arbitration rulings also stymied the city’s best efforts to cut. The city’s spending on retiree health care soared 46% from 2000 to 2012, even as general fund revenue fell by 20%."

From the article: "The anti-labor movement’s greatest victory has been in preventing the unionization of the jobs that have replaced well-paying industrial work."

This is such a myth. Right now there's a HUGE shortage of skilled labor in this country - most in non-unionized fields:

http://www.scdigest.com/ontarget/13-11-06-3.php?cid=7555

"Companies that make tangible products are struggling to find candidates for about 237,000 job openings. To put that figure in perspective, it's 89,000 more than the entire U.S. economy created in September."

"But worse, the under 30 crowd simply does not see manufacturing work as an attractive option. That may be due to some misconceptions about new age manufacturing jobs, says Paul Gerbino, head of ThomasNet News.

Many young workers don't even think about manufacturing as a career "because they don't realize that factory jobs are not what they were in the old days," says Gerbino. "Many of these jobs involve sophisticated technology" he told Fortune, and with that comes improved pay. Salaries can start at $50,000 or more, and climb to well over $100,000 a year for skilled, experienced engineers and technicians.

The Thomas.Net study found that 59% of small and medium-size manufacturers are planning to hire skilled trade workers - that is, if they can find them."

Not exactly a ringing endorsement for the author's assertion we need more unions to protect the "working wages".

Already much of the seafood is from Thailand and Chinese sources (check the label at your local supermarket).

(And how often is such food tested for antibiotics that are legal there, but banned here? Is a question I would like the answer to...)

This statement about the "laws of the free market" is an erroneous claim. Look up "compensating differential."

He also uses the year 1965. Just a few years later in the 1970's the steel industry in this country started to take a huge dive. Why? They priced themselves out of the market. Steel was cheaper everywhere else.

One look at this graph tells a grim story. Imagine if it went back to the 1900's instead of just 1980.

http://www.marketsize.com/blog/wp-content/uploads/2011/05/Ir...

Can you imagine what the air quality, or lack of was like back then?

Now, just multiply the loss of the steel industry with all of the others that we've lost over the years, like the auto industry. It's easy to see where the jobs went. The rest of the world simply caught up.

It's easier in some counties. For example, while in London, I was able to buy a very good percentage of local food, even bio stuff. As I travelled through Europe last year, I was able to do the same in every country I went to. I was driving around and that certainly helped getting to the big supermarkets but I also went to smallers shops and, while not perfect, it was still possible to choose products based on its origin.

Edward McClelland claims that "the laws of the free market", differing compensation for different types of work, and for work of differing degrees of unpleasantness and risk, should be compensated equally. While there are some within present economic circles who'd argue that, if you go back to Adam Smith (insufficiently read by either economists or their critics), you'll find he actually expands at some length on this in Chapters VIII and X of Book I of The Wealth of Nations. Edited for length (the 18th century was a time of considerably more leisurely writing...).

The precis: general wage levels should cover the basic needs of survival, and are established by whether or not general employment is growing, steady, or declining, with the favorability to labor being best in the first and worst in the last case. Compensation for specific types of works varies according to five factors identified by Smith: agreeableness of the work (which reduces pay), cost of acquiring a skill (which increases it), regularity of employment (decreases), trust required of the worker (increases), and the probability of success (less risk: lower reward).

Incidentally, this answers the question of why college professors are relatively poorly paid ("If you're so smart, why aren't you rich?"): while the job requires considerable education, it's agreeable, highly regular, relatively low on the trust metric, and (for tenured positions) carries very low risk. And hence: the pay is adequate, but generally modest. Back to Smith....

First, Chapter VIII notes that it's the increase or decrease in the economic output of a country, not its total size, which sets the prevailing wage rate. A smaller economy growing faster than a larger one will pay better yet have lower prevailing prices. Smith also notes that pay must always be sufficient to cover living expenses, a point somewhat lost on WalMart and McDonalds of late:

A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation....

There are certain circumstances, however, which sometimes give the labourers an advantage, and enable them to raise their wages considerably above this rate, evidently the lowest which is consistent with common humanity.

When in any country the demand for those who live by wages, labourers, journeymen, servants of every kind, is continually increasing; when every year furnishes employment for a greater number than had been employed the year before, the workmen have no occasion to combine in order to raise their wages. The scarcity of hands occasions a competition among masters, who bid against one another in order to get workmen, and thus voluntarily break through the natural combination of masters not to raise wages....

It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest.

In Chapter X, wage differentials by type of work:

The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others. First, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them.

First, the wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness, of the employment. Thus in most places, take the year round, a journeyman tailor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier....

Hunting and fishing, the most important employments of mankind in the rude state of society, become, in its advanced state, their most agreeable amusements....

Secondly, the wages of labour vary with the easiness and cheapness, or the difficulty and expense, of learning the business.

When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out upon it, with at least the ordinary profits. A man educated at the expense of much labour and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines....

The difference between the wages of skilled labour and those of common labour, is founded upon this principle....

[I]n order to qualify any person for exercising the one species of labour, ... [custom imposes] the necessity of an apprenticeship.... During the continuance of the apprenticeship, the whole labour of the apprentice belongs to his master. In the meantime he must ... be maintained by his parents or relations... Some money, too, is commonly given to the master..... [O]n the contrary, the labourer, while he is employed about the easier, learns the more difficult parts of his business... It is reasonable ... [that] the wages of mechanics, artificers, and manufacturers, should be somewhat higher than those of common labourers.... This superiority, however, is generally very small: the daily or weekly earnings of journeymen in the more common sorts of manufactures ... are, in most places, very little more than the day-wages of common labourers. Their employment, indeed, is more steady and uniform, and the superiority of their earnings, taking the whole year together, may be somewhat greater.... Education in the ingenious arts, and in the liberal professions, is still more tedious and expensive. The pecuniary recompence, therefore, of painters and sculptors, of lawyers and physicians, ought to be much more liberal; and it is so accordingly.

Thirdly, the wages of labour in different occupations vary with the constancy or inconstancy of employment....

A mason or bricklayer ... can work neither in hard frost nor in foul weather... What he earns, therefore, while he is employed, must not only maintain him while he is idle, but make him some compensation for those anxious and desponding moments [he awaits employment]...

[Any contractor should be familiar with this circumstance ... Ed]

When the inconstancy of employment is combined with the hardship, disagreeableness, and dirtiness of the work, it sometimes raises the wages of the most common labour above those of the most skilful artificers. A collier working by the piece is supposed, at Newcastle, to earn commonly about double [or more] ... the wages of common labour ... [arising] altogether from the hardship, disagreeableness, and dirtiness of his work....

Fourthly, the wages of labour vary according to the small or great trust which must be reposed in the workmen.

The wages of goldsmiths and jewellers are everywhere superior to those of many other workmen ... on account of the precious materials with which they are entrusted.... Such confidence could not safely be reposed in people of a very mean or low condition....

[Entrepreneurs pay attention to the next .. Ed]

Fifthly, the wages of labour in different employments vary according to the probability or improbability of success in them.

*The probability that any particular person shall ever be qualified for the employments to which he is educated, is very different in different occupations.... In a perfectly fair lottery, those who draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession, where twenty fail for one that succeeds, that one ought to gain all that should have been gained by the unsuccessful twenty.

http://www.gutenberg.org/files/3300/3300-h/3300-h.htm

Why this sh*t is posted on hacker news?????

Why????????????????????????????????????????