The genuine desire to increase the number of middle class jobs may be one of the only pieces of common ground on the American political landscape. The actual definition of “middle class” varies based on where you live, but the desire is universal.
The most commonly accepted formula for determining “middle class” is two thirds to double the median household income. A salary between $48,300 and $144,966 qualifies you if you live in Maryland. The range is $25,309 to $75,926 in Mississippi.
Regardless of what it means where you live, higher paying jobs is important considering that it costs an average of just over $245,000 to raise a single child born in 2013 until they reach 18 years of age. That’s over $13,000 per year in a middle class home.
The current administration’s plans focus on four areas at this point:
- Bringing jobs that have moved overseas back to America
- Reducing regulations that make it more difficult to grow jobs in the United States
- Renegotiating trade deals so that Americans have a better opportunity to compete
- Upgrading infrastructure to put people back to work and create a foundation for other growth and innovation
Each of these ideas has merit, and none of them will solve the ultimate problem of increasing wages either individually or collectively. Here’s why:
The problems we face are only partially caused by Mexico, China, or any other foreign country those benefits from the offshoring of jobs. The bigger culprit is increased efficiency through automation. In other words, you can blame the technology companies who are innovating and disrupting virtually every industry.
Michael Hicks and Srikant Devaraj from Ball State University found that the need for employees went down while productivity went up between 2000 and 2010. Specifically, they noted that “had we kept 2000-levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers. Instead, we employed only 12.1 million.”
You can’t ignore the loss of jobs to overseas relocation, but that number represents only 13 percent of job losses compared to 87 percent from productivity increases.
The truth many politicians have failed to share and many Americans have failed to accept is that many of the jobs lost during the great recession are not coming back.
Any plan to increase hiring through an infrastructure stimulus plan is a short to medium-term solution at best. A 2013 report by the American Society of Civil Engineers suggests that the United States needed a $3.6 trillion investment to bring its infrastructure up to desired standards. Such a commitment would make a meaningful impact on jobs in the near term and remove what Bank of Canada Governor Stephen Poloz called a world-wide impediment to business growth.
While the construction industry has been slower to adopt digital solutions to increase productivity than other areas of the economy, that won’t last forever. Japan is already utilizing robotic bulldozers, dump trucks, and other vehicles guided by drones to overcome its labor shortage in its construction industry.
Does anyone doubt that it is only a matter of time before construction follows the example of manufacturing and increases productivity through automation?
The jobs problem isn’t solved until the education problem is solved. The Wall St. Journal reported that there were, on average, 353,000 job openings per month in the manufacturing sector in 2016. The number one reason is the lack of qualified candidates for the job.
The State of Tennessee began offering two years of essentially free community or technical college education to high school graduates in 2014. As expected, enrollment has increased. Most importantly, Tennessee was named the number one state in the country for advanced industry job growth in 2016. While it is impossible to ignore efforts to create a business friendly climate, finding highly-skilled workers is considered to be the number one driver for business location decisions.
So what does this mean for you?
- If you are near retirement and have a job now, you may be okay without re-skilling. Changes to how you work are inevitable, but they won’t hit every industry or every company within an industry the same way at the same time. You should pay attention to the trends in your industry and adjust accordingly.
- For everyone else, you must control your own destiny through education. Your continued employability will be based on the value you create. You can’t count on your employer or your state government to retrain you. The one thing you can control is your preparation for the future. In short, it is time to get off your butt and learn something new.
- You need to pay as much attention to your local school board elections as you do the national presidential election. The impact of the President of the United States on national and international affairs in undeniable. The decisions about what your children and grandchildren will learn to prepare them for a good job are made at the local level in most communities. A study from Portland State University suggests that the voting percentage in local elections is 20 percent of less.
To quote the shadowy character Deep Throat from the movie “All the President’s Men,” we should “follow the money.” When it comes to the future of jobs, the long-term future of the middle class is to upgrade knowledge and skills to add value in a world that will be dramatically different than it is today. You will be paid more when the job you perform is worth more.
Randy Pennington is an award-winning author, speaker, and leading authority on helping organizations achieve positive results in a world of accelerating change. To bring Randy to your organization or event, visit www.penningtongroup.com , email info@penningtongroup.com, or call 972.980.9857.
