With the general decline in middle class income over the past several years, the great engine that drives the American economy has continued to sputter. This large group was responsible for pushing along a market dependent on consumer spending, that reached unprecedented highs prior to 2008. We seem to add that last phrase to many financial discussions now. "Prior to 2008" is the new general disclaimer.
As we've noted in other pages, the housing market collapse gets most of the blame and for sure it was a major factor. But the warning bells should have rung out years before. The concern should have begun with the exodus of manufacturing from America. When we manufacture less at home, but continue to buy consumer items, it has to be a sign of trouble.
There are no shortage of graphs and charts showing middle class income numbers going down over the past several years. But if you are in that large group you don't need any graphs. You know that less is coming in and more is going out.
There are plenty of news stories detailing low, government reported inflation numbers. But if you are part of this large group, you know that food costs more. Energy costs more. Your disposable income doesn't buy as much. In fact disposable income was actually down even in "official" reports for the first two quarters of 2012. Given the time lag between actual happenings and federal government reporting, we know this has been true for more than just the first two quarters of that year.
More recent reports detail a 4% drop in the median income for "middle class" Americans in 2014, compared to the same group in 2000. Here is a link to some information that offers two viewpoints of possible outcomes of these numbers.
The growing gap between rich and poor has people wondering if we are on a path to only those two classes. Can we save the middle class? Will we see middle class income go back up to previous levels? I think the answer is "yes", but I think it is still down the road. We can't keep doing the same things and expecting different results.
Jobs reports still show growth only in retail, hospitality and business support. That means customer service, restaurants and staffing companies filling temporary positions. And many of those are only part time.
Politicians love to talk about raising middle class income. And lowering the tax rate on that group. But what they either don't know or won't admit is, when a government devalues it's own currency it robs from it's own citizens. As money loses buying power, it takes more disposable income to buy everyday items. As we already mentioned, lower middle class income already has reduced buying power. Government fiat currency printing only adds to the pressure.
So what can you do? The answer is to do what the wealthy do. I don't mean to do what high income earning specialists do. I mean look at the path true entrepreneurs take. Do the things the government wants private enterprise to do because the government has proven to be miserable failures in their attempts. Think like an entrepreneur.
I can give you a dozen more paragraphs about the struggles of the middle class income earners. But that doesn't fix the problem. Our country was built by doing, not complaining. Yes, it is tough and to be honest, it will get much tougher. The federal government doesn't know how to fix the problems. If they could have, they would have already done it.
Think about federal housing projects. How many are the most dangerous areas of major cities? Think about Solyndra. Millions of tax dollars dumped on that solar energy flop. Solar energy is a great idea. But the federal government cannot do it.
The government offers tax incentives for private enterprise to do these things. As we've drawn from "Why "A" Students Work For "C" Students and "B" Students Work For The Government," we've heard a constant theme. Build your asset column.
It may take grabbing one of those readily available part time jobs for a while to supplement your regular job income. You will miss some things. But you will also be preparing yourself to profit from the largest wealth transfer in history. Money will either go toward you or away from you. It comes down to preparation.
The global economy is evolving everyday. New opportunities are replacing old methods of doing things. The doors will open for those who reach for them.
I've written in other pages that I believe "The 7 Habits Of Highly Effective People" is the finest goal setting book ever written. But I've stated that this isn't Stephen Covey's best literary effort. "The 8th Habit" is even better. Both are included in our list of classic books, located in the left margin of every page.
In this page, I'll include some excerpts from that excellent book. Near the end of "The 8th Habit", the author provides answers to some questions often asked of him.
Question: "You say that one of the basic problems is that we are using the industrial age model in the Knowledge Worker Age, but aren't we still an industrialized nation?"
Dr. Covey's response: "That's true, but the nature of value-added work done in these various industries is more and more being done by knowledge workers, not manual workers. So. we're not talking about doing away with industry....We are talking more about a mental framework than a physical environment."
Question: "How does all of this apply in a bad economy, or, let's say, a good economy but a declining industry?"
Dr. Covey's answer: It applies all the more, simply because the greatest resource is the creative capacity of people who come up with Third Alternative solutions in bad times."
The thought of learning something new is at least mildly terrifying to those of us who have been on this planet for more than four decades. Most of us probably didn't ask for the conditions that have brought about this middle class income calamity.
But that doesn't really matter. We can't click our heels together and wish it away. But we can learn new things. We can read empowering books and learn how to handle new situations.
We can read "How An Economy Grows And Why It Crashes." We can turn off the sitcom reruns and watch that list of empowering videos located within the resource library that detail the history of money.
We can learn new things that will help us become a leading player in this "Knowledge Worker Age." I'm in my second half century of life. The idea of building a web site after age 50, with zero experience in this area, appeared to be a daunting task.
But with some time management skills gleaned from Brian Tracy, some goal setting prowess from Stephen Covey, some motivation from Zig Ziglar and some effort, things get easier. Not always easy, but easier.
Just below is a short video featuring Robert Kiyosaki's take on the middle class dilemma. Some people get scared off when they hear about things they believe to be impossible in their lives. Please listen all the way through and let the message sink in, then see what you can take from the video
Pay particular attention to his remarks about the similarity between members of both political parties. The governments of the world will not rescue the middle class. They'll talk about it before every election, but political action committees funded by deep-pocketed special interests draw all their attention.
In this video, you'll also notice a candidate for president in the upcoming 2016 election. In no way does inclusion of this video in this page indicate that I feel the candidate is a good choice for president. I don't.
But I also don't believe his opponent is a good choice. Her level of corruption and dishonesty surpasses any in recent memory. That she has sunk below even that well-established lower limit of deceit and treachery and still is nominated speaks volumes about the elitism and utter lack of vision and government competence that serves to tear down the middle class.
The message in the video is about taking charge and improving your life. In the process, you'll set the example for others to follow.
I would suggest that you share this information with your children in their teenage years and above. The advantage of cutting edge information is vital. And as our child's most important teacher, it is up to us to show them. They will do as we do, more than as we say.
The middle class income and the actual middle class is in jeopardy now. But, I think in time the American spirit will prevail and growth will return. You may be part of the reason why. If you prepare and learn.