State of middle class: Standing still

Twenty years ago, the Five-O model predicted that the middle class would devolve. At the crux of Celente’s forecast was the wage and purchasing power trend line that would emerge early in the 21st century as the global economy adapted to the Five-Os.

As evidenced by a series of economic reports, from unemployment rates to GDP numbers that show roaring growth and a U.S. economy that is on a sustained growth path since 2010, is the simple fact that the “wealth” is not seeping into the disappearing middle class.

For example, in the U.S., its labor market added 157,000 jobs in July while the unemployment rate ticked down to 3.9 percent, which is honing in on what is statistically full employment.

At this stage in a record stretch of job growth that began in 2010, however, all eyes are on wages because they’ve been much slower to recover from the Great Recession.

Yes, wages were up as well. Average hourly pay increased by 7 cents, or 0.3 percent to $27.05. That increase built on the 4-cent gain in June. And looking at the broader trend, wages increased 2.7 percent for the 12-month period that ended July 31.

But what is under-reported and poorly analyzed when these reports are published, is how wage growth, when adjusted for inflation, is actually slowing.

In fact, while average hourly earnings may be growing at 2.7 percent a year, the consumer price index has increased 2.9 percent. And that number is a politically concocted fraud, purposely lowered to deny social security and other inflation-based benefits.

Moreover, the data clearly show that the sharpest category of wage increase spikes are coming from low-wage sectors, where wages have increased 0.7 percent over the last decade, largely because several big low-wage employers, such as Walmart, Costco, McDonald’s and others, raised their minimum pay levels.

These increases amount to a mere pittance. In fact, in America, since hourly wages are so low, taxpayers are subsidizing Walmart and other workers with some $6.2B a year in public assistance since many of their workers are living below the poverty level.

And weak wage growth isn’t just a problem in America.

Workers in Japan, the U.K., Germany, Australia, Italy, Spain and other countries are experiencing similar trend lines.

In the United Kingdom, for example, the wage average in May fell to the lowest level in six months, while the number of workers increased. The UK’s National Statistics Bureau said average weekly earnings rose by 2.5 percent on the year in the three months to May, slowing down from the previous three months when they grew by 2.6 percent. Pay growth excluding bonuses slowed to 2.7 percent. TJ


Across the globe in most civilized countries, the story is the same: More workers in the labor forces than jobs available. This is one of the major factors driving the massive migrant trend: People fleeing their countries looking for work.

And, as populations continue to increase, there will be a greater supply of workers than the demand for jobs, thus adding further downward pressure on wages.

And in the new world of high-tech innovations such as robotics, Artificial Intelligence, online retail and services, etc., from top to bottom, jobs will be replaced and the pay scale will continue to be lowered.

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