We all know the middle class that actually owns capital and wields political influence is shrinking. As I noted last week in Redefining the Middle Class: It Isn’t What You Earn and Owe, It’s What You Own That Generates Income, defining the middle class by household income alone is a misleading metric, as it leaves out the critical factors of debt and ownership of productive assets.
A household may have an income of $150,000 and appear well-off by that metric, but if they are mired in debt and own virtually no productive assets or wealth that can be passed on to future generations, they aren’t middle class–they’re well-paid proletariats.
So what’s killing the middle class? If you read the dozens of articles on the decline of the middle class in the mainstream (corporate) media, you soon discover there’s a short list of the usual suspects:
1. Globalization / outsourcing
2. Technological changes / automation
3. “Winner take all” asymmetry in rewards for specialized skills