When the autopsy is written on the death of the middle class, the current lousy economic recovery will be a major contributing factor, according to a new report.
The job market's recovery from the Great Recession has been the slowest since World War II, and middle-income jobs lost during the recession are being replaced by low-wage McJobs. This adds to the widening gap between the rich and poor in this country, snuffing out a middle class that helped power the U.S. economic engine for much of the 20th century. And there's little relief in sight, according to the latest UCLA Anderson Forecast, a closely watched quarterly economic report
"It's not a recovery," Edward Leamer, director of the UCLA Anderson Forecast, wrote in a press release accompanying the June forecast, which was released to paying subscribers on Wednesday. "It's not even normal growth. It's bad."
Leamer and other UCLA economists reportedly estimate that economic growth in this recovery has lagged behind that of past recoveries by more than 15 percent. This -- not Obamacare or the horrors of regulation or high corporate tax rates -- helps explain why job growth has been so bad: There's no need to hire people and pay them much when growth and demand are this sluggish.
"Without the Great Recovery, we will need to find a way to communicate the harsh reality of the 21st Century to our workforce: So sorry, the American dream is a thing of the past," Leamer writes in the report. "A high school degree and willingness to work hard are no longer a sure path into the middle class."
Much has been written about the death of the middle class in America, and we all know the usual suspects. They include massive tax cuts that have benefited the wealthy, offshoring, automation and the recent gutting of middle-income government jobs.
Since the recession ended in June 2009, the unemployment rate has drifted from 9.5 percent down to 7.5 percent, and about 5 million new jobs have been created. But at least half of those jobs pay low wages, according to recent studies by the National Employment Law Project and U.S. economists working for the Royal Bank of Scotland. During the recession, in contrast, more than half of the jobs lost were middle-income jobs, those studies showed.
Meanwhile, state and federal governments have cut 423,000 jobs since the end of 2010 and 835,000 jobs since the peak of government employment in April 2009 (which was coincidentally near the end of the recession). Many of those jobs were middle-income jobs. Many more -- teachers, firefighters, cops -- may not have paid exorbitant wages, but they did provide decent health care and retirement benefits that are scarcer in the private sector.
Recent booms in housing and stock markets have gotten us in the financial media excited about the prospects for a broader economic recovery. But so far, these gains have mainly benefited the wealthy, and they probably aren't adding to anybody's take-home pay anyway -- they're all paper gains.
On Friday, we will get the latest reading on the nation's job market. Economists, on average, expect to learn that 167,000 new jobs were created in May, according to a Bloomberg tally. That will about match the rate of job growth in April and for the past several months. And that is good news: Some jobs are better than no jobs.
But until these jobs start paying better, the recovery will keep slowly draining the life from the middle class.