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Vice President Biden is in charge of a task force to strengthen the middle class.

Last month, he declared in Denver, “The president and I have set a very basic and measurable goal that we’ll be held to…[W]hen middle-class incomes begin to grow, and when people aspiring to the middle class get a shot to become part of it — that’s the measure.”

Official economic data confirm what we see where we live and work. The rich have become richer, the poor poorer, and the middle class smaller.

The United States Census Bureau periodically ranks all households from the lowest to highest in income, and divides them into five equal population groups, or quintiles. Then, the aggregate income of each group is divided by the national aggregate income to derive each group’s share of the American income pie.

The data show that the share going to the wealthiest, top fifth of the population rose from 43.6% in 1975, to 50.4% in 2005. The share going to the bottom fifth fell during that period from 4.3% to 3.4%. Finally, if “middle class” is defined in the most rudimentary manner possible, as the intermediate second, third, and forth quintiles containing 60% of the population, then the middle class’s share fell from 52.1% in 1975, to 46.2% in 1995.(1)

I fear Vice President Biden will not address the two real causes of the middle class decline. Rather, they will be hidden under a pile of peripheral promises and policies.

The first cause is well known.

The historical socio-economic core of the American middle class was small agricultural and manufacturing producers. Two, undeniable, centuries-old tendencies are (i) the enlargement of the scale of enterprise via mergers and economies of scale, and (ii) the concomitant disappearance of small producers, of which small farms are the most publicized example.

The second cause is less obvious…

What saved the American middle class was a 1900s revolution — a revolution that today is taken for granted.

Our economy became productive enough to enable more people to live off the maintenance and distribution of wealth — soldiers, doctors, lawyers, teachers — than from the creation of that wealth. In America, the service sector furnished 80% of all jobs in 2002, versus only 60% in 1960.(2)

Vice President Biden mentioned the manufacturing sector; he did not mention the service sector. That omission is crucial because the service sector contains most of the middle class.

Whither the service sector middle class? That is the question. Was the service sector salvation of the middle class permanent or merely a pause in a greater decline?

The core of the service sector middle class consists of craftsmen, tradesmen, and professionals. Their economic existence is based on higher levels of training and education necessary to perform complex tasks.

A process intrinsic to all modern economies attacks that base:

Writing in 1776, Adam Smith identified a fundamental characteristic of the new economic world appearing around him: the division of labor and its consequence, the simplification of tasks:

“The quantity of materials which the same number of people can work up, increases in a great proportion as labour comes to be more and more subdivided; and as the operations of each workman are gradually reduced to a greater degree of simplicity, a variety of new machines come to be invented for facilitating and abridging those operations.”(3)

Thus, the simplification and standardization of tasks converts the laborer from an artisan into a machine tender.

Contemporary scholars have observed the corrosive impact of simplification and standardization, along with the growing availability of education, on the economic foundation of the middle class. The sociologist C. Wright Mills:

“[T]he rationalization and down-grading of the work operations themselves and hence the lessening importance of education and experience in acquiring white-collar skills…; the increased size of the white-collar labor market, as more people from lower ranks receive high-school educations, so that any monopoly of formal training adequate to these jobs is no longer possible…All the factors of their status position, which have enabled white-collar workers to set themselves apart from wage-workers, are now subject to definite decline. Increased rationalization is lowering the skill levels and making their work more and more factory-like.”(4)

“Factory-like.” The tendency is observable even in universities — major centers of higher education and training — where adjuncts replace instructors.

As did the middle class in the production sector, will the service sector middle class decline?

The most distinctive, new, economic phenomenon of our times is not a “new economy,” but the transformation of services into commodities. As a result, services are beginning to be subjected to the same simplification and standardization that characterize commodity production in general.

If socio-economic forces are causing the decline of the middle class, it is reasonable to suppose that decline will take place in conjunction with those forces, i.e., move cyclically and over the very long term. This assumption is opposed not only to the perennial Marxist prediction of an imminent crash of the middle class but also to the conservative, often equally fanatical faith of status quo defenders who see the American middle class as immortal and destined to grow.

The upshot: for some periods, Biden can rightfully say he is achieving his “basic and very measurable goal”: middle class incomes will indeed “begin to grow.” At other times, however, those incomes will stabilize or contract. All depends on their location in the greater, long-term, cyclical trend.

The two fundamental causes of the weakening of the middle class can be summarized as these questions to Vice President Biden:

(1) Regarding the middle class in the production sector, both agricultural and manufacturing: How do you propose to stop the inherent tendency of enterprise to concentrate and centralize, thereby reducing the number of small producers?
(2) Regarding the middle class in the service sector: How do you propose to stop the tendency of modern enterprise to specialize labor? That specialization simplifies work, thereby eroding the middle class economic foundation: complex tasks and the higher levels of education and training needed to perform them.

A long-term decline — centuries long — taking place in short-term swings up and down: the most poignant expression of the fate of the middle class is found neither in economics nor history, but in literature. Edgar Allan Poe captured the essential movement in the title of his novel, “The Pit and The Pendulum.”

The terrors of the Spanish Inquisition that Poe feared, however, are small indeed when compared to what would follow the collapse of the American middle class — and with it, the collapse of the Western world.

FOOTNOTES

(1) United States Census Bureau, “Historical Income Tables — Households. Table H-2: Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households, All Races: 1967 to 2005,” Current Population Survey, Annual Social and Economic Supplements. Page last modified March 7, 2007. www.census.gov./hhes/www/income/histinc/h02ar.
(2) David Leonhardt, “History Points to a Relatively Small U.S. Economic Rebound in 2002,” International Herald Tribune, January 3, 2002.
(3) Adam Smith, “The Wealth of Nations,” Penguin Books, London, England, 1997, p. 372.
(4) C. Wright Mills, “White Collar: The American Middle Classes, Oxford University Press,” New York, 1956, pp. 294, 297.

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Thomas Belvedere is the pseudonym of a top consultant to senators, representatives, governors, and the media. An accredited expert witness in federal court, he has a Ph.D. in political science. He authored “The Source of Terrorism: Middle Class Rebellion.” Website: http://lebelvedere.weebly.com.

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