The economy isn't going to collapse. There are a couple of things happening right now. Natural resources are getting more scarce, which lowers the overall standard of living. In addition, the economy isn't finished re-adjusting itself to the economic efficiences introducted by the internet; internet shopping, re-use (Ebay), and job hunting. There will be job contraction in some areas, and expansion in others.
Everyone talks about the middle class being hollowed out. I personally don't see it, and maybe it depends on how you define 'middle class'. I consider myself middle class and nobody I know is hurting. Having said that, my demographic consists of college and university educated white collar types. Engineers, programmers, marketing types, etc. What's disappeared is the ability to walk out of high school and into a good paying union job in a factory, such as working the line at GM (I'm from Oshawa). Thing is, we've known since the 80's that was on its way out.
It's probably worth noting that engineers and programmers, at one point in time, were upper class and have slowly been moving down. You can say you don't see it, but you would if you actually looked. The upper middle class can't enjoy the same lifestyle it used to and slowly the average income corrected for inflation for engineers and the like is coming down to. When you're firmly in the median of middle class, you'll realize how bad things are. As a pilot, meaning I work in the industry most keenly effected by changes in economic situation, it's quite obvious that year-over-year things are going worse and worse. Even within our rank and file, the economic position of individuals is slowly being pulled down. Look at Air Canada. Pilots today earn 10% less than they did 10 years ago. That's not an adjusted for inflation figure, that's a flat reduction in pay. Pilots agreed to wage freezes in '09, then in '11 when the contract was up, tried to bargain for a restructured pay that would bring them in line with the increases in pay executives had seen while they had been under the freeze, only to be forced back to work by the government for less than what Air Canada had already offered them. When arbitration was done, not only did the wages increase by a mere fraction of what the executives saw, the two-tiered pension system means new hires at Air Canada have a vastly reduced total compensation. Meanwhile, the executives are still getting raises, bonuses and pensions.
This, Ringworld, is how the decline of the middle class is taking place. Slowly, gradually, but in definite steps. I bet the vast majority of engineers and programmers 10-20 years ago were getting full pensions. How many of them get that now? And don't kid yourself, employer match is only a fraction of the compensation that a defined benefits pension has. As a whole, the buying power of the middle class is being reduced, year over year, while the distribution of wealth is skewing more and more towards the top earners. While I appreciate that the upper incomes are paying the vast majority of the taxes, much more than their distribution of income would suggest they should, I'd appreciate it more if the wealth was better distributed and the tax burden with it. And that's coming from a guy sitting in the top bracket. I'd rather pay less in taxes because a healthier middle class (which make no mistake, despite being in the top tax bracket I am definitely only middle class as well) can afford to pay more of it too.
In my industry, newcomers to the top tier airlines are barely above the poverty line. When I flew with WestJet, back in 2005, I was lucky to come from the military and get to jump a few rungs. A first officer, during their first year of employment, take home was about $800 per check. This is a job that requires years and years of experience to get in addition to about $60-70k worth of out-of-pocket expenses on your initial training. For those years and years, those guys were making $10-30k/yr. Finally, after sometimes a decade of slugging it out, they hit the big time - a major airline. And get $800/2 weeks. Yes, there are ESP and stock options, and if the company continues to do well those can be valued very highly. Adjusted salary is about $120k/yr if you include those, but for a guy that's got debt to pay off, and lots of it, that extra money locked away in investments would be better served reducing the debt that's been accrued. So that $20k/yr of salary that you can spend puts you firmly $2,500/yr above the poverty line. This is Westjet, paying the guy who keeps you safe $20k/yr after tax. Keep that in mind next time you're on a Dash 8 or a regional jet that might say United, Delta or Air Canada on the side but is being operated by one of the small feeders where the pilot is probably still paying only the interest on the loans he took out to get his license. The reality is that I have a "career" that's seen by most as very profitable and secure, meanwhile furloughs are extremely common at the cargo carriers and the average income for a pilot is about $45k/yr with the median around $60k/yr, the vast majority without a pension of any kind, not even defined contribution. And we're starting to see this trend happen everywhere. Even the salary for first year associates in law firms is plummeting. Last I read it was a decline in salary offers by 7% year over year while inflation certainly isn't declining year after year - it might reduce but it's always marching upwards.
I agree the economy isn't going to collapse, but the middle class is definitely being hollowed out and if you can't see it than it means you're choosing to look away.
