# The long term effects of recession & middle class squeeze **URL:** \ **Category:** Great Debates\ **Created:** [November 19, 2009, 7:19pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186 "2009-11-19T19:19:36Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [November 25, 2009, 6:17am UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/21 "2009-11-25T06:17:27Z")
> [@msmith537](#): > > But as I said, I don’t believe that you can extrapolate this data over decades or even years. And while we’ve been hearing about the end of the middle class for decades, it hasn’t happened. Most of my classmates have found jobs and bought houses and started families. > > This chart chart actually shows a general increase in [real mean household income](http://upload.wikimedia.org/wikipedia/en/5/5d/Household_income_65_to_05.png). And [it has generally been increasing for nearly every income group except the bottom quartile](http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg). > > So I don’t know if you can even say the middle class is being “squeezed”. I do believe that they are living in a world that is increasingly volatile economically and uncertain though. Mean income increased for households, but how much of that was due to having more than one person in the workforce vs. seeing real wages increase? Real wages have not gone up, they have hovered at $300/wk for the last 40 years according to the BLS. [http://www.workinglife.org/wiki/Wages+and+Benefits:+Real+Wages+(1964-2004)](http://www.workinglife.org/wiki/Wages+and+Benefits:+Real+Wages+(1964-2004)) This chart from EPI shows a raise in real hourly wages of $0.50 ($15.50 up to $16/hr) from 1989-2005. [![](https://files.epi.org/page/-/old/images/wagepictchart2_200601181.gif) ](https://files.epi.org/page/-/old/images/wagepictchart2_200601181.gif) So inflation adjusted hourly wages have stagnated for decades. Also, I do feel the middle class is being squeezed. With various costs of living like education, health care or real estate growing far faster than wages while regressive taxes go up people are being asked to pay for more expensive goods and services with a lower net income. I don’t know what larger a percentage of gross income goes to taxes for middle class families compared to 30 years ago, but as a guess I’d say 5% or so (meaning the tax rate may be 30% vs 25% a few decades ago, but that is a guess). [http://www.taxpolicycenter.org/taxtopics/images/ptax2\_2.jpg](http://www.taxpolicycenter.org/taxtopics/images/ptax2_2.jpg) An employee’s half of payroll taxes is about 7.65% today, up from maybe 5.8% back around 1979. Plus sales taxes, property taxes, sin taxes, fuel taxes, etc have also gone up. So 5% is a rough estimate of how much more gross income goes to regressive taxes. Add into that the disappearance of pensions, and people are being told to save 6% of gross income in 401ks for retirement. So not only have regressive taxes gone up but eliminating pensions has required middle class people to fund retirement more out of personal income. Plus for companies that still offer health care the costs of deductibles have gone up. All in all, the middle class is being squeezed. Wages are stagnating (unless you have 2 people in a household working) and net income is down due to higher retirement savings demands (due to a lack of pensions) and more regressive taxes. And people have to use that lower net income to pay for more expensive health care, education, child care and real estate. Student loans can last for years. We save money in other areas though. A person in 2009 can use the internet to find a decent used car with good reliability for $5000 whereas 20 years ago a person had to pick whatever car was in the local paper. Information, comparison shopping, higher productivity and higher quality mean certain consumer goods are cheaper. So I think that mitigates some of the damage. I don’t know if its possible to reverse this trend. Krugman says this is a political thing, not an economic issue. He claims no other OECD nation is seeing this kind of squeeze (he also claims no other OECD nation saw a rise in movement conservatism like the US). I realize higher wages and better pensions would put us at a competitive disadvantage to foreign nations. But something has to change with this setup. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [November 25, 2009, 6:27am UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/22 "2009-11-25T06:27:52Z")
> [@Dr.Love](#): > > I saw [this chart](http://1.bp.blogspot.com/_djgssszshgM/SwpbkKToSOI/AAAAAAAABD4/gJ-PvxJ0tWU/s1600/worldgdp.jpg) on Greg Mankiw’s blog a couple days ago, and it rather support’s **msmith537** ’s first line, “The US has not been declining. The rest of the world has been catching up.” Be careful about interpretation, though: the fact that the USA line is constant means that the US economy has been growing at the same rate as the world economy, not that the US economy is stagnating. The combined economies of BRIC (Brazil, Russia, India, China) are supposed to surpass the G6 in 2040. So I agree. > **[Brazil, Russia, India and China( BRIC ) larger economy by 2050 • ThePicky](http://www.thepicky.com/investing/brazil-russia-india-and-china-bric-larger-economy-by-2050/)** > > Did you know that BRICs economies could become a much larger force in the world economy by 2050? What is BRIC? BRIC or BRICs are the acronym used to refer But the central problem still remains. People in the US are seeing stagnating wages, lower net incomes (due to more regressive taxes and having to save for retirement out of 401ks instead of pensions), and higher expenses for health, education, child care and real estate. So the squeeze still exists. The US economy has been growing, but wages have only grown faster than inflation for the top 20% or so. Household income is up, but I’m not sure how much of that is due to both parents working vs. higher median hourly wages. ---
**Author:** ![Lumpy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lumpy/32/446_2.png) [@Lumpy](https://boards.straightdope.com/u/Lumpy)\ **Post date:** [November 25, 2009, 2:01pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/23 "2009-11-25T14:01:43Z")
In absolute terms the US economy has been holding its own or growing, but what’s more important is _relative_ decline, ala’ Paul Kennedy’s **The Rise and Fall of the Great Powers**. Reduced to its barest bones, the argument is this: We are now paying to keep our economic competitors safe. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [November 25, 2009, 2:21pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/24 "2009-11-25T14:21:13Z")
> [@Wesley\_Clark](#): > > I realize higher wages and better pensions would put us at a competitive disadvantage to foreign nations. But something has to change with this setup. This is the mentality I don’t understand. How are wages and standards of living supposed to rise by if we are at a competetive disadvantage? ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [November 25, 2009, 3:37pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/25 "2009-11-25T15:37:18Z")
This has happened before. An interesting model for this is England at the dawn of the Industrial Age - which actually had interesting similarities - a fairly large leisure (or near leisure) class funded largely by ‘third world’ trade and war, a working class who had a lot of job security - you farmed Lord Dudley’s estate like your father before you and your father before him, while your sister was a housemaid pre marriage - like her mother before her. Or you were a tailor, like your father before you - that disappeared with changing technology. The short term effects are “it sucks for a lot of people” the long term effects are “humans are adaptable.” ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [November 25, 2009, 4:06pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/26 "2009-11-25T16:06:18Z")
> [@Dangerosa](#): > > This has happened before. An interesting model for this is England at the dawn of the Industrial Age - which actually had interesting similarities - a fairly large leisure (or near leisure) class funded largely by ‘third world’ trade and war, a working class who had a lot of job security - you farmed Lord Dudley’s estate like your father before you and your father before him, while your sister was a housemaid pre marriage - like her mother before her. Or you were a tailor, like your father before you - that disappeared with changing technology. The short term effects are “it sucks for a lot of people” the long term effects are “humans are adaptable.” The Industrial Revolution is a great example because it demonstrates how disruptive technologies cause a great deal of short term social termoil while leading to long term higher standards of living and greater wealth. And those advancements are happening at a pace that continues to accelerate. In the old days, you could go to work and that business would exist for at least the length of your lifetime. Think of how many new products and technologies that have been invented in the past few decades. Each of them has likely put some older more obsolete product or technology out of business. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [November 25, 2009, 5:05pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/27 "2009-11-25T17:05:15Z")
> [@msmith537](#): > > This is the mentality I don’t understand. How are wages and standards of living supposed to rise by if we are at a competetive disadvantage? By ensuring that the benefits of economic growth and the tax burden are spread among everyone. In the last 30 years almost all the GDP growth has gone to the top 5% while their taxes have been cut. For everyone else taxes have gone up while wages have stagnated. Also, encouraging foreign nations to improve their labor, environmental and quality control standards will make us more competitive by increasing costs overseas. China is under internal and external pressure to do that. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [November 25, 2009, 5:51pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/28 "2009-11-25T17:51:49Z")
[Here is an interesting Time article from February of this year and a link to a similar article from 1986.](http://www.time.com/time/nation/article/0,8599,1882147,00.html) ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [November 26, 2009, 12:20am UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/29 "2009-11-26T00:20:41Z")
Here is my thoughts on the subject. The “Middle Class” is an ill defined term that applies to nearly everyone who isn’t poor or very rich. It is how most Americans view themselves. The actual number of people in the middle class constantly fluctuates up and down and it is difficult to define where the cutoff actually is. Is it a fixed income range? Is it based on quartiles or percentages? What about when people leave the middle class to join the upper classes as described in the article I linked to? As a general rule, since the middle class mostly earns market wages or market salaries, the market will constantly adjust in such a way that they are always “two paychecks away from financial hardship.” IOW, if wages go up, the costs of goods will go up nearly as much offsetting any real gains. Therefore, because they are in this precarious position, they are always particularly vulnerable to increased education, healthcare and energy costs, economic downturns, and career uncertainty. This creates a constant anxiety about losing their social status and becoming “working class” or “poor”. The middle class probably aren’t any worse off than they ever were and in many ways they are probably better off. But I do think they have more to worry about. ---
**Author:** ![begbert2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/begbert2/32/3357_2.png) [@begbert2](https://boards.straightdope.com/u/begbert2)\ **Post date:** [November 26, 2009, 1:02am UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/30 "2009-11-26T01:02:18Z")
> [@msmith537](#): > > Here is my thoughts on the subject. The “Middle Class” is an ill defined term that applies to nearly everyone who isn’t poor or very rich. It is how most Americans view themselves. > > The actual number of people in the middle class constantly fluctuates up and down and it is difficult to define where the cutoff actually is. Is it a fixed income range? Is it based on quartiles or percentages? What about when people leave the middle class to join the upper classes as described in the article I linked to? > > As a general rule, since the middle class mostly earns market wages or market salaries, the market will constantly adjust in such a way that they are always “two paychecks away from financial hardship.” IOW, if wages go up, the costs of goods will go up nearly as much offsetting any real gains. Therefore, because they are in this precarious position, they are always particularly vulnerable to increased education, healthcare and energy costs, economic downturns, and career uncertainty. This creates a constant anxiety about losing their social status and becoming “working class” or “poor”. > > The middle class probably aren’t any worse off than they ever were and in many ways they are probably better off. But I do think they have more to worry about. I think that for a goodly chunk of time (like, twenty or thirty years) the middle class _were_ riding high above the anxiety level. I think that technology improved things fast enough that a generation’s worth of preconceptions about the value of things had to grow old and leave the workforce before the market could try and correct for it. And then women entered the workforce, and it took another twenty years to make two-income households _required_ to feel secure. I also dispute that historically the middle class was always “two paychecks away from financial hardship.” I’ve heard old stories and rumors about things called “savings”. I assume they’re not _all_ fictional. However I also think that we’re currently seeing a swing in the other direction from the aforementioned “good old days” - the market has gotten used to squeezing tighter and tighter, and it’s going to take a while (and the crash of the credit market) before it decides to let up and reach a more sustainable equilibrium. IMHO IANAEconomist usual disclaimers. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [November 26, 2009, 2:17am UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/31 "2009-11-26T02:17:17Z")
> [@begbert2](#): > > I think that for a goodly chunk of time (like, twenty or thirty years) the middle class _were_ riding high above the anxiety level. I think that technology improved things fast enough that a generation’s worth of preconceptions about the value of things had to grow old and leave the workforce before the market could try and correct for it. And then women entered the workforce, and it took another twenty years to make two-income households _required_ to feel secure. > > I also dispute that historically the middle class was always “two paychecks away from financial hardship.” I’ve heard old stories and rumors about things called “savings”. I assume they’re not _all_ fictional. However I also think that we’re currently seeing a swing in the other direction from the aforementioned “good old days” - the market has gotten used to squeezing tighter and tighter, and it’s going to take a while (and the crash of the credit market) before it decides to let up and reach a more sustainable equilibrium. > > IMHO IANAEconomist usual disclaimers. I think what happens is the economy ends up adjusting to compensate at a new equalibrium. Women entered the workforce and families could now earn two incomes. Except costs adjust so now two incomes are required to have the same standard. Credit allowed people to afford more sooner, but now they are saddled with debt. I don’t think the middle class is litterally two checks away from bankrupcy (it was a Biden quote after all). They make enough money to be relatively comfortible so long as they have a steady income. That income as a general rule isn’t enough so that they can just take a year off and write a novel or something if they lose their job. ---
**Author:** ![Spectre\_of\_Pithecanthropus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spectre_of_pithecanthropus/32/12343_2.png) [@Spectre\_of\_Pithecanthropus](https://boards.straightdope.com/u/Spectre_of_Pithecanthropus)\ **Post date:** [November 28, 2009, 8:22am UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/32 "2009-11-28T08:22:04Z")
> [@yorick73](#): > > Most people will receive promotions and salary increases over the life of their careers. If they’re lucky, only keeping pace with inflation. What happens when you top out in a functional role, but have little or no management potential? Above a certain level, being promoted means pretty much ceasing to do the actual work of your profession, and dealing instead with coordinating, supervising, planning, and managing. It makes no sense to assume that everyone is comfortable with or capable of making this shift. Or even if they are, that there will necessarily be managerial slots available to them. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 28, 2009, 8:33am UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/33 "2009-11-28T08:33:11Z")
> [@yorick73](#): > > Are you assuming that people remain at basically the same salary throughout their lives? I don’t believe that the majority of people stagnate at a set salary and only wait for the minimum wage to increase or get a cost of living adjustment. Most people will receive promotions and salary increases over the life of their careers. That used to be the case. However, many people who have been laid off from jobs that paid good salaries can never find equivalent jobs anymore. When I was growing up, in the '50s, losing your job was rare and somewhat shameful. Today at least it is no longer shameful, but neither is it rare. My father worked for the UN for 30 years. When I started in the Bell System there were plenty of people who had been there for 20 - 30 years, and it was kind of assumed we’d be there forever if we wanted to be. Now, 13 years after I left, I know maybe 2 people still working for the successors to AT&T. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [November 28, 2009, 3:36pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/34 "2009-11-28T15:36:52Z")
> [@Spectre\_of\_Pithecanthropus](#): > > If they’re lucky, only keeping pace with inflation. What happens when you top out in a functional role, but have little or no management potential? Above a certain level, being promoted means pretty much ceasing to do the actual work of your profession, and dealing instead with coordinating, supervising, planning, and managing. It makes no sense to assume that everyone is comfortable with or capable of making this shift. Or even if they are, that there will necessarily be managerial slots available to them. Although, from the company’s perspective, and the economy as a whole, why should you get raises in excess of inflation if you aren’t adding additional value? Once you top out in your functional role, you “theoretically should be” being paid according to the value you add. There isn’t any more reason to pay you more - and if they do, that increases the cost of the end product, increasing inflation and making your raise worthless anyway. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [November 28, 2009, 6:07pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/35 "2009-11-28T18:07:23Z")
> [@Dangerosa](#): > > Although, from the company’s perspective, and the economy as a whole, why should you get raises in excess of inflation if you aren’t adding additional value? Once you top out in your functional role, you “theoretically should be” being paid according to the value you add. There isn’t any more reason to pay you more - and if they do, that increases the cost of the end product, increasing inflation and making your raise worthless anyway. Productivity has risen faster than wages for decades, so the argument that raises should match productivity doesn’t really make sense. The average US worker now produces about $65,000 in wealth a year and is paid $30,000 to do it. Workers have to leverage to clamor for more income because the competitors are doing the same thing. Plus virtually all of the growth in the economy has gone to the top 5%. A reason they were able to do that was deunionization since workers at the bottom had no leverage to fight for better wages and treatment. There are negatives to unions obviously (higher costs, fewer hirings), but there are positives too to what they can bring to an economy (job security, moving GDP downward). ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [November 28, 2009, 6:42pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/36 "2009-11-28T18:42:22Z")
> [@Wesley\_Clark](#): > > Productivity has risen faster than wages for decades, so the argument that raises should match productivity doesn’t really make sense. The average US worker now produces about $65,000 in wealth a year and is paid $30,000 to do it. Workers have to leverage to clamor for more income because the competitors are doing the same thing. Ok, what about technology? Having a computer, a printer, and other technological advances (CAD, robotics, machinery at the labor level), access to databases, or for my job: court decisions, case files, recent legal decisions, federal regulations, advisory notices and statements, has had a huge impact on productivity. None of these advancements in technology has been made by labor at the company. These advances have come from other business, entrepreneurs, and industries. Some of the “labor” to make all this happen involved sitting in front of a scanner and literally pressing “enter.” How much should this person be paid? Instead of having 100 lawyers sift through cases and decisions and collating files to be processed into some database, 1 lawyer can do it and have 99 literally unskilled laborers do all the processing. Fees to my Westlaw database can be as high as $12,000/year for my small corporate department (the special large firm discount [note: sarcasm]), covering 8 concurrent users. My department now doesn’t have to be 40 people, we can run by on 8 (nonetheless, I’m sure we still employ like 10,000 lawyers, but that’s beside the point). The point is that one can’t measure productivity per organization without noting the technology that made it happen. The technology to make it happen costs a ton of money. > [@](#): > > Plus virtually all of the growth in the economy has gone to the top 5%. A reason they were able to do that was deunionization since workers at the bottom had no leverage to fight for better wages and treatment. To date, I think I negotiated about $900M (give or take a few million) in commercial technological transactions, mostly procurement. I’m probably doing the least in my group because I travel so much doing auditing and compliance (massively non-revenue generating). Should I get paid a percentage of the contract value? Who can afford to buy all these goods and services that I am negotiating? The top 5%, that’s who. They’re not going to risk their capital for a few measly point of ROI. Otherwise, the smartest thing to do is put it in the bank. Without people risking capital, the economy doesn’t move and no amount of unionization will change that. ---
**Author:** ![independentminded](https://avatars.discourse-cdn.com/v4/letter/i/ed8c4c/32.png) [@independentminded](https://boards.straightdope.com/u/independentminded)\ **Post date:** [November 28, 2009, 7:03pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/37 "2009-11-28T19:03:41Z")
> [@Wesley\_Clark](#): > > I’m not saying there is a conspiracy to hide cures for chronic conditions, I said that the financial incentives seem to skew towards managing chronic conditions rather than curing them. A vaccine for HIV that costs $100 will not make as much money as HAART therapy which costs $10,000 a year in the US and must be taken for life. A cure for type II diabetes will not make as much money as lifelong management. I never said there was a hidden cure for cancer and the common cold. > > I really don’t know what you are asking me to prove. Are you asking me to prove that financial incentives of some medical industries (namely pharmaceuticals or hospitals) are tilted towards managing chronic conditions rather than curing them (and their R&D funds will likely be invested to reflect this incentive)? > > I love the internet, I referenced a chart I saw years ago and found it on google. > > [http://www.aafp.org/fpm/20020600/monitor\_f2.gif](http://www.aafp.org/fpm/20020600/monitor_f2.gif) > > 37% was due to increased consumer demand and newer technologies. Mandates might also be a form of new volume. > > Either way, it is not an argument against increasing volume of health care since health care volume will increase anyway. The only difference is do you increase the volume of primary and preventative care or the volume of ER care because people put issues off until the last minute. > > Also, like I said, other countries provide high quality care to everyone for 1/3 what we spend per capita. Some third world countries have universal health care programs that spend less than $1000 per person. > > According to Peter Orszag, about $800 billion in health spending is wasted or not effective at improving health. So cutting inefficiencies would compensate for the increased volume. What would be so wrong with finding a cure for chronic conditions, and not just siimply continuing to manage them? \*\*That’s \*\*what our government should be investing time and money and resources on, instead of constantly on stupid, illegal and unnecessary foreign wars. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 28, 2009, 7:31pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/38 "2009-11-28T19:31:42Z")
> [@mazinger\_z](#): > > Ok, what about technology? Having a computer, a printer, and other technological advances (CAD, robotics, machinery at the labor level), access to databases, or for my job: court decisions, case files, recent legal decisions, federal regulations, advisory notices and statements, has had a huge impact on productivity. None of these advancements in technology has been made by labor at the company. These advances have come from other business, entrepreneurs, and industries. I do work for the industries which make this happen, and would be quite willing to accept on behalf of my company a slice of the profits your company makes from increased productivity. Doesn’t sound good? CEOs of EDA companies do complain that companies like Intel insist on negotiating to decrease prices instead of giving them a share of the profits their software makes possible. If you have ever tried to push a new technology out to users, you wouldn’t discount the effort the average guy makes to increase productivity. It usually involves doing things in new ways, which is hard for some people. People using tools which increase their productivity definitely deserve a cut of it. > [@](#): > > Some of the “labor” to make all this happen involved sitting in front of a scanner and literally pressing “enter.” How much should this person be paid? Instead of having 100 lawyers sift through cases and decisions and collating files to be processed into some database, 1 lawyer can do it and have 99 literally unskilled laborers do all the processing. Fees to my Westlaw database can be as high as $12,000/year for my small corporate department (the special large firm discount [note: sarcasm]), covering 8 concurrent users. My department now doesn’t have to be 40 people, we can run by on 8 (nonetheless, I’m sure we still employ like 10,000 lawyers, but that’s beside the point). The point is that one can’t measure productivity per organization without noting the technology that made it happen. The technology to make it happen costs a ton of money. You consider $12K a year a ton of money? I sold a single license of an EDA tool which cost $100K. When I was in the CAD group, the software we bought to support a lot fewer than 12,000 designers cost in the tens of millions of dollars. (And the designers probably got paid less than lawyers.) You no doubt got rid of the mindless repetitive tasks through automation, but I’m betting that what the eight of you do requires a lot more skill on average, since your time no doubt is spent dealing with special cases and areas where the software is weak. You definitely deserve more money, and a share of the increase in productivity, since without you the process would crash and burn. > [@](#): > > To date, I think I negotiated about $900M (give or take a few million) in commercial technological transactions, mostly procurement. I’m probably doing the least in my group because I travel so much doing auditing and compliance (massively non-revenue generating). Should I get paid a percentage of the contract value? Who can afford to buy all these goods and services that I am negotiating? The top 5%, that’s who. They’re not going to risk their capital for a few measly point of ROI. Otherwise, the smartest thing to do is put it in the bank. Without people risking capital, the economy doesn’t move and no amount of unionization will change that. Did the $900 M just walk in through the door? I’m betting you could have goofed off and made it $800 M. Don’t you think you deserve anything for working harder? Not a commission, no, but not even some small share of the increased profit you were directly responsible for? ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [November 28, 2009, 10:32pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/39 "2009-11-28T22:32:05Z")
> [@Voyager](#): > > If you have ever tried to push a new technology out to users, you wouldn’t discount the effort the average guy makes to increase productivity. It usually involves doing things in new ways, which is hard for some people. People using tools which increase their productivity definitely deserve a cut of it. Well, maybe and maybe not. Sometimes the tools eliminate the need for so many workers. Sometimes the tool eliminates skilled workers and replaces them with unskilled workers. Think of it like this. Should a machine operator that pushes a button that cranks out a thousand widgets every hour be paid the same as a thousand highly skilled workers who can each make one hand crafted widget an hour? ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [November 28, 2009, 10:43pm UTC](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186/40 "2009-11-28T22:43:24Z")
> [@independentminded](#): > > What would be so wrong with finding a cure for chronic conditions, and not just siimply continuing to manage them? \*\*That’s \*\*what our government should be investing time and money and resources on, instead of constantly on stupid, illegal and unnecessary foreign wars. Because a good deal of medical research seems to be conducted by organizations like pharma companies that have more incentive to manage conditions than to cure them. As an example, it costs $10,000 a year to manage type II diabetes. However obesity surgery like the lap band can ‘cure’ it (eliminate symptoms of insulin and glucose imbalance) in 73%+ of patients. The surgery costs $10,000. So for the cost of one year of diabetes management care you can get a surgery that puts type II diabetes in remission. A polypill made up of several low dose cardiovascular drugs might reduce rates of stroke and heart attack by up to 80%, and cost a few dollars a month. There is less money to be made in that than in making a ‘me-too’ drug for cholesterol that costs $400/month, or in a more advanced form of invasive surgery. [http://seniorjournal.com/NEWS/Nutrition-Vitamins/3-06-26polypill.htm](http://seniorjournal.com/NEWS/Nutrition-Vitamins/3-06-26polypill.htm) The public sector needs to play a far bigger role in finding ways to prevent and cure chronic diseases, especially since the public sector has to pay for them (people with severe chronic conditions in the US are more likely to be on medicare, and health systems in other nations are even more public). I’d gladly pay more in taxes to double the R&D budgets of the NIH and NIMH. [Previous page](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186.md?page=1) [Next page](https://boards.straightdope.com/t/the-long-term-effects-of-recession-middle-class-squeeze/518186.md?page=3)