Jim Clifton, Chairman and CEO at Gallup, says the American middle class is an endangered species. His organization produces surveys of American consumers. Clifton understands the economic quandary now facing America.
“I’ve been reading a lot about a ‘recovering’ economy. It was even trumpeted on Page 1 of The New York Times and Financial Times last week,” Clifton writes on the Gallup website. “I don’t think it’s true.”
According to the statistics cited by Clifton, the percentage of Americans who say they are in the middle or upper-middle class has fallen 10 percentage points, from a 61% average between 2000 and 2008 to 51% today.
“Ten percent of 250 million adults in the U.S. is 25 million people whose economic lives have crashed,” he writes. “What the media is missing is that these 25 million people are invisible in the widely reported 4.9% official U.S. unemployment rate.”
“Let’s say someone has a good middle-class job that pays $65,000 a year. That job goes away in a changing, disrupted world, and his new full-time job pays $14 per hour — or about $28,000 per year. That devastated American remains counted as “full-time employed” because he still has full-time work — although with drastically reduced pay and benefits. He has fallen out of the middle class and is invisible in current reporting.”
Clifton notes the emotional impact due to “the sudden loss of household income can cause a crash of self-esteem and dignity, leading to an environment of desperation that we haven’t seen since the Great Depression.”
The percentage of the population working a full-time job is around 48%, the lowest since 1983. Moreover, the number of publicly listed companies and new business startups are now at a historical low.
“Gallup finds that small businesses — startups plus ‘shootups,’ those that grow big — are the engine of new economic energy. According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses, not large ones,” Clifton writes.
“America needs small business to boom again. Small businesses are our best hope for badly needed economic growth, great jobs and ultimately accelerated human development. When we get small business to boom, we can save America, restore our middle class and once again lead the world.”
According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, in 2011 there were less than 8 startup jobs per 1000 Americans. The number of “new entrepreneurs and business owners” has fallen by more than 50 percent as a percentage of the population since 1977.
Most of the blame for the destruction of Main Street jobs can be attributed to government. According to Kane, “business high taxes and higher uncertainty about taxes are undoubtedly inhibiting entrepreneurship.” Obamacare is also thwarting the creation of small business. Additionally, the rise of occupational licensing is decimating startup opportunities for poor and middle-class Americans.
The subprime depression of 2008 resulted in the loss of more than 220,000 small businesses. Since 1977 America has experienced a remarkable 53 percent reduction in new entrepreneurs and business owners.
If the current trend of large government, burdensome regulation, and high taxes continues, there will be little hope for entrepreneurs, new job opportunities, and a sincere economic recovery.
“Undoubtedly, America is becoming a Third World country — in fact, it already is,” writes Ted Baumann of The Sovereign Investor.
In addition to taxation and restrictive government regulation, Baumann cites “the dominance of corporate managers over shareholders; acceptance of monopoly and market abuse; favoritism towards the financial sector; and a justice system that ignores elite economic crime.”