Death knell for the upper middle class

White collar automation and extractive economic policies pose an existential threat to the upper middle class. In order to survive, the upper middle class needs to comprehend their position within the economy and find solidarity with the poor and working class.

The new, new deal

The post war era saw an unspoken alliance between the capital class at the top of the economy, and a class of well educated technocratic professionals.

As part of the deal, the technocratic professionals would manage and run the economy for the benefit of the capitalist class. In return, the capitalists would share enough of the spoils to propel those technocratic professionals into a prosperous upper middle class. This may not have been an explicit deal signed on a piece of paper or sealed with a handshake, but it is evident in the structure of the modern economy.

Billionaires can’t deliver babies.

There is a lot of dirty work in the actual running of an economy, and billionaires are famously adverse to getting their hands dirty. In order to keep those well manicured hands clean, this class of well educated professionals were enlisted to do the work of the day to day management of the economy.

Engineers were enlisted to create and maintain the physical infrastructure of the economy (roads, sewers, water, ports etc). Doctors to perform maintenance on the current pool of workers (primary care physicians, surgeons, dentists etc) and help in creating new workers (OBGYN’s and paediatricians).

Keep those workers coming

Glorified paper pushers to keep track of money, ensure corporate and market compliance, and create binding covenants that hold the system of private property together (accounts, actuaries, lawyers etc). In the post industrial era, those proficient with technology have been invited to join the upper middle class in exchange for administering electronic commerce.

In return for running the economy for the benefit of the capital class, these professionals were offered a life of material and physical comfort in their working life. They would still need to spend their lives working, but there would be no more dangerous physical labor, and they would be well compensated.

The reward

Individuals in these technocratic professions earn above the US average household income of $61,000.

This doesn’t take into account the non-cash benefits many of these professionals receive but that are not typically given to the poor or middle class. This includes health insurance, restricted stock awards, 401k matching etc.

An office worker busy not contracting black lung

Even though many of these professions are mentally demanding and require long hours, they are, for all intents and purposes, physically safe professions. No one is contracting mesothelioma while they spreadsheet.

Within the non-capital classes, only the upper middle class has seen any wage growth over the last decade. Middle class wages barely moved while the poor actually lost ground.

The upper middle class also saw more benefits flow to them via the US tax code. Preferential tax treatment of employer provided health insurance, deductions for mortgage interest, property taxes and state income taxes benefited those earning below the itemized deduction phase out while still generating enough income to outlay the deductible expenses.

The trade off

As part of this deal, the upper middle class saw their economic prospects lie in siding with the capital class over their fellow workers in the poor or middle economic classes.

The US offers few worker vs capital examples in its modern electoral history. However the best and most recent example is the 2016 Democratic primary. In 2016, Bernie Sanders led a profoundly (by US standards) anti-capitalist campaign. Contrast this against the pro-capital Clinton campaign that raised $800m in campaign contributions with the majority coming from corporate and high net worth individual donations. Hillary Clinton even had members of the billionaire class appear on stage with her at campaign events.

2016 Democratic primary votes by income level — Clinton (blue) v Sanders (green). Source http://graphics.wsj.com/elections/2016/how-clinton-won/

In the 2016 democratic primary, a larger proportion of the economically upper middle class (those with income over $100,000) voted for the pro-billionaire Clinton (58.4%) vs the pro-working class Sanders (41.4%) than the poor or middle class primary voters.

The split is still true when accounting for technocratic professions (those with post graduate educations) vs those without post-grad education who voted 59.9% to 39.2% for Clinton over Sanders respectively.

Outside of electoral politics, the upper middle class pursues its economic position at the expense of the poor and middle class through their children’s education. Public schools in more affluent areas provide a better education while simultaneous being less socioeconomically diverse. The system of property tax school funding only serves to advantage the schools of the upper middle class at the expense of those below them.

Contrast this fight for public education resources amongst the non-capital classes, with the fact that the ultra wealthy send their children to private schools at much higher rates in the US. This is especially hard to swallow when you consider that the ultra wealthy are openly advocating for the destruction of public education.

The deal’s off…

The passing of the GOP tax reform bill is the first outward signal that the capital class’ deal with the technocratic professional class is now off.

Rob the rich to pay the ultra rich (Source: Getty Images)

In order to fund massive tax cuts for the ultra wealthy, the GOP tax reform bill capped the mortgage interest deduction and slashed the property tax and state income tax deductions that had previously benefited the upper middle class.

This transfer of wealth from the upper middle class to the capital class via tax reform represents the first shot in the upcoming war between the two classes. It is a taste of what is to come for the technocratic professionals of the upper middle class.

Open the pod bay doors, HAL

The negative impact of automation of blue collar work on the US middle class is well worn territory. Until recently it seemed that the white collar, technocratic professions were immune to similar threats of automation. However the growth in artificial intelligence is going to deeply challenge many of the technocratic professions that economically support the upper middle class.

Composition of the US job market over the last 150 years (Source: IPUMS-USA, University Of Minnesota)

It is estimated that almost half of US jobs are at risk of automation over the next decade. Indeed, within the next decade, it is estimated that artificial intelligence will render 100,000 legal jobs redundant. Artificial intelligence will eliminate a significant amount of the compliance work that dominates the accounting profession.

Current technology workers face a two pronged assault on their position within the upper middle class. First, AI is learning to code which will cause redundancy among tech workers. Second, the big push for kids to learn to code at all levels of schooling will produce a glut of technology workers which will drive down wages.

Even if artificial intelligence does not render a profession completely redundant, any amount of automation will have a downward effect on wages. If an algorithm can perform a part of a job, then an employer needs fewer employees to perform that task. The more employees there are available in the unemployed labor pool, the less employers have to pay their employees to perform their jobs.

If you raise the concerns of automation and AI as a threat to current employment, employers and “thought leaders” will insist that this will free professionals up to pursue more interesting work, and that more jobs will be created to fill new roles. If you believe that (and I worry about a “thought leader” who really does believe that ) then I have a bridge to sell you. The National Bureau of Economic Research performed a study that showed that automation has an overall negative impact on jobs and wages.

The technocratic professions are about to be destroyed or at least significantly degraded, and there won’t be enough jobs to replace them to economically sustain the upper middle class in it’s current iteration.

R2D2, MD.

It is hard to imagine that the medical profession could be automated out of existence given the amount of human contact it requires. However there will be aspects of the profession that will be automated. Enough automation will have the effect of reducing demand in the labor pool which will drive down wages within the medical profession.

Don’t worry though, even if doctors do escape automation, they will still be subject to brutal upward wealth distribution to the ultra wealthy via their level of student debt. In 2016, a doctor could expect to be almost $200,000 in debt by the time they finished training. Numbers for 2017 and 2018 are not available but it is hard to imagine the average has been reduced.

Plenty of other technocratic professionals graduate with absurd levels of student debt. Dentists graduate with an average debt of $240,00. Lawyers average between $84,000 to $120,000 depending on whether they attend public or private schools.

The average graduate student loan interest rate is 6–7%. This is well above the current Federal reserve interest rate of 2.25% the Federal government can borrow at to provide the student loans.

So where do student loan interest repayments go? Well, they are used to fund the Federal government. The CBO estimates that the Federal government will profit up to $130B between 2014 and 2025 on student loan debt repayments. If the Federal government is propping up its tax cuts for the ultra rich with student loan debt repayments, the only way to think about this is that it is an upward distribution of wealth from these upper middle class professions to the capital class.

History class for STEM graduates

When you combine the threat of white collar automation, the revocation of tax breaks for the upper middle class and the use of significant student debt to extract wealth upward from the upper middle professions to the ultra wealthy capital class, it is evident that the technocratic professionals should be concerned about their position atop the working class.

However, the technocratic upper middle class should not feel slighted by the pain that the capitalist class is about to inflict on them, because they are not alone. Instead the technocratic upper middle class should come to understand that this is the fate that has befallen both the poor and traditional middle class in the United States over the past four decades.

Like an alzheimer cowboy

The poor in the United States have never had it easy. The US has always been a leader in poverty statistics in the first world. However the policies of the New Deal and Great Society at least provided some semblance of a social safety net.

However since the late 1970’s, the ruling class in the US have pursued policies that rolled back that social safety net.

Government IS the problem..

This has happened under both Republican, and Democratic administrations. The last remaining social safety nets, Social Security and Medicare, are now on the chopping block.

Hollowing of the middle class

While the economic destruction wrought on the poor in the US was overt, the dismantling of the traditional US middle class was more subtle. First and foremost, the outsourcing and automation of reliable blue collar jobs removed the economic foundation of the US middle class, while increasing profits for the capital class.

Economic shocks like the 2008 financial crisis led to what is typically described as wealth destruction where 8 million middle class homeowners were foreclosed upon. However it is disingenuous to call this destruction, as that wealth was distributed upward from the equity of middle class homeowners to the capital class.

Similarly, the opioid crisis can be seen as an upward wealth distribution from the middle class to the capital class.

Image courtesy of the National Institute on Drug Abuse

Between 1996 and 2016 200,000 americans died of prescription opiate overdoses. In 2016, at a time when prescription opiate users were dying at a rate of five times that two decades prior, Purdue Pharma, the company that produces Oxycontin, posted a $31b profit.

While drug addiction is typically portrayed as a symptom of poverty, opiate abuse was endemic amongst the US middle class. Vulnerable members of the US middle class exchanged their health for opiates which allowed the US capital class to cash in via pharmaceutical industry profits.

The end of the upper middle class

The destruction of jobs, the removal of government benefits, and the implementation of economic policies that result in the upward distribution of wealth to the capital class. These were the tactics deployed to squeeze the wealth out of the poor and middle classes and send it upward to increase the wealth of the capital class.

These are the same tactics now being deployed against the last remaining bastion of wealth in the non-capital class — the technocratic professional upper middle class. Things may seem fine now for the doctors, lawyers and other professionals that make up the upper middle class. However, I’m sure the good times seemed like they would never end for the blue collar workers in the 1950’s midwest.

Detroit, 2018

The future of the upper middle class is grim. Enough jobs will be automated to depress the wages of technocratic professionals, if not completely destroy those professions all together. The governing elite is already using government policy to extract wealth upward out from the technocratic professional upper middle class.

The capitalist class has turned against the technocratic professions they use to run the economy. It is time for the technocratic professional class to realize their true place in the economy, and side with the poor and working class against the capitalists.

The true working class

The modern media are at pains to portray the “working class” as culture (specifically a white man working a blue collar job) as opposed an economic strata . However, the true definition of working class means anyone who exchanges their labor for a salary (ie works for a living). This is the opposite of the capital class who derive their income primarily from investment income (ie profits from someone else's labor) and not from selling their own labor.

It seems a cheap ploy, but the big reveal is that the upper middle class technocratic professionals were part of the working class all along. The media’s treatment of “working class” as a cultural identifier as opposed to an actual economic concept, and the material benefits that have been heaped upon the technocratic professionals, have helped obscure the the technocratic professionals position within the working class.

What is to be done

The capital class is no longer going to “share” their profits with those who help them by running the economy. The capital class have created a fatted calf in the upper middle class, and now they are about to slaughter it and devour its wealth.

The technocratic professionals of the upper middle class need to come to understand that their future lies in solidarity with the poor and working class of America.

This does not mean that the upper middle class should defend the gains bestowed upon them by the capitalists. It means banding together with the rest of the exploited in this country to reclaim the ill-gotten gains of the capitalist class and share those gains equally with all.

It isn’t to be expected that the doctors and lawyers of America will be storming the Winter Palace any time soon. However, there are practical steps that the upper middle class should take right now.

Your institutions

The upper middle class needs to defend and support the public institutions that promote racial and socioeconomic equality in US society. The best institution for this is the US public school system.

First and foremost this means no more private schools. Sending your kids to public schools is the best way to advance public education for all. Second, support efforts to desegregate public schools on both racial and socioeconomic lines. Third, support efforts to change the funding system of public schools to ensure that all schools receive equitable funding.

Your vote

Please, quit voting for the pro-billionaire candidates that the Democratic party continues to put forward. It is the corporate wing of the Democratic party that has overseen or supported much of the policies that have left the US in its current state of dislocation. It was corporate Democrats that oversaw the outsourcing of US manufacturing that gutted the US middle class. It was the corporate Democrats that implemented mass incarceration that destroyed generations of people of color. The majority of senate Democrats and 40% of congressional Democrats voted for the invasion of Iraq. It was the corporate Democrats that bailed out the banks at the expense of US homeowners.

There is a great battle for control of the Democratic party being waged right now between those aforementioned corporate Democrats, and a new wave of pro-worker progressive candidates. When 2020 rolls around, vote for the candidates who will go into battle against the capital class on behalf of the working class. Candidates like Bernie Sanders, Alexandria Ocasio-Cortez and Abdul El-Sayed, ran on explicitly pro-worker and anti-capital class platforms. We need more individuals like this at all levels of government.

Realize that there is more to politics than just voting. There are plenty of progressive organizations out there doing grassroots work to advance the cause of equality and justice in the United States

Your policies

Fight for universal health care even though you have access to great healthcare through your employer sponsored insurance. Fight for tuition free college even though you can afford to pay for your kids college. Fight for student debt reform even though you can make your student loan repayments. The great majority of this country urgently needs that help, and in all likelihood, your grand children will come to need it too.

Your future

If you, the upper middle class technocratic professional, have any doubt about where your true interests lie, whether you should continue working for the benefit of billionaires, or whether you should band together with your fellow workers and reclaim equality and justice for all, just ask yourself these questions:

When the earth goes through its ecological death throes, will you or your children or grandchildren be getting a seat on Elon Musks final escape rocket to Mars? Will you be sitting next to a fashion designer failson of a Koch brother as you blast off from the burned husk of our planet? Or will you still be here, fighting for the last drop of Earths clean drinking water alongside the global poor and former members of the middle class?

You know the answer.

Solidarity Forever (learn that phrase, doc.)