{"id":1043,"date":"2021-03-31T16:05:08","date_gmt":"2021-03-31T23:05:08","guid":{"rendered":"http:\/\/savingusmanufacturing.com\/blog\/?p=1043"},"modified":"2021-04-04T13:25:39","modified_gmt":"2021-04-04T20:25:39","slug":"are-americans-losing-the-american-dream","status":"publish","type":"post","link":"https:\/\/savingusmanufacturing.com\/blog\/general\/are-americans-losing-the-american-dream\/","title":{"rendered":"Are Americans Losing the \u201cAmerican Dream?\u201d"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">One\n<a href=\"https:\/\/www.investopedia.com\/terms\/a\/american-dream.asp\">definition<\/a> of the\n\u201cAmerican Dream\u201d is \u201cThe belief that anyone, regardless of where they were born\nor what class they were born into, can attain their own version of success in a\nsociety in which upward mobility is possible for everyone. The American dream\nis believed to be achieved through sacrifice, risk-taking, and hard work,\nrather than by chance.\u201d <a href=\"https:\/\/en.wikipedia.org\/wiki\/American_Dream\">Wikipedia<\/a> states, &#8220;The American Dream is rooted in the Declaration of\nIndependence, which proclaims that &#8220;all men are created equal&#8221; with\nthe right to &#8220;life, liberty and the pursuit of happiness.\u201d The question\nis:&nbsp; Are we losing the \u201cAmerican\nDream.?\u201d&nbsp; <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What\nthe \u201cAmerican Dream\u201d means to me is access to a good education, ability to have\na good paying job, owning a home, and living in a safe, pleasant neighborhood.&nbsp; In other words, someone living the \u201cAmerican\nDream\u201d would be comfortably in the economic middle class in the United\nStates.&nbsp; Let\u2019s consider what has happened\nin the past 50 years.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The\nchars below shows that the U. S. has been running a trade deficit since 1976.\nThis means that we import more products than we sell.&nbsp; In 2020, the U.S. trade deficit was $678.7\nbillion, according to the U.S. Bureau of Economic Analysis (BEA), and more 42.1%\nof the U.S. trade deficit in goods is with China. &nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/savingusmanufacturing.com\/blog\/wp-content\/uploads\/2021\/03\/U.S.-Trade-Balance.1960-2020.png\" alt=\"\" class=\"wp-image-1044\" width=\"511\" height=\"307\" srcset=\"https:\/\/savingusmanufacturing.com\/blog\/wp-content\/uploads\/2021\/03\/U.S.-Trade-Balance.1960-2020.png 350w, https:\/\/savingusmanufacturing.com\/blog\/wp-content\/uploads\/2021\/03\/U.S.-Trade-Balance.1960-2020-300x180.png 300w\" sizes=\"auto, (max-width: 511px) 100vw, 511px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Trade\ndeficits can occur for the following reasons: <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>A country&#8217;s\ninability to produce some goods.<\/li><li>Better\nquality of some foreign goods.<\/li><li>Cheaper\nforeign materials.<\/li><li>Lower foreign\nwages.<\/li><li>Lower foreign\ncapital costs.<\/li><li>Subsidies\nfrom foreign governments to their manufacturers. <\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The\nlast four reasons have been the main reasons for our trade deficit with\nChina.&nbsp; China does not have a free-market\neconomy; it is a controlled by the Chinese Communist Party, which uses\nmercantilist policies of product dumping, currency manipulation, intellectual\nproperty theft, and government subsidies to take over markets in the United\nstates. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Higher Paying Jobs Disappearing <\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Trade\ndeficits can result in a loss of up to 6,000 jobs for each one billion dollars of\ntrade deficit. Since China\njoined the WTO in 2001, the US has lost 77,000 manufacturing establishments\n(factories), and nearly six million manufacturing jobs since the peak shown\nbelow in 1980.<strong><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n  <strong>Percent Manufacturing\n  Jobs in the U.S.<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Year<\/strong>\n  <\/td><td>\n  <strong>Manufacturing Jobs\n  (Millions)<\/strong>\n  <\/td><td>\n  <strong>Percent Manufacturing\n  Jobs<\/strong>\n  <\/td><\/tr><tr><td>\n  1976\n  <\/td><td>\n  17.8 Million\n  <\/td><td>\n  &#8212;\n  <\/td><\/tr><tr><td>\n  1980\n  <\/td><td>\n  18.6 Million\n  <\/td><td>\n  20.5\n  <\/td><\/tr><tr><td>\n  1990\n  <\/td><td>\n  17.3 Million\n  <\/td><td>\n  16.1\n  <\/td><\/tr><tr><td>\n  2000\n  <\/td><td>\n  17.1 Million\n  <\/td><td>\n  13.0\n  <\/td><\/tr><tr><td>\n  2010\n  <\/td><td>\n  11.5 Million \n  <\/td><td>\n  8.9\n  <\/td><\/tr><tr><td>\n  <strong>2019<\/strong>\n  <\/td><td>\n  <strong>12.8 Million<\/strong>\n  <\/td><td>\n  <strong>8.5<\/strong>\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.census.gov\/foreign-trade\/statistics\/historical\/index.html\">https:\/\/www.census.gov\/foreign-trade\/statistics\/historical\/index.html<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Manufacturing jobs are the foundation of the middle class and as we lose manufacturing jobs, we are losing the middle class.\u00a0 As a result, <a href=\"https:\/\/tradingeconomics.com\/china\/wages\">median yearly wages<\/a> have stagnated, only growing from $19,822 in 1985 to $51,916 in 2019, which is <strong>only a 1.21% average annual percent of change for a total 61% increase in 34 years, hardly enough to keep up with the annual rate of inflation. <\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In\nNovember 2019, the U.S. Private Sector Job Quality Index (<a href=\"https:\/\/www.jobqualityindex.com\/\">JQI)<\/a> began \u201cto assesses job quality in the United States by\nmeasuring desirable higher-wage\/higher-hour jobs versus lower-wage\/lower-hour\njobs&#8230; \u201cjob quality\u201d means the weekly\ndollar-income a job generates for an employee.\u201d&nbsp;\nThe JQI White Paper states: \u201cThe size and composition of the U.S. labor\nforce have changed substantially over the past quarter century\u2026The percentage\nof private U.S. jobs in the service-providing sectors increased steadily from\napproximately 55% during the years immediately following the end of World War\nII through the end of the Great Recession in 2009. However, the percentage has\nremained flat\u2014at around 83.5%\u2014 since that point.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As\na result of creating more lower paying service and retail jobs, the average\nhourly wage nationwide is $11.31\/hour for a yearly average pay of $22,620 compared\nto the yearly average base pay of $47,945 ($23.97\/hour) for a manufacturing job\naccording to <a href=\"https:\/\/www.glassdoor.com\/Salaries\/manufacturing-salary-SRCH_KO0,13.htm\">Glassdoor<\/a>.&nbsp; However, a skilled automotive worker can make\nas much as $70,204 per year ($35.10\/hour). <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Another\nadvantage of jobs in manufacturing is that they create more other support jobs\nthat a retail job does. One the average, manufacturing jobs create 3 \u2013 4 other\nindirect jobs, compared to less than one job for retail, but certain\nmanufacturing jobs create more other jobs as shown below:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n  <strong>Industry<\/strong>\n  <\/td><td>\n  <strong>Direct jobs<\/strong>\n  <\/td><td>\n  <strong>Total indirect jobs<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Manufacturing<\/strong>\n  <\/td><\/tr><tr><td>\n  Steel\n  product manufacturing from purchased steel\n  <\/td><td>\n  1\n  <\/td><td>\n  12\n  <\/td><\/tr><tr><td>\n  Motor\n  vehicle manufacturing\n  <\/td><td>\n  1\n  <\/td><td>\n  14\n  <\/td><\/tr><tr><td>\n  <strong>Retail<\/strong>\n  <\/td><\/tr><tr><td>\n  Food\n  and beverage stores\n  <\/td><td>\n  1\n  <\/td><td>\n  0.7\n  <\/td><\/tr><tr><td>\n  General\n  merchandise stores\n  <\/td><td>\n  1\n  <\/td><td>\n  0.7\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The\nlack of growth in wages hasn\u2019t been at the same rate for all income levels\naccording to data from the Economic Policy Institute:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n  &nbsp;\n  <\/td><td>\n  <strong>Bottom 90%<\/strong>\n  <\/td><td>\n  <strong>Top<\/strong><strong>&nbsp;5%<\/strong>\n  <\/td><td>\n  <strong>Top<\/strong><strong>&nbsp;0.1%<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Net Growth in Wages 1979- 2019<\/strong>\n  <\/td><td>\n  26.0%\n  <\/td><td>\n  75.1%\n  <\/td><td>\n  345.2%\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Middle Class Shrinking<\/strong><strong><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">According\nto a Pew Research Center <a href=\"https:\/\/www.pewresearch.org\/social-trends\/2015\/12\/09\/the-american-middle-class-is-losing-ground\/\">study<\/a>, this\nstagnation of wages has caused a decrease in the percentage of Americans that\nare in the middle class<strong>.&nbsp; In 1970, 62%\nof Americans were in the middle class, but only 52% of Americans were in the\nmiddle class in 2018<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Home\nOwnership Stable<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The\ngood news is that home ownership nationwide has been relatively stable in the\npast 50 years, actually increasing from 64.0% in 1970 to 67.9% in the 1<sup>st<\/sup>\nquarter of 2020 according to data from <a href=\"https:\/\/fred.stlouisfed.org\/series\/RHORUSQ156N\">FRED<\/a>. &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Why\ndid we lose so many higher paying jobs?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I\u2019ve\nwritten three books discussing this problem and what we can do about it, but in\na nutshell, I can condense the reasons to the following major causes:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Trade agreements such as NAFTA with Canada and Mexico (1994) that benefited our trading partners more than the U.S. and began the process of outsourcing jobs to other countries, primarily Mexico.<\/li><li>Granting China Most Favored nation status in 2000 (now called Permanent Normal Trade Relations) and allowing them to become a member of the World Trade organization. This caused a mass exodus of manufacturing jobs from the U.S., either by outsourcing manufacturing to Chinese companies or American companies setting up manufacturing plants in China.<\/li><li>Ending tariffs on imports from trading partners as part of the regulations of the World Trade Organization Agreement.<\/li><li>Tax policies that favor multinational global corporations, allowing them to shift profits to other countries and encouraging them to outsource manufacturing jobs.<\/li><\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>How\ncan we create more higher paying jobs to restore the American Dream?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since\nit took us nearly 30 years to get to this point, there is no simple, rapid\nsolution. However, there are steps our government has taken and can take to\naccelerate restoring the American Dream: <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Renegotiate existing trade\nagreements to require trading partner countries to purchase more U. S. agricultural\nproducts and energy products such as oil, gas, and renewables.<\/li><li>Maintain current tariffs and expand\ntariffs to other critical, essential products<\/li><li>Pass Sales Factor Tax Apportionment\nlegislation, which would require multinational corporations to pay taxes on the\nprofits of their sales in the U.S., discouraging profit shifting.<\/li><li>Pass Market Access Charge\nlegislation to tax foreign entities and individual on purchase of U.S. assets;\ni.e., stocks, bonds, companies, and property, which would gradually balance the\novervalued dollar.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These\nrecommended policy steps have been described in more detail in past blog\narticles available to read at <a href=\"http:\/\/www.savingusmanufacturing.com\">www.savingusmanufacturing.com<\/a>. And, these policies were discussed at the annual trade\nconference held virtually on March 23-26, 2021 by the <a href=\"https:\/\/prosperousamerica.org\/\">Coalition for a Prosperous America<\/a>,\nabout which I will be writing in future articles. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>One definition of the \u201cAmerican Dream\u201d is \u201cThe belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society in which upward mobility is possible for everyone. The American dream is believed to be achieved through sacrifice, risk-taking, and hard [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1043","post","type-post","status-publish","format-standard","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/1043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/comments?post=1043"}],"version-history":[{"count":3,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/1043\/revisions"}],"predecessor-version":[{"id":1047,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/1043\/revisions\/1047"}],"wp:attachment":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/media?parent=1043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/categories?post=1043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/tags?post=1043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}