[Homestead] Vanishing Middle Class, who the hell cafes.

Tvoivozhd tvoivozd at infionline.net
Mon Sep 20 17:13:41 EDT 2004

Sixty million middle class  wage-earners going down for the count---Our 
Maximum Compassionate Republican Leader speeding their descent.

*washingtonpost.com* <http://www.washingtonpost.com/>
*As Income Gap Widens, Uncertainty Spreads*
More U.S. Families Struggle to Stay on Track

By Griff Witte
Washington Post Staff Writer
Monday, September 20, 2004; Page A01

Scott Clark knows how to plate a circuit board for a submarine. He knows 
which chemicals, when mixed, will keep a cell phone ringing and which 
will explode. He knows how to make his little piece of a factory churn 
hour after hour, day after day.

But right now, as his van hurtles toward the misty silhouette of the 
Blue Ridge Mountains, the woods rising darkly on either side and 
Richmond receding behind him, all he needs to know is how to stay awake 
and avoid the deer.

So he guides his van along the center of the highway, one set of wheels 
in the right lane and the other in the left. "Gives me a chance if a 
deer runs in from either direction," he explains. "And at night, this is 
my road."

It's his road because, at 3:43 a.m. on a Wednesday, no one else wants 
it. Clark is nearly two hours into a workday that won't end for another 
13, delivering interoffice mail around the state for four companies -- 
none of which offers him health care, vacation, a pension or even a 
promise that today's job will be there tomorrow. His meticulously laid 
plans to retire by his mid-fifties are dead. At 51, he's left with only 
a vague hope of getting off the road sometime in the next 20 years.

Until three years ago, Clark lived a fairly typical American life -- 
high school, marriage, house in the suburbs, three kids and steady work 
at the local circuit-board factory for a quarter-century. Then in 2001 
the plant closed, taking his $17-an-hour job with it, and Clark found 
himself among a segment of workers who have learned the middle of the 
road is more dangerous than it used to be. If they want to keep their 
piece of the American dream, they're going to have to improvise.

Figuring out what the future holds for workers in his predicament -- and 
those who are about to be -- is key to understanding a historic shift in 
the U.S. workforce, a shift that has been changing the rules for a 
crucial part of the middle class.

This transformation is no longer just about factory workers, whose ranks 
have declined by 5 million in the past 25 years as manufacturing moved 
to countries with cheaper labor. All kinds of jobs that pay in the 
middle range -- Clark's $17 an hour, or about $35,000 a year, was smack 
in the center -- are vanishing, including computer-code crunchers, 
produce managers, call-center operators, travel agents and office clerks.

The jobs have had one thing in common: For people with a high school 
diploma and perhaps a bit of college, they can be a ticket to a modest 
home, health insurance, decent retirement and maybe some savings for the 
kids' tuition. Such jobs were a big reason America's middle class 
flourished in the second half of the 20th century.

Now what those jobs share is vulnerability. The people who fill them 
have become replaceable by machines, workers overseas or temporary 
employees at home who lack benefits. And when they are replaced, many 
don't know where to turn.

"We don't know what the next big thing will be. When the manufacturing 
jobs were going away, we could tell people to look for tech jobs. But 
now the tech jobs are moving away, too," said Lori G. Kletzer, an 
economics professor at the University of California at Santa Cruz. 
"What's the comparative advantage that America retains? We don't have 
the answer to that. It gives us a very insecure feeling."

The government doesn't specifically track how many jobs like Clark's 
have gone away. But other statistics more than hint at the scope of the 
change. For example, there are now about as many temporary, on-call or 
contract workers in the United States as there are members of labor 
unions. Another sign: Of the 2.7 million jobs lost during and after the 
recession in 2001, the vast majority have been restructured out of 
existence, according to a study by the Federal Reserve Bank of New York.

Each layoff or shutdown has its own immediate cause, but nearly all 
ultimately can be traced to two powerful forces that reinforce each 
other: global competition and rapid advances in technology.

Economists and politicians -- including the presidential candidates -- 
are locked in a vigorous debate about the job losses. Is this just 
another rocky stretch of the U.S. economy that, if left alone, will 
foster new industries generating millions of as-yet-unimagined jobs, as 
it has during other times of upheaval? Or is the workforce hollowing out 
permanently, with those in the middle forced to slide down to low-paying 
jobs without benefits if they can't get the education, credentials and 
experience to climb up to the high-paying professions?

Over the next several months, The Washington Post, in an occasional 
series of articles, will explore the vast changes facing middle-income 
workers and the consequences for businesses and society.

Some of the consequences are already evident: The ranks of the 
uninsured, the bankrupt and the long-term unemployed have all crept up 
the income scale, proving those problems aren't limited to the poor. 
Meanwhile, income inequality has grown. In 2001, the top 20 percent of 
households for the first time raked in more than half of all income, 
while the share earned by those in the middle was the lowest in nearly 
50 years.

Within the middle class, there has been a widening divide between those 
in its upper reaches whose jobs provide the trappings of the good life, 
and those in the lower rungs whose economic fortunes are less secure.

The growing income gap corresponds to a long-term restructuring of the 
workforce that has carved out jobs from the center. In 1969, two 
categories of jobs -- blue-collar and administrative support -- together 
accounted for 56 percent of U.S. workers, according to an analysis by 
economists Frank Levy of MIT and Richard J. Murnane of Harvard. Thirty 
years later the share was just 39 percent.

Jobs at the low and high ends have replaced those in the middle -- the 
ranks of janitors and fast-food workers have expanded, but so have those 
of lawyers and doctors. The problem is, jobs at the low end don't 
support a middle-class life. And many at the high end require special 
skills and advanced degrees. "However you define the middle class, it's 
a lot harder now for high school graduates to be in it," Levy said.

College graduates aren't immune, either. In places like Richmond, the 
overall health of the economy masks layoffs that have snared not only 
blue-collar workers like Clark, but also thousands of office workers at 
companies like credit card giant Capital One Financial Corp. and 
high-tech retailer Circuit City Stores Inc. Those cutbacks have educated 
even those with bachelor's degrees in the new ways of a volatile economy.

A University of California at Berkeley study last year found that as 
many as 14 million jobs are vulnerable to being sent overseas. Many 
economists, though, say offshoring is more opportunity than threat 
because it allows companies to make and sell goods for less, and offer 
even better jobs than those that are lost. "Offshoring can't explain job 
loss. It can only explain job switch," said David R. Henderson, a Hoover 
Institution economist.

Henderson says the middle class is thriving, and by many measures, he's 
right. As a group they're earning more money than they have before, and 
their ranks have swollen with members who can afford the DVDs, SUVs and 
MP3s now seen by many families as part of the essential backdrop to 
modern life. Whereas Census numbers show the median household earned 
$33,338 in 1967 when adjusted for inflation, that number was up by 
$10,000 in 2003.

But when compared with those at the top, the middle has lost much 
ground. And many in the middle have dropped well behind their peers.

The gaps are likely to widen, according to Robert H. Frank, a Cornell 
economist. He said that as more people worldwide become available to do 
routine work for less money and as computers take on increasingly 
complex functions, the demand for those Americans whose skills are 
easily duplicated could drop. "The new equilibrium," Frank said, "may be 
a little meaner and more unpleasant than it was before."

*Believing in Ma Bell

In the Washington area, the federal government and its contractors have 
cushioned the impact of the change in the workforce. But you don't have 
to travel far for evidence of the shift: Just two hours south on I-95, 
to Richmond.

 From a distance, like many parts of the United States, Richmond looks 
like a place where the middle class should thrive. As its economy 
evolved over the past century from agriculture to manufacturing to 
services and, finally, to technology, it hung on to some aspects of each 
phase. That diversity keeps the jobless rate below the national average. 
Paychecks for professionals are growing. Major corporations such as 
Philip Morris USA are adding staff. A biotech park has taken root in 
downtown. Two new malls recently opened in the suburbs.

And yet, for some who lack the right skills to match employers' demands, 
Richmond has less to offer than it used to.

"I think we're tending not to see any growth in the middle," said 
Michael Pratt, a Virginia Commonwealth University economics professor, 
"but I don't know anywhere in America where you are."

It wasn't always that way.

When Fred Agostino moved to suburban Richmond to head the Henrico County 
Economic Development Authority in the mid-1980s, employers wanted 
semi-skilled workers they could train for half a day and hire for life 
at a decent wage with benefits. Now companies looking to relocate to 
Richmond just want to know what percentage of the local population has a 
PhD. "They have to have educated, skilled, world-class people," Agostino 

Meanwhile, the lifetime jobs were cut short.

The Viasystems Inc. circuit board factory was once known as "Richmond 
Works," and it provided good pay for people who didn't get past high 
school -- like Scott Clark. He was also among the 2,350 people who lost 
their jobs in 2001, when the plant shut for good.

Today Clark is a driver-for-hire, willing to work virtually any 
schedule, and drive any route for less than anyone else. His old factory 
job was outsourced to workers in China, Canada or Mexico. But now he 
benefits from outsourcing, doing work that once might have been someone 
else's full-time job with benefits. A former proud union man, he has 
become part of the steady exodus from the labor movement, which now 
represents just under 13 percent of the workforce. Instead, he's part of 
another nearly 13 percent of the workforce that has grown, not shrunk -- 
those who do jobs that are temporary, contract or on-call.

At least the work's not going anywhere. A real person in America, he 
reasons, has to drive American roads to get things from one place to 
another. There's security in that.

Clark used to feel the same security about work at the factory. When he 
started there in the mid-1970s, it was a new Western Electric plant, 
part of the Ma Bell family. When managers called him for an interview 
and he got the job, he could hardly believe it: "I said, 'It's funny you 
called me. My girlfriend's got college, and you ain't called her.' They 
said, 'What kind of college?' I said, 'She's taking biology and 
chemistry and all that stuff.' Before I got home, they called her and I 
had to turn around and bring her back up."

His girlfriend, Kathy, dropped out of school immediately. They started 
work the same day in 1976, making less than $10 an hour between them. 
Marriage followed.

Clark, a big, profane man, makes his way through Virginia yelling at 
other drivers, yelling at talk radio, and, occasionally, singing along 
to a sweet, sad bluegrass tune.

He doesn't have much patience for politicians. When Sen. John F. Kerry 
(Mass.), the Democratic presidential nominee, comes on the radio to talk 
about the economy, proclaiming, "I believe in building up our great 
middle class," Clark sneers, "Yeah, right." When President Bush's voice 
echoes through the cab a little later, Clark dubs him "a liar."

Clark has few nice things to say about corporations, either, but he 
concedes that the factory -- for most of his years there -- was run 
pretty well. He enjoyed the work, putting copper plating on circuit 
boards that would power phones, computers and even a few submarines for 
the Navy. Working in the chemical division was a dirty job. But because 
it was dirty, managers stayed away. Amidst the fumes, working long into 
the night on the second shift, the workers forged deep friendships. 
Clark and three buddies played the lottery religiously, with a vow that 
if one hit the jackpot, they would split the winnings and all retire on 
the spot.

"It was a real close-knit group of people," said Kathy Clark, who also 
worked the second shift for years. "We grew up there. We had our 
families there."

*'You Could Work for Nothing'

But in 1996, the plant was sold by Lucent Technologies Inc., which had 
inherited it from AT&T Corp. Although the union made a bid, the victor 
was a start-up called Viasystems.

Many of the workers, Scott Clark included, had a feeling Viasystems was 
not invested in the plant for the long term. The reality was hard to 
ignore: By 2001, few companies still made circuit boards in the United 
States. They could earn a bigger profit producing them where business 
costs were lower, and where the workers would not demand overtime or 
sick leave. Scott Clark was not surprised on the day Viasystems 
announced the factory would shut down.

"They point-blank told us. . . . 'You could work for nothing and we 
would still close this plant,' " Kathy Clark said.

On the plant's final day, the workers were told to throw their ID passes 
and beepers into a box in the auditorium. Scott Clark wouldn't do it. 
Instead he broke into a meeting of managers, and placed his pass on the 
table. "When I walked into this plant, they handed me that pass," he 
told them. "They were proud to give it to me, and I was proud to take 
it." Now he was giving it back. He turned, and left the plant for the 
last time.

A handful of employees stayed behind to remove the machines so they 
could either be shipped overseas or sold for scrap. In the end, Richmond 
Works was just a shell. The building still sits vacant off the side of 
Interstate 64 just outside Richmond, a 700,000-square-foot tan tombstone 
in a weedy field.

Kathy Clark was unemployed for a year after the plant closed. Scott 
Clark lost time to training as he began his second career on the road. 
With their savings all but evaporated, the Clarks have spent the past 
two years starting over.

Working 15-hour days, Scott Clark has been pulling in good money. He 
won't say exactly how much for fear that competitors will undercut him, 
but in the Richmond area, he said, a courier can make $800 a week for 
doing routes less time-consuming than his. That's more than his base pay 
at the factory, though his new job lacks any benefits and he has to pay 
for the van and the gas. Kathy Clark, meanwhile, got a full-time job 
this summer after two years of temp work. But they still have a lot of 
ground to make up. Had the plant stayed open, they would have been ready 
for retirement in just a few more years. Now, "I feel like I'm 18 years 
old again," said Kathy Clark, as she sat in a rocking chair in her 
living room, strands of light gray overtaking the dark brown of her 
short hair.

The Clarks know they have it better than many of their friends from the 
plant. They have frequent, impromptu reunions at Wal-Mart, where the 
talk inevitably turns to who has found work and who hasn't.

Raffael Toskes Sr. has, but only for $11 an hour. He rides around each 
day in an armored car, a gun strapped to his side. "I consider myself a 
middle-class person," said Toskes, who made $17 an hour at the plant. 
"But right now, I'm probably a lower-middle-class person."

Lawrence Provo has given up on trying to find a job. He was out of work 
for nearly two years after the plant closed. "That was probably the 
worst time in the world to become unemployed. Everybody was downsizing. 
Everybody was laying off," he said.

Provo and his wife cut back on expenses and sold their car, furniture 
and jewelry. They even sold their home, and moved in with Provo's 
mother-in-law. But it was not enough. They had come to rely on his 
factory wage, and now their debts spiraled into the tens of thousands. 
They declared bankruptcy, joining a record 1.6 million who filed last year.

Provo finally got a job through a temp agency for $8.50 an hour, less 
than $18,000 a year and a little more than a third of his pay at 
Viasystems. He was just getting his life back together when, in November 
last year, his heart failed him. "My doctor told me, 'You've got a 
choice: You can work or you can live,' " he said.

Robert Boyer retrained in computers after the plant closed. But tech 
companies told him they wanted five years' experience, not a certificate 
from a six-month course. So he works for $11.50 an hour at Home Depot, 
using the wisdom of four decades as plant electrician to help customers 
pick light bulbs for their remodeled kitchens.

Boyer turns angry at any suggestion that the jobs picture is not that 
bad. "When these guys get on the boob tube and say there's jobs out 
there, you just gotta go out there and get them, it makes me want to go 
out there and grab them by the throat and say, 'Where? Where are the 
jobs at?' "

*Slipping Away at Circuit City

Ask Richmond's leaders, and they'll say the jobs are in infotech, 
biotech, nanotech and other kinds of tech yet to be conceived. "People 
have the impression that Richmond is a good-old-boy town. And we do have 
some old money here. But that money is going to build the new economy," 
said Robert J. Stolle, executive director of the Greater Richmond 
Technology Council. "Tech is the backbone of the Richmond economy."

One home-grown company seems to capture in its name Richmond's most 
deeply held ambitions: Circuit City. Born in 1949 to sell television 
sets to the masses, its existence attests to the enduring strength of 
the middle class. And all those sales of computers and video games have 
created a lot of jobs. With a local staff of 3,072, the chain is one of 
the Richmond area's largest employers.

But the work has a tendency to disappear. In the eight years after he 
moved to Richmond to take an offer at Circuit City, Chuck Moore lost his 
job in that company three times, proving that a white collar and a 
college degree are no protection from the forces that have shifted the 
ground under blue-collar workers like Clark.

At 35, Moore spent the first nine months of 2004 desperate for a job as 
he watched his grip on the middle class slipping away. His story 
complicates the idea that to be comfortable in America today, all you 
need is a little more education.

Moore's roots are solidly blue-collar: His father worked as an 
electrician for the same company for 40 years. His stepfather drove a 
truck. His brother went to work at the Georgia Pacific plant. His mother 
still manages the local Shoney's. No one in his family had ever 
graduated from college.

For nine years after his high school graduation, he and his wife, Terry, 
worked full time to pay for Chuck to complete his degree at the Savannah 
College of Art and Design. With a knack for electronics and an artistic 
eye, he wanted to animate movies or video games. "I thought that walking 
out that door with that degree in my hand, I wouldn't have to look. I 
would have people coming to me," Moore said.

But while Moore was in school -- designing animation by day, manning a 
hotel desk by night -- the technology had continued to improve and so 
had employers' capacity to hire artists anywhere on earth. A bachelor's 
degree might have been enough before; now you needed a master's or even 
a doctorate.

Moore started looking for computer jobs instead. He and Terry both had 
luck at Circuit City.

Moore's first job disappeared when the company closed a tech support 
center and began moving its call center operations to India. His second 
job -- designing ads for the recruitment division -- evaporated when the 
tech bubble burst. His last job there ended in January when the database 
he built to manage marketing projects worked so well that the company no 
longer needed the help of a human.

Until this past weekend, his job search had gone like this: 320 résumés 
sent out, six calls back. Three interviews. No offers. At first, he had 
put his old salary on his résumé: $40,000. Later he switched to, 

"I've already been willing to go down 10 [thousand dollars]. And if it 
goes much longer, I might have to go down 15. For a guy with a 
bachelor's degree to take $25,000, I might as well be working at 
McDonald's," Moore said in August. "There's something not right about that."

Yet on Saturday, when an animal hospital offered him work as a 
veterinary assistant -- for half what he had been making in his old job 
and no benefits -- he accepted immediately. He starts today, cleaning 
out kennels and, he hopes, learning how to use the X-ray machines or 
work in the lab so he can add to his repertoire of skills.

Moore has thought of going back for his master's degree. But that's 
hardly an option when he has a 3-year-old son, not to mention a mortgage 
and student loans.

Instead, to help make ends meet, he's been teaching computer basics at 
J. Sargeant Reynolds Community College, where his students can identify 
with their teacher's plight. One is a 20-year Army veteran who found 
that the best he could do without college was become a salesman at 
Lowe's, the home-improvement store. He was taking Moore's class so he 
could go to a four-year college in the fall.

"The job market for people like me is not that good," said the man, 
Albert DiCicco. "Maybe it is for people with bachelor's degrees."

Lately, DiCicco's predicament has been on the mind of Federal Reserve 
Chairman Alan Greenspan.

In June, Greenspan warned that a shortage of highly skilled workers and 
a surplus of those with fewer skills has meant wages for the lower half 
of the income scale have remained stagnant, while the top quarter of 
earners sprints away. Greenspan said the skills mismatch "can and must 
be addressed, because I think that it's creating an increasing 
concentration of incomes in this country and, for a democratic society, 
that is not a very desirable thing to allow to happen."

But it already has happened. The gap between the wages of a 30-year-old 
male high school graduate and a 30-year-old male college graduate was 17 
percent as of 1979, according to analysis by Harvard's Murnane and MIT's 
Levy in their book, "The New Division of Labor." Now it tops 50 percent, 
with an even larger differential for women. Real wages for both high 
school graduates and high school dropouts have actually fallen since the 
1970s. Meanwhile, wages for college graduates -- who make up only about 
a quarter of the adult population -- have soared upward.

The trend seems poised to continue. The list of the 30 jobs the Labor 
Department predicts will grow the most through 2012 includes high-paying 
positions such as postsecondary teachers, software engineers and 
management analysts. But nearly all require a college degree. There are 
also plenty of jobs that demand no college -- including retail sales and 
security guard -- but they pay a low wage.

And yet, as Moore's situation shows, a college diploma offers a porous 
shield when demand for a certain skill evaporates. College graduates 
have, in recent years, become an increasingly large percentage of the 
long-term unemployed. When they find new work, their salary cuts have 
been especially deep.

The optimists among economists -- and there are many -- point to trends 
that could help mitigate the pain of job losses and lead to future 
growth. One is the coming mass retirement of baby boomers, which could 
leave plenty of openings for those trying to break into the workforce. 
Economists tend to believe, too, that trade and technology will 
ultimately create new efficiencies that produce far more jobs than they 
destroy and leave everyone, on average, better off.

*A Tough Climb

Scott Clark isn't sure if he will emerge better off. Spending day and 
night in the cab of a van was not exactly how he planned to live out his 
fifties and sixties, but he'll get by. He's even managed to save enough 
money to begin cutting his hours from 15 down to 11.

It's the end of the day now and as Clark battles the Richmond evening 
rush hour, his thoughts are turning to home. He's already fulfilled his 
part of the American dream, doing better than his parents did. 
"Everybody tells me I'm low class," Clark says, chuckling faintly. "But 
we're middle class. We're definitely middle class."

Yet his kids -- his son is 26 and his twin daughters are 21 -- still 
live at home because they can't afford places of their own. None of them 
went to college, although his daughters had 3.8 grade-point averages in 
high school and his son aced the SATs. They're saving to go back to 
school -- eventually. In the meantime, they work. His son lays carpet 
and his daughters stock shelves in a warehouse.

Will they be able to move up the economic ladder, just like he did? 
Clark ponders the question. After a long day, he is showing the strain, 
getting sleepy with his regular bedtime of 6:30 p.m. fast approaching.

"I really don't know. It's just too uncertain. It really is. There's 
nothing there," he says, turning completely serious for the first time 
all day. "There's nothing you can just count on. I wish there was."

© 2004 The Washington Post Company

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