A stable society requires a degree of income equality. Countries like Yemen, South Africa, Venezuela and other areas in the world with high levels of social unrest all face the same issue of lack of inclusion in the country due to a lack of economic status.
In the US, both republican and democratic economic platforms make sweeping statements about empowering the middle class without specifics. One of the primary reasons for this omission is that the changing world economy does not need middle class workers. Median wages will continue to decline across the world (although average wages will increase) due to the continued success of technology in displacing the administrative, managerial and goods producing workers (i.e., manufacturing workers). Service sector workers, for the time being, seem to be safe although the number of workers per dollar of output appears to be falling.
Historically in the US there was a path to the middle class that was used by immigrant and ethnic groups from the mid- 1870’s to the mid-1960’s. The father would begin as a worker in the great manufacturer plants. His sons would move into the manager and supervisor positions. His grandsons would be the executives and the racial or ethnic class would be assimilated. The family now had a stake in social stability and were a part of the country, concerned about the institutions and long-term direction of the US.
Automation destroyed this economic (and social) model although creating more overall economic wealth. Unfortunately, this wealth is being concentrated by capital owners and the financial sector. Not to say that a large portion of the wealth shouldn’t go the capital, but not all of it. However, the initial step, joining the economy by getting a job in the manufacturing sector, is now gone replaced by robots and automated assembly facilities.
Now, what is the path for prosperity? Where do immigrants and low-income families make their initial steps into long-term opportunity? Fast food chains, hotels and taxi companies offer jobs, but they don’t offer any long-term promotional opportunities or the income to allow a family to attend college, although even that is not a guarantee of long-term prosperity any longer.
For people to have any sense of inclusion in the country and society, minimum wages have to rise substantially. The service sector has replaced the manufacturing sector as the entry point into the economy. The service sector cannot be a kind of indentured servitude or monopsony market where people work for a company and end up in debt to that firm, afraid to leave. The service sector has to provide the income to allow the next generation to train to move upwards in economic status.
As one ponders the bleak economic future that face our children and the indifference to social institutions in this country (especially in the poorer states), the only conclusion one should come to is minimum wages have to rise and income equality has to improve. Otherwise, we care going to end up with a fractured, warlord run country like Yemen or Somalia.
Even hikes in minimum wages are only a short-term solution. As automation continues to increase and jobs become scarcer, eventually a minimum income level is going to have to be imposed. But that is a topic for another time.