Wages have stagnated for middle-income workers over the last fifty years, yet the top 5% of income earners have seen real income growth of 91%. Why aren't middle class workers getting ahead and what can you do about it?

Why Middle Class Workers Aren't Getting Ahead

Ask almost any politician the causes of middle class income stagnation and they may blame:

  • Wall Street and/or the “1%”
  • Trade agreements that transfer American jobs overseas
  • Big corporations enriching their CEOs and “sitting on cash”

As Pogo famously said, “we have met the enemy and he is us.”  Envy, jealousy and xenophobia are employed by politicians to aim blame at easy targets instead of really solving societal problems.

Engineers, who make a living by solving problems, know you must first accurately and objectively describe the problem. Then ask the appropriate question, “what are the primary causes and what can be done to address them?”

The problem: from 1965 to 2015 – the middle quintile of income earners experienced real income growth of 23% compared to 91% for the top 5% of income earners.

For wage earners, income growth comes from pay raises over time. What is preventing employers from increasing wages of middle income workers at a faster pace? Key issues that restrain employers' ability to increase wages:

  1. Rapid growth in bureaucratic rules and regulations financially impact employers
  2. U.S. share of global GDP has shrunk substantially – global competition is real
  3. Rapid advances in technology displace millions of jobs

So, if the real causes of tepid growth in middle class income are bureaucratic burdens, global competition, and technology advancement, what can you do to get ahead?

What You Can do to Get Ahead

The above three issues are metaphorical winds that we as individuals can do nothing to alter. H. Jackson Brown Jr. famously said “if you can't change the direction of the wind – adjust your sails.”

How can you change your sails to be successful? Below are a list of changes you can actually do to improve the odds in your favor:

  1. Retrain, take college classes to qualify for a higher paying career
  2. Learn skills that benefit from technology changes
  3. Start a small business part-time doing something you enjoy
  4. Become an inventor and license your product
  5. Become a consultant and be paid for your expertise, not by the hours you put in

Is it easy to make changes like those recommended above? No, it is not. But, I can tell you from personal experience that it works, I have personally benefited from 3, 4, and 5 above. I know it works.

Put more succinctly, if you are paid for your presence (paid a wage or salary based on the hours you work), your maximum income potential will be limited. If, instead you are paid for your products (physical products or your expertise) your maximum income potential is unlimited.

It is much better to be paid for your products than for your presence.

Stay tuned!