Is The Middle Disappearing?

The recession and the associated austerity policies of governments are still with us as the challenges facing the economy remain. Yet, many companies are reporting record profits in what is a difficult economic environment. On the face of it, the two conflicting messages don’t make sense.

One explanation is that in a static economy company profits have increased disproportionately, partly as a result of lower costs and wage savings from the workforce.

The winners in this scenario appear to be companies, as their profits increase to new levels. The losers appear to be employees, as their wages sink to new levels.

Even the advice of recent decades to young people to get an education to ensure greater earning potential is losing creditability, as wages at all levels are squeezed.

Given the reality of the two situations, why is it happening and why are so many traditional middle level jobs disappearing.

It appears there are two main reasons. First, technology is now at a stage where it is affecting almost every industry. Second, many companies have grown so large that they can influence all aspects of the sales and supply chain.

Technology is replacing employees in many industries and causing the automation of jobs at all levels. The ability of technology to replace jobs is increasing, as the sophistication of automation and robotics is developed and commercialised.

The jobs affected by developments in technology are no longer limited to low-pay or low-skilled workers, as traditional middle level jobs are targeted.

The mantra in relation to the impact of technology in the workplace suggests that creativity and innovation will help to create new jobs at a higher level to replace the jobs lost.

This may be the case for some people and some jobs but it is unlikely to be the solution for everyone affected by the spread of technology.

Many companies have grown to significant size in their particular markets and as a result have the ability to increase prices and profits without having to share margin with employees.

The divide between the record profits of companies and the reduced wages of workers, particularly those in the middle, looks like it will continue as the balance of power has shifted.

SO, the recession is changing many things and it seems one of them is the fact that the middle ground, where so many people work and live their lives, is disappearing.

What do you think? Is the middle disappearing? Get in touch, we would love to hear your views contact Nick on 028 8224 9494 or via Twitter @nick_oec.