There are many reasons why America’s utter dominance of the world economy started to erode in the late 1960s. A full generation after the close of WWII, Europe and Japan had finally rebuilt their national infrastructures and began to compete in earnest, thereby ending America’s near monopoly on industrial production. Instability in energy markets and job siphoning from cheaper labor markets also challenged America’s economic position. As a result, the U.S. manufacturing sector went into a long period of decline from which it has never fully recovered.
America’s reaction to these developments have had mixed results. On the one hand, the nation’s economy was able to make impressive adjustments. Just as manufacturing had once grown to usurp agriculture, the service and technology sectors have now expanded to make up for the decline in manufacturing. But as was the case with the earlier transition, American society has been slow to adapt in ways that could help many workers succeed in the new economy, instead letting them fall through the cracks.
During the mid-20th century, neither a college education nor a high level of manual skill was essential for landing gainful employment. Blue collar jobs, particularly in union shops, 
offered middle class wages to semi-skilled and sometimes unskilled workers. And many white collar workers had little or no college education, instead having worked their way up the bureaucratic chain or from more skilled industrial positions. A college education was an available avenue for success, but hardly a necessity. Indeed, the great expansion of American colleges and universities was a post-WWII phenomenon, and the widespread opportunity for accessible and affordable college educations first became available on a large scale to Baby Boomers, not their predecessors (the GI Bill aside). Even today, only about one-quarter of American adults hold a Bachelor’s degree from a four-year college.
This situation now presents a problem for American workers on the whole. In today’s economy, a college degree is typically mandatory for well-paying white collar positions. The opportunity to say, forge a career in management at a major insurance company with only a HS degree, as my uncle did beginning in the early 1960s (see the prior post), are practically non-existent. At the same 
time, the loss of manufacturing jobs and the decline of unions that represented those workers means that in order to reach the middle class, today’s blue collar workers also need to be skilled. Electricians, plumbers, auto mechanics are still in a strong position to earn competitive incomes, either as wage workers or owners of their own businesses. Why? Because they have skills that are vital to society, which most people can’t actually do, and that can’t be mastered in a day or a week or even a month. This is why skilled workers have so much bargaining power. Are you really going to re-wire your house or drop your transmission? We need them and we pay them accordingly.
So what it comes down to is this: whether entering the white collar or blue collar workforce, today’s American workers generally need to be highly skilled in order to earn a middle class wage. In the white collar world this typically means at least a bachelor’s degree. In the blue collar world this typically means a skilled trade. But less than a third of Americans manage to move through the school system and earn college degrees, while even fewer are attaining specialized trade skills as schools rarely offer them as part of the curriculum. The result is that since the 1980s the U.S. labor market has been importing skilled foreign workers to fill both white and blue collar positions (as well as unskilled positions, but that’s another matter entirely). Meanwhile, the American middle class has begun to shrink as a percentage of the overall population, and the ranks of poor and working poor Americans have grown.
Amid these developments, cycles of poverty have emerged, particularly in cities and rural areas. As the middle class has fled to the suburbs, the number of children, grandchildren, 
and even great-grandchildren being raised by families that have never known anything but poverty are growing. And these youngsters are far less likely to ever reach the middle class for many reasons. One of the most important is that their families no longer have the know-how or skill sets needed to attain middle class employment. And without familial guidance or role models, children are much less likely to make their way out of poverty and into the middle class. And thus, poverty becomes cyclical, the culture of poverty takes root, and the underclass not only expands but begins to show signs of permanence.
By necessity, these two short blog entries offer a simplified explanation for why America has a growing underclass. But the situation is very real. And one thing in particular about this development needs to be clearly understood.
It will not change by itself anytime soon.
America’s population of poor and working poor grew steadily for more than a century until 
WWII. The Industrial Revolution was centered in American cities, and for much of that period, many of them were largely third world slums. Diseases and poverty were rampant, and animals and people alike died in the streets, while wealthier citizens segregated themselves into separate neighborhoods ever further from the city’s blight.
Back then, local, state, and federal policy makers were ill-equipped to tackle the issues that plagued America’s poor. Instead of developing realistic and effective social, economic, and labor policies, they often blamed the poor for their poverty, naively and stereotypically explaining it as the result of supposed immoralities.
I’d like to think that we’re more sophisticated today. I’d also like to think that we’re not simply 30 years into another cycle of economic redevelopment that will take more than a century to hash itself out. I’d like to think that within my lifetime we can stop, and even reverse the expansion of America’s underclass. But in order for that to happen, we need to start coming up with sound policies that will help the next generation of workers gain the skills they need to succeed as either white or blue collars workers in the 21st century economy.
If we do not take effective steps to help reverse this slide, it might be a very long time before it sorts itself out. And I’d like to think that we can do better than that.