Why Some People Do Not Believe that the Economy is Better

Paul FennerBusiness & Economics

While the economy may have improved since the Great Recession, there appears to be an increase in uncertainty.  A sea change of sorts has been overtaking the American Dream if you will.  Once upon a time, it was merely a high school education that one needed to secure their spot within the middle class of America.  From there the road to a secure middle-income life required a college degree but largely without the massive amounts of debt that today’s generation is currently being saddled with.

But today there are still those that are stuck between these diverging roads to the middle class of America.  One of the reasons why so many people are caught in this economic transition is the rapid change within some industries.

Structural Changes

It was only a few decades ago where you could walk into any number of U.S. manufacturing locations and see people manually doing the work that robots are currently doing today.  What took the work of say 6 people to operate a manufacturing line now takes only a few.  However, the skill sets of the people remaining doing the work have changed drastically.

Rather than doing the physical work that robots or other machines are performing today, the manufacturing worker of today needs to know how to repair the robot and how to make it run more efficiently.

What is the Message

This brings me back to the current political scene.  Opposite the message of “hope” that President Obama ran on in 2008, The current batch of Presidential candidates seems to be running on the message of “fear.”  The politicians try to stress the structural challenges that have occurred within America and the long-term economic uncertainty that it has brought to so many Americans caught within these transitory cycles.

The popularity of anti-establishment candidates such as Donald Trump and Bernie Sanders can flame the political fires of Americans who feel left behind and disenfranchised by the rebound in the American economy that has helped to create a larger divide between those that have and those that have not.

Professor Scott Galloway of the NYU Stern School of Business has stated that it has never been easier to become a billionaire in the U.S. while it has never been harder to become a millionaire.  How is this so?

Think of the millennial software tycoons who have built companies such as Facebook, Pandora, Uber, or any other software that you likely use on a daily basis.  These innovative disrupters are also the same people who help to fuel the great divide.  Consider Facebook, they employ a fraction of the people that say Ford Motor employees but with having a market valuation of 6 times Ford.  Many of those people working at Ford could not work at Facebook.  Thus this is one of the factors that have driven the structural changes.

However, what we continue to need is more innovation and not less.  We need more disrupters who will create the companies that generate jobs that stay in America that will help to continue to support a middle class that most nations can only dream of.

The economy as a whole is much better today than it was 7 years ago.  However, that does not mean that all individuals are much better today than they were 7 years ago.  The structural changes that occur within every generation does not bring every American along no matter how hard it tries.

Although there will always be challenges, what America needs now is a message about solutions to those challenges and not a message of fear that most politicians seem to be giving out today.