In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.
I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. “We demand a higher paycheck than the rest of the world,” he told me. “So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”
First of all, this is a terrific article, worth reading in its entirety. A much better look at modern income disparities than the typical “OMG the rich are getting richer” take on the subject.
I have a fair amount of sympathy with the sentiment quoted above. I’ve often differed, for instance, from my programmer kin in that I’m not bothered by offshoring in the slightest. Having been to India I can confidently say they need the jobs more than we do. The software income that pays for a big house and an SUV in the US typically supports several generations of a programmer’s extended family in India.
But there’s one big caveat: an Indian may be willing to take a tenth of the salary, but basic necessities also cost a fraction of what they do in the US. The trouble with dropping from middle class to poor in the US is that you can’t go down to the market and buy lunch for a few cents. Or a major surgery for $1,000.