Middle Class in America (1908 - 2040)

The auto industry created the middle class in America. Not only did ordinary factory workers get to buy their own homes in the urban Midwest. Many purchased getaway cottages "up north." 

That dates back to Henry Ford. His Model-T, which rolled out in 1908, did two things, at least. It created a large number of production jobs. And since the pay was $5 daily for eight hours, the labor force went beyond survival to being the new consumer class.

Now, like other sectors such as much of professional services and tech, the auto industry is slated to shrink. CNBC details how by 2040 auto sales could decline by 2 million units. What's driving that, found Bain and Company, includes: 

"Falling birth rates, behavioral changes, high car prices and a growing array of alternatives ..."

Of course, already we're seeing signs of that. 

Actually since the dawn of the digital age, fewer kids were getting their driving licenses or putting that off for years. They preferred video games to tooling around town on four wheels. Currently more and more are on two, such as e-bikes and scooters. Now, with reduced child-bearing, which is posited to also be due to digital, there are fewer of those kids to be the next gen buying cars for decades. 

In addition, reality is that car ownership, reports NerdWallet, just like home ownership, is no longer open to the masses:

"AAA says the average ownership cost for a new vehicle driven 75,000 miles over five years is $11,577 annually ... That breaks down to about $965 a month"

That's exactly why I guide the semi-retired and the retired to relocate to urban areas such as Pittsburgh, Pennsylvania with excellent public transportation. When I lived there and worked downtown in Big Oil, I didn't need a car. I was able to plow my money into home ownership. 

In addition, knowledge workers eventually might also be forced to opt out of having the personal car. For example, both demand and compensation for MBAs are down. No one expects that to reverse. Some MBAs are leaving that off job-search materials. The legal sector is having a boom but it's no newsflash that fewer and fewer lawyers will be needed as AI performs strategy and complex tasks. 

Another option for taking on or continuing with the expense of a car is the Uber model, along with the traditional taxi. 

But instead of being one-dimensionally focused on the auto-industry piece of the middle class in America the immediate financial, emotional, reputational and lifestyle issue is this: Should you give up on becoming or sustaining middle-class status? That embeds the concept of ongoing upper mobility. And that, with the exception of some ways of earning a living/building wealth, has become an anachronism. For more of my clients it's about being able to pay the bills, have a financial reserve and establish passive income. 

Meanwhile, we could lose track of how many other industries are already shrinking or headed that way. As a result, the shift could be from a preoccupation with middle class whatever to the European mindset of frugality. Unfortunately, that could constrain America's economic growth, just as it has in parts of Europe.

Career Paths? So Over. It’s about Earning a Good Living. No matter what.

Complimentary consultation. No Pressure. Street-smart Guidance. Contact Jane Genova janegenova374@gmail.com.