The Lone Coder with a Middle-class Dream

On any particular day, you can go to a St. Catharines grocery store and get your groceries bagged. The only unusual thing about it is that the groceries are bagged by people with grey hair. The Niagara region is one of the poorest areas of Ontario. It was like that long before the collapse of the U. S. financial sector. Retired people, unable to pay their bills, are taking over minimum wage starting jobs usually filled by teenagers.

Although the economic crisis took most people by surprise, at least a dozen economic commentators had predicted an impending system failure for years leading up to announcements in late 2008 that the disaster had, at last, come to pass. (Financial Crisis 2007-2010, Wikipedia)

Certainly the financial problems were terrible, as well as being foreseen and avoidable, affecting countries around the world, including Canada. However, with the talk in the media about the recovering economy, it's important to put things into perspective. Exactly what kind of "recovery" are we talking about? Eleven years ago analysts were predicting numerous and wealthy jobs in Information Technology (A Lone Coder in a Big Pond, Lone Coder June 2006). In 2006, Statistics Canada reported that 2/3rds of Canadians between 24-54 couldn't find a position to match their skills (Life After the Bubble Burst, Lone Coder April 2006). Will Canadian IT workers finally receive a fair wage?

During the 1950's to 1970's, the average Canadian was middle-class--that is, not very poor or very rich, but were able to afford a modest house, didn't have to work at manual labour jobs, could save money for their children's education and retirement. (Middle Class, Lower Middle Class, Wikipedia)

These were also the years of the government student loans. Beginning in 1964, the government would loan students money for higher education and, when the students got a good paying job they would pay back the loan within a fixed period (usually 10 years). Anyone who didn't pay back the loan must be lazy or committing fraud. Who could imagine someone with a university degree unable to find work immediately that was long-term and high paying?

In 2003, 42% of students used loans and since 1990, the ability of students to repay those loans has been seriously declining (Government Student Loans, Government Debts and Bankruptcy: A Comparative Study, Canadian Student Loan Statistics).

According to The Globe and Mail, the next three decades saw the median wage for Canadian salaries freeze (about $40,000, when adjusted for inflation). By May 2008 (just prior to the economic collapse in the U. S.), if you ignore people with extreme wealth, the average wage was actually dropping: the rich were getting fewer and wealthier while the poor were getting poorer and more numerous. The income of Canadians was looking more like the 1920's than the 1960's. (The rich, the poor, and the chasm between, Globe-and-Mail, May 2008).

The consumer price index rose rose 14% between 2002 and 2008 alone, while the typical Canadian saw their earnings decline. The cost of education is rising faster than than the Consumer Price Index. (The Dark Side of Student Loans, Carelton University, 1998, Bank of Canada)

In the 1950's to 1980's, $40,000 (adjusted for inflation) would be more than enough to safely purchase an affordable house and car. By 1998, that salary needed rose to between $80,000 and $120,000. By 2010, $40,000 is no longer middle income: it's not enough to safely rent a basement apartment.

So the basic requirements of a middle-class livestyle continue to rise out-of-reach while salaries fall. Some commentators still define $35,000 as "middle class", what would have been called "poor" in the middle of the economic prosperity of the last century. A new term, "lower middle class", has been introduced, suggesting that "poor" is the "new normal" (Lower Middle Class, Wikipedia).

The upshot is that Canadians are poorer than their parents, and most cannot afford to live on the salaries they earn. The next generation is likely to be even poorer.

The situation has hit the computing industry rather hard. As I mentioned above, you need a salary of $80,000 or more earn enough to afford a modest house and car. Amongst my friends, working for less than $65,000 is not worth the trouble. But IT workers have unique challenges:

• No benefits. Most IT work these days is contract-based. That means the IT worker is gambling that they don't get sick or otherwise require benefits that a permanent job would provide.
• Periods of Zero Income. It was common to work for 20 years for a single company in past decades but not anymore. IT jobs of 2 years or more are long term. If the work is between contracts, the IT worker has no income while searching for more work.
• Immigration. Web developers have seen wages tumble as these relatively simple programming jobs are done by recent immigrants to Canada, asking for bottom wages. The effect is to dragging down wages for all web developers. (Globe and Mail again)

So, factoring these items together, the average web developer job is earning $45,000 (due to immigrants) * 66% (looking for work) * 90% (loss of benefits) = $26,730 before taxes but needs $80,000 to qualify for a middle-class life. Even two married web developers with a university degree cannot support a family at those wages. And how do you pay off student loans with an effective income of someone who works as a grocery bagger?

Despite the reports of a steadily growing Canadian economy over the past couple of decades (Globe and Mail again), the average Canadian is getting poorer. So how is this possible? Where's the money going?

One theory is that that the money is not really there. It may not have been there for a while.

On TV Ontario (TVO Home Page), Allan Gregg interviewed Chris Hedges, Pulitzer Prize winning author of "Empire of Illusion".

It is Mr. Hedges position that for years that the U. S. society has been trying to deny reality. Universities teach students to stop challenging ideas and instead reward students who conform to and support existing systems and avoid questioning the structures around them. Intelligence, creativity and introspection is punished and marginalized.

According to the interview, this attitude has spread to other facets of American society. Tony Robbins' "feel good" philosophy says you can get what you want by "thinking positive" and focusing on yourself, which is simply another way of not admitting to the structural changes that need to be made to systems. Companies resort to "magical thinking", that having the right attitude will allow you to overcome the surrounding reality. Mr. Hedges cites the New York Times Human Resources department as one example: ideal employees are considered to be happy conformists who challenge no corporate direction, the kind of ideals shared by some forms of communism. Employees that challenge assumptions, question authoritarian corporate structure and are suspect of cheerful, fake veniers are seen as "dark", "political" and an obstruction to a company's success.

Contemporary companies reward people who are delusional.

So the U. S. economic collapse was with no surprise to Mr. Hedges: the collapse was merely a product of a society that built its empire on emptiness. The government bailout followed the ideals of people taught in university that to throw money at systems that have failed is a sensible approach.

(For more on the interview in regards to television, the military, the adult film industry, wrestling, agriculture: Audio Version, Video version.)

The reality may simply be that Canada, like the U.S., is trying to keep up the appearance of being a wealthy nation when the days of wealth are really behind it. Like the U.S. economic collapse, sooner or later reality will intervene. Meanwhile, the media talks about economic recovery, but Mr. Hedges reminds us that recovery will certainly not mean overcoming reality to return the middle-class dream of families with financial security.

Meanwhile, on TVO's "The Agenda", a group of wealthy pundits had this advice for Canadians: don't look for work because if you accept a lesser job, it will ruin your career. Instead, take out loans and go back to school and hope to get a better job to pay off the loans in the future. This was 1960's thinking in a 2010 world.

Canadians need to be realistic about living in the 2010 decade. The high dollar makes it sound like the economy is doing good, and people talk of economic improvements. But the reality for most Canadian families is that they will be poor: they will not afford a house, a car or an education for their children. They will not retire and will be working until they die. People working in computing are going to earn lower wages than most other professionals. Web programmers, especially, will not earn enough money to live on. What good paying positions there are are becoming fewer in number, not enough for everyone. If you are racking up big loans and credit card bills hoping that the next big job will pay them off, you're making the same mistakes that lead to the U. S. financial crisis.

If there is a positive way out of this situation, it will not be through "magical thinking". It will be through the recognition that middle-class living is no longer possible and can only be recovered by admitting reality and correcting some bad mistakes. The quote at the top of this article is from the Hugh Award winning short story, "Nine Yards of Other Cloth". It raises the question of how we use the power that is placed in our hands. It's not too late to recapture the middle-class dream. But it will never be recaptured if the leaders and media who can make a difference act like Nero, living in fantasy, playing the fiddle of "recovery" while the country burns.

April 15, 2010