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Middle class neighborhoodAmericans are caught in a vise: On one side, falling wages, on the other, rising costs. In between, the middle class is getting squeezed painfully -- perhaps ruinously. Despite rhetoric on both sides of the political fence, the future of the middle-income economic sector, defined loosely as households earning between $40,000 and $95,000, is sliding downhill. Jobs, as so many AOL DailyFinance readers point out every day, are at the heart of it. One telling statistic: In 1980, 52% of jobs were middle income. By 2010, the figure had dropped to 42%, according to a report from the New America Foundation.

This troubles Robert S. Kaplan, author of the new business leadership book What to Ask the Person in the Mirror. "[The middle class] is the engine of a country's prosperity. Show me an economy with an eroding middle class and you will see broader socioeconomic problems," he says. "Show me a growing middle class, and you will have growth and a healthier country."

As the son of a jewelry salesman growing up in Kansas, Kaplan recalls growing up in a squarely middle-class household, using the same baseball glove throughout his years at public junior high and high school. "We were taught to work hard and be frugal," he says. That hard work helped him climb his way up to vice chairman at Goldman Sachs, which he left in 2005 to teach at Harvard Business School.

Middle class job lossDrawing on the business leadership principles he lays out in his new book, Kaplan outlined five ways that business leaders and Washington should address concerns for the middle class.

1. Ask the critical questions. "How do we deleverage and foster economic growth?" is a better question than simply "How do we cut?" argues Kaplan. He advocates for entitlement reform as well as new spending on infrastructure and small business credit support as economic ways to lift middle-income earners. In the coming election cycle, voters should ask two questions: What are these candidates' visions for the middle class of the United States? What do they see as the top three ways to build it? Candidates who cannot answer with real analysis and fact-based plans are probably not strong chief executive candidates, he says.

2. Start with a clean slate. "Try to move beyond the way we used to do things," he says, "and think about how to address our current challenges. ... People do an incredible job of adapting once they face reality." Focus on key priorities such as education, health care and retirement savings.

3. Demand leadership rather than clever tactics.
Kaplan argues that the "coy" tactics of some political leaders have created a vacuum for essential explanations and plans. This has left the middle class with a feeling of powerlessness. "Leaders need to explain the current situation and articulate a plan -- at least present a straw man for debate." He says questions such as How is globalization affecting middle class jobs? What invisible forces are putting pressure on the economy? should be framed and explained to the country.

4. Say "no" to pledges. "In private business, if you took a pledge to not face reality, you would be out of business pretty quickly," says Kaplan. "In this case, Washington needs to take a cue from business. ... If you want to be successful, you don't start with tactics. You start with a vision for how to add value. If you do those things, you will make money."

The risk of pledge-taking politicians, he says, is that they close the door on analysis and new ideas. Compromise is an essential part of leadership; he argues that for the middle class to thrive, it needs "leaders who are willing to be open to debate and argue issues on the merits based on analysis of current problems" rather than relying on election cycle pledges.

5. Insist on a road map. CEOs who don't have a vision and a plan are quickly shown the door by shareholders. Why should it be any different in Washington, asks Kaplan. His definition of leadership -- "searching for what you believe, then having the courage to act on it" -- means that political leaders need to stick their necks out and worry less about re-election. "Put out your plan," he says. Will you get beat up? Yes, but it will also be a starting point for debate and progress toward solutions."

Catherine New is a staff writer with DailyFinance. You can reach her at catherine.new@huffingtonpost.com.

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Another glaring problem is the personal side of it. We demand our country get out of debt living (I agree) but how many of those demanding that are in fact debt free themselves. A family, a country that lives within its means...no matter how meager...will be happier. Having 1 to 6 mo of savings is the way to avoid those credit cards too...and that can be achieved by faithfully tucking away 10% each payday - live below your means and even give away at least 10%. Greed and the need to 'stay up with the Jones' gets a LOTof middle class families in deep debt...which, btw, is the number one reason for divorce! What's worse is that we encourage and support such behavior in our children who expect the nice shoes, clothes, and other status symbols.

September 12 2011 at 3:51 PM Report abuse rate up rate down Reply

The middle class is slipping away partly because it no longer exists from a demographics point of view.
The current baby boomers created the "majority middle class because they were the majority of the population in the middle of their earning power just a decade agoThe current population is bipolar it is the retiring baby boomers then a hughe gap then those 40 and under There is a very smal percent today that warrant the age to be middle class.
Since wealth is about time working it is a mathematical fact that the middle class is shrinking and there is nothing any one can do about it.
But the politicains on the left want a new middle class war so those under 40 achieve it by having them pay no taxes and becoming dependent on government for their wealth rather than create it.

September 12 2011 at 2:41 PM Report abuse rate up rate down Reply

Demand 1: Reduce 2013 Federal Budget Outlay to the 2004 outlay
Demand 2: Reduce 2014 Federal Budge tOutlay to the 2000 Outlay
Demand 3: Reduce 2015 Federal Budget Outlay to the 1995 Outlay
Demand 4: Reduce 2016 Federal Budget Outlay to 1990 Outlay
Demand 5: Exempt all married couples with 3 more children from all Federal Taxes

WOW I just cut the National Debt in half to $7 trillion, made the dollar the strongest currency on the planet and created the greatest transfer of wealth and prosperity to future American children that was just about stolen by culture of death statist Baby Boomer politicians.

See full article from DailyFinance: http://srph.it/reAKp6

See full article from DailyFinance: http://srph.it/reAKp6

See full article from DailyFinance: http://srph.it/reAKp6

September 12 2011 at 2:26 PM Report abuse rate up rate down Reply

for da luv of gawd ! not a word on full funding for illegals and their spawn ? billions wasted annually and billions OFF THE BACKS of the taxpayers----FIRST and FINAL DEMAND. ....2nd--SPONSORED ENTRY ONLY --no job or nobody to support YOU ? no entry..... 3rd-no welfare for any immigrants....connects with 2...... FOURTH : a RETURN to the full enforcement of all federal laws on immigration(google them,you'll be fascinated) .......FIFTH : the true intent of the 14th amendment revealed and no more anchors.........BILLIONS SAVED PER STATE and federal.

September 11 2011 at 7:04 PM Report abuse rate up rate down Reply

Okay, I'd just like to see one conservative candidate for President present a plan for putting the country back to work. If I wasn't so damn old, I'd run myself. My plan would be to look at all of the industry that has left this country in the last few decades; then I'd look at all of the areas that the manufacturing facilities for all of these industries was located, and I'd look at the people that were there then, and I'd look at now, that ought to open some eyes. Then I'd get all of the leaders of the industries that we're talking about together and discuss what it would take to start getting back these facilities or facsimiles of to these areas. What would it take, change some regulations, change some tax rates, change some NLRB rules, what would it take????? Then I would start the ball rolling. Why can we not get some important people talking like this???? We need to start a PPTOW Party, a Put People TO Work Party!!!!!!!!!

August 27 2011 at 12:40 PM Report abuse rate up rate down Reply
1 reply to osbuck's comment

ossie ? maybe when the toilet known as the senate gets flushed we can get a move on.

September 11 2011 at 7:05 PM Report abuse rate up rate down Reply

I have only one demand. That demand is for the Elected Officials of this Country to tell both Parties to go to hell and for them to vote for the good of the American People! Both the Radical Left and the Radical Right are dangerous. Just listen to some of the comments on here! Americans are center right and need to make thier voices heard to both Parties, if they do not listen then it is time to vote them all out!

August 25 2011 at 1:53 PM Report abuse rate up rate down Reply

You headline and entire story is misleading. The middle class in America has been lost to welfare, and high taxes. Welfare has taken many out of the work force because its pays better than working, and it comes with FREE benefits. Another reason for a smaller middle class is unions demanding more than companies can afford to pay and stay competitive. They have moved out of America so they can stay in busines. Still another reason for a smaller middle class is high taxes on companies that have to move to stay in business. Still another reason for a smaller middle class is the high wages paid to the useless government employess who now are no longer counted in the middle class. The answer is LESS GOVENMENT, LESS TAXES, LESS REGULATIONS, LESS UNIONS, LESS DEMOCRATS, AND MORE TEA PARTY TYPES IN POWER.

August 25 2011 at 1:09 PM Report abuse +4 rate up rate down Reply
1 reply to wodelson's comment

Welfare pays better than private sector; that says it all. You just blew your point. Did you know that on a recent graph presented by the Department of Labor, that the erosion of unions is in line with the erosion of the middle class? The middle class and unions are linked, but you woudn't know that.

August 25 2011 at 1:31 PM Report abuse +1 rate up rate down Reply

Always remember, the President proposes and the congress dispossess. The Presiden has less power, thanks to the ability of Congree to override a 'veto'. This was put into the Constitution so the President, whoever he or she might be, could not try to become a 'king' since the Founding Fathers had had enough of rule by a King, thank you! Our current 'flaw' is that members of Congree were envisioned as 'regular' citizens who would come to Congress for the 'Common Good' and then return and become ordinary citizens again. We seemed to have strayed from that ideal.

August 25 2011 at 12:35 PM Report abuse +2 rate up rate down Reply
2 replies to switzarch's comment

What rightwingers don't understand that we are the government. A government of the people, by the people, and for the people. "We the people...." We elect politicians through a democratic process to carry out the will of the people. However, our voice has been drowned out by special interests and corporate greed. Any time you hear rightwing leaders say government is the problem, they are saying we are the problem, but low-information voters can't see the forest through the trees and understand that they are being brainwashed. They spout the words communism and socialism without knowing the definitions. They forget it was the Democratic Party that entered us into war with North Korea and North Vietnam. They also forget if it weren't for progressive values we'd have a two-class economy: rich and poor. I ask all rightwingers read their history and get a balanced view, or we are screwed as a nation.

August 25 2011 at 12:46 PM Report abuse -2 rate up rate down Reply

Switzarch - We have strayed boy have we strayed. One way to get the folks that have inhabited DC for decades and through generations is to institute term limits. Yes, there are tradeoffs but given how these fools on the hill govern I say let's try it. If we find that term limits is not an answer - try something else. I'm willing to take the risk at any attempt to bring us back to a nation governed by ordinary citizens who eventually go home.

August 28 2011 at 12:44 PM Report abuse +1 rate up rate down Reply


August 25 2011 at 12:30 PM Report abuse rate up rate down Reply


August 25 2011 at 12:19 PM Report abuse +1 rate up rate down Reply
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