The Two-tier Economy

A sales rep I do business with called me the other day. He asked the standard icebreaker question for these kinds of calls: “How’s business going for you guys?”

I told him that things weren’t too bad. Our order book was pretty solid, and after the restructuring we did last year, it looked like we would be in the black, even at the lower recession level of business we were seeing. I felt like our business was as secure as any could be in these days of whirlwind change.

I expressed some sympathy for the salesman. With commission based income, he was probably hurting more than I. He assured me that he wasn’t doing too badly. His sales lines were diversified, and while some sectors were hurting, other sectors had picked up the slack.

Although the recession may have ended, things certainly have not returned to the pre-recession level. Good times are a long way away. Yet, here we were, both of us fairly comfortable and secure in our employment.

I think what has happened in the last six months is that the existential threat has gone away. Last year at this time, the people I talked to in business were all worried, wondering if the next round of cutbacks was going to hit them. We acted as if the sword of Damocles was hanging over our head.

Now that the decline has stopped, and things have improved (if only marginally), I don’t feel that immediate threat any more. We may not have enough work to need new workers, but there is plenty of work for those of who are left.

In the news, they call it a jobless recovery. I call it the two-tier economy.

In the top tier are the 90% of us who still have jobs. Bonuses, commissions, and overtime have been reduced, but we’re still standing. People in this tier are going to the movies, going out to eat, shopping in the stores. Life is back to normal, although maybe with a little less reliance on credit and a bit more saving.

Then there are the other 10%. These are the people who worked for businesses that failed, or plants that closed, or were laid off in cutbacks. For these folks, no possible reduction in lifestyle is going to be enough, because they no longer have an income. If the job situation doesn’t turn around, over time the people in the lower tier are going to lose everything. As their unemployment benefits run out, these people are going to start getting desperate. Assuming they’re not already desperate.

I don’t know what the solution is to the predicament of the people in the lower tier. I do know that I’m going to do what it takes to stay in the much larger top tier.