The Hollowed Out Middle Class

By James Alctucher. Originally published on JamesAltucher.com

He was going to scare me and beat me into submission and I was nervous because he looked like he could take his belt off and slap me right across the face with it. He used to manage a trillion dollars or so for the richest family in the world. The kind of family that 100 years ago would throw dimes at poor people and call it charity back when it was fashionable to do so.

Why was I visiting him? Because that’s what I do. I visit people.

“Come over here,” he said to me, “and look at that building. Or that one. Or that one.” We looked. “What do you see?” he asked me. I don’t know what I saw. Buildings. New York City is a vertical city, I thought.

“I’ll tell you,” he said. “The floors are empty. That’s the Citigroup building over there. That’s probably some ad agency there. That’s a bank or a law firm over there. All empty desks, empty floors, empty buildings.

“The middle class has been hollowed out. There’s no need for paper shufflers anymore. No need for middle management. It’s either outsourced to China or technology takes care of it. Millions of people in middle management, in middle class jobs will be fired or replaced by cheap labor and technology and there’s nothing anybody can do about it.

“This doesn’t mean people are getting poorer,” he said, “In fact, more people entered the upper class last year than ever before. But it does mean the gap is spreading between upper class and lower class and there’s no way to stop it.”

I grew up middle class. I lived in a suburb. We lived on a square block. The square block was one of 30 square blocks.

Every day at 8 am the garage doors opened, unleashing an army of Vice-Presidents of companies based in New York. My dad always had a deal he was working on. “Next month it should happen,” he would say. He said that for 20 straight years. Everything was postponed until next month. Vacations. “Next month will be huge.” I had fantasies about next month. What I would buy. Maybe I would take a limo to school so the kids on the bus would stop beating on me. Maybe I would give strategic advice to the kids who wore plaid shirts and sold drugs and got girls pregnant. I had fantasies. Next month.

“Next month” never happened. And eventually my dad got depressed. He would break out into tears in the supermarket. I had to go home from college to visit him and he kept asking me, “What’s wrong with me?” A company had bought the scraps of his bankrupt company and when he got depressed he was let go and lived off the mental disability insurance. He never worked again and died 15 years later.

I can’t remember any conversations I had with him between 1988 and 2002 except for the last conversation.

In December 2002, after losing $15 million I finally reached the point where I had $0. I got scared. I would break into tears in the supermarket. My dad could sing that song that has that line, “My boy, he’s just like me.”

But, seriously, I was scared. What if I needed diapers or something over the weekend? I had a newly minted citizen of the United States living in my house whose face looked like me and shat in her pants on a regular basis while crying. What if I needed to clean that shit.

The following week I was going to sell for a massive loss the apartment I was living in. The deal was done but not concluded. And I had zero money for food or anything. I was scared because for many years I had been wealthy. But I didn’t treat the money right. I was very mean to it and it finally abandoned me when my apologies were as useless as whispers.

I called up my parents and asked them for a few hundred dollars. I said I would drive 60 miles to them that night, pick up the money, and then drive back on Monday and give them back the cash. I just wanted money in case I needed it for an emergency. Two years earlier I would’ve flown a helicopter to them and bought them a house or two if I wanted. Now I was worried about getting baby food. I had no friends to ask. I was embarrassed to ask my sisters. I had nobody else to call.

They said “no.” I won’t get into the details. There was yelling. Someone said some things. I hung up the phone. They tried calling back. I didn’t pick up.

For six months after, my dad tried sending me messages. Sometimes through email. He’d see me on TV. “Nice job.” I was trying to get my life back together. Things were happening. I was getting off the floor. I didn’t want anything negative in my life. I never responded to him. Never called him back. Then he had a stroke and never spoke or moved again and died two years later. He was rejected further treatment when his medical insurance ran out. I couldn’t afford to do anything about it. I had a family to feed. I was middle class. But with a twist.

How do I know that the middle class is on its way out?

Among other things, I’m on the board of directors now of a temp staffing company. This past 12 months they had $700 million in revenues. The year before they had $400 million in revenues.

Meanwhile, thousands of startups have been invested in. So temp staffing is on the rise and startups are on the rise.

And the middle class, according to my friend in the vertical palace, is being hollowed out.

It’s true. I see it from the front lines. There’s nothing we can do about it. It’s a tidal wave and we are just a tiny island of history that is being overwhelmed.

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James Altucher is the author of the bestselling book Choose Yourself, editor at The Altucher Report and host of the popular podcast, The James Altucher Show, which takes you beyond business and entrepreneurship by exploring what it means to be human and achieve well-being in a world that is increasingly complicated.