The U.S. increasingly resembles a developing country for the majority of its population and has largely been divided into two societies, an economist has argued.
Peter Temin, a professor at the Massachusetts Institute of Technology, states in his book, "The Vanishing Middle Class: Prejudice and Power in a Dual Economy," that the traditional middle class is rapidly disappearing, reports MIT News.
While the middle class, defined as those earning between two-thirds and twice the national median, accounted for 60 percent of all earnings in 1971, that figure had dropped to 40 percent by 2014.
"We have a fractured society," Temin said. "The middle class is vanishing."
By dual economy, he means that society has been divided into two parts, which largely exist independently of each other. One section, termed the "FTE sector" (finance, technology and electronics) by Temin, comprises the top 20 percent of the population. They have good educations, can see opportunities everywhere, influence policy and believe in economic growth.
The remaining 80 percent of the population lives in what Temin calls the "low-wage sector." These people lack the opportunities open to the FTE sector, can only obtain an education by going into high levels of debt, do not have the social connections of the privileged minority, and survive on largely low-paid jobs with few prospects for social improvement.
The dual economy model applied by Temin was first used for developing countries by Nobel Prize-winning economist W. Arthur Lewis.
Temin contends that the process began in the 1970s, when productivity levels and wages for goods-producing workers began to separate. This has resulted in wages for goods-producing workers remaining flat in real terms.
Temin argues that racism and sexism have also played a role, noting, "the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector," according to the Institute for New Economic Thinking.
He also warns that a continuation of the policies that maintain this system will ultimately affect everyone, regardless of the group they fall into.
"Look at the movie, 'Hidden Figures': It recounts a very dramatic story about three African-American women condemned to have a life of not being paid very well teaching in black colleges, and yet their fates changed when they were tapped by NASA to contribute to space exploration," Temin added. "Today we are losing the ability to find people like that. We have a structure that predetermines winners and losers. We are not getting the benefits of all the people who could contribute to the growth of the economy, to advances in medicine or science which could improve the quality of life for everyone including some of the rich people."
He holds out hope education can provide a solution.
"The link between the two parts of the modern dual economy is education, which provides a possible path that children of low-wage workers can take to move into the FTE sector," Temin wrote.