Derek Thompson, associate editor of The Atlantic asks, "Why did the middle class meltdown happen and how can we fix it?"   He ponders this question in a thoughtful piece about the downfall of what was once the core economic class of America. 

For the last 30 years, the U.S. manufacturing sector has been on the down and out.  As the financial sector blossomed, the manufacturing sector suffered a loss of decent wages while production was handed over to technological advancements in machinery and cheaper labor overseas.  So, today, the manufacturing industry and the middle class which it supported, are facing quite the predicament.

In his article, Thompson points to a number of reasons for the gradual, yet impactful, decline of the middle class:

Choose your own culprit, but the outcome is the same: The middle class has been thoroughly hollowed out. Low-paying jobs in food service and home health aides are growing. High-paying jobs in finance and management are growing. But the middle class that was once our core now resembles a valley.

Thompson's predictions for jobs in 2011 includes growth in the health care sector, but also cites other possible engines of future economic growth that have been tossed around in recent months including green energy, bioscience, and the Internet revolution.

So what do we do about this serious economic problem, as the middle class is being hollowed out from an already teetering economy? In Thompson's opinion, there are three things that Washington can do.  First, they could create a "pro-growth and progressive tax system with stable regulations would allow the economy to function with minimal interference."  Second, the government could choose to refocus its attention and resources on educational initiatives, giving workers looking to retrain for manufacturing jobs a bit of a financial break.  Last, Thompson proposes a new industrial policy (hooray!).  To that end, he asks:

Why shouldn't the United States be strategic about building the bedrock for the middle class' resurgence with a carbon tax to boost clean energy, a public-private pharma bank to boost biosciences, or an aggressive export strategy to help American innovation penetrate emerging markets?

ManufactureThis might add a firmer push from Congress and the Obama administration to get China to rebalance trade and revalue their currency, as well as investing in our infrastructure and protecting intellectual property rights.

Kudos on a well-written article that hopefully gets some key policymakers thinking on the right track for the middle class in America.