The Three Economies: Why the Middle-Class Has Stagnated – Oliver DeMille

There are three economies in modern society. They all matter. But most people only know about two of them.

They know the third exists, in a shadowy, behind-the-scenes way that confuses most people. But the first two economies are present, pressing, obvious. So people just focus on these two.

A couple of recent conversations brought these economies even more to the forefront of my thinking.

First, I was meeting with an old friend, touching base about the years since we’d talked together. He mentioned that his oldest son is now in college, and how excited he is for his son’s future. I asked what he meant, and he told me an interesting story.

Over twenty years ago he ran into another of our high school friends while he was walking into his community college admin building. The two greeted each other, and they started talking. My friend told his buddy that he was there to dis-enroll from school. “I just can’t take this anymore,” he told him. “College is getting me nowhere.”

“Well, I disagree,” his buddy said. “I’m here to change my major. I’m going to get a teaching credential and teach high school. I want a steady job with good benefits.”

Fast forward almost thirty years. My friend ran into his old buddy a few weeks ago, and asked him what he’s doing. “Teaching high school,” he replied.

“Really? Well, you told me that was your plan. I guess you made it happen. How much are you making, if you don’t mind me asking?”

When his friend looked at him strangely, he laughed and said, “I only ask because you told me you wanted a steady job with good benefits, and I wanted to get out of school and get on with real life. Well, I quit school that day, but I’m still working in a dead end job. Sometimes I wonder what I’d be making if I had followed you into the admin building that day and changed majors with you.”

After a little more coaxing, the friend noted that he was making about $40,000 a year — even with tenure and almost thirty years of seniority. “But it’s steady work, like I hoped. Still, I’ve got way too much debt.”

After telling me this story, my friend looked at me with what can only be described as slightly haunted eyes. “When he told me he makes $40K a year, I just wanted to scream,” my friend said.

“Why?” I asked.

He could tell I didn’t get what he was talking about, so he sighed and looked me right in the eyes. “I’ve worked 40 to 60 hour weeks every month since I walked off that campus,” he told me. “And last year I made about $18,000 working for what amounts to less than minimum wage in a convenience store. I should have stayed in college.”

That’s the two economies. One goes to college, works mostly in white-collar settings, and makes from $30,000 a year up to four times that. Some members of this group go on to professional training and make a bit more.

The other group, the second economy, typically makes significantly less than $50,000 a year, often half or a third of this amount, and frequently wishes it had made different educational choices.

The people in these two economies look at each other strangely, a bit distrustfully, wondering what “could have been” if they’d taken the other path.

That’s the tale of two economies.

Which brings me to my point. Ask members of either economy for advice about education and work, and they’ll mostly say the same thing. “Get good grades, go to college, get a good career. Use your educational years to set yourself up for a steady job with good benefits.”

This is the advice my grandfather gave my father at age twenty, and the same counsel my dad gave me after high school. Millions of fathers and mothers have supplied the same recommendations over the past fifty years.

This advice makes sense if all you know are the two economies.

Sadly, the third economy is seldom mentioned. It is, in fact, patently ignored. Or quickly discounted if anyone is bold enough to bring it up.

A second experience illustrates this reality. I recently visited the optometrist to get a new prescription for glasses. During the small talk, he mentioned that his younger grandchildren are in college, but scoffed that it was probably a total waste of time.

“All their older siblings and cousins are college graduates,” he said, “and none of them have jobs. They’ve all had to move back home with their parents.”

He laughed, but he seemed more frustrated than amused. “It’s the current economy,” he continued. “This presidential administration has been a disaster, and it doesn’t look like anyone is going to change things anytime soon. I don’t know what these kids are supposed to do. They have good degrees — law, accounting, engineering — but they can’t find jobs. Washington has really screwed us up.”

I nodded, and brought up the third economy, though I didn’t call it that. What I actually said was: “There are lots of opportunities in entrepreneurship right now.”

He looked at me like I was crazy. Like maybe I had three heads or something. He shook his head skeptically.

“Entrepreneurship is hard work,” I started to say, “but the rewards of success are high and…”

He cut me off. Not rudely, but like he hadn’t really heard me. That happens a lot when you bring up the third economy.

“No,” he assured me, “college is the best bet. There’s really no other way.”

I wasn’t in the mood to argue with him, so I let it go. But he cocked his head to one side in thought and said, slowly, “Although…” Then he shook his head like he was discounting some thought and had decided not to finish his sentence.

“What?” I asked. “You looked like you wanted to say something.”

“Well,” he paused…then sighed. I kept looking at him, waiting, so he said, “The truth is that one of my grandsons didn’t go to college.” He said it with embarrassment. “Actually, he started school, but then dropped out in his second year. We were all really worried about him.”

He paused again, and looked at me a bit strangely. I could tell he wanted to say more, but wasn’t quite sure how to go about it.

“What happened?” I prompted.

“To tell you the truth, I’m not really sure. He started a business. You know, one of those sales programs where you build a big group and they buy from you month after month. Anyway, he’s really doing well. He paid off his big house a few years ago — no more mortgage or anything. He has nice cars, all paid for. And they travel a lot, just for fun. They fly chartered, real fancy. He and his wife took us and his parents to Hawaii for a week. He didn’t even blink at the expense.”

“That’s great,” I told him. “At least some people are doing well in this economy.”

He looked at me with that strange expression again. “I’m not sure what to make of it,” he said. “I keep wondering if he’s going to finish college.”

I was surprised by this turn of thought, so I asked, “So he can get a great education, you mean? Read the classics? Broaden his thinking?”

He repeated the three heads look. “No. He reads all the time — doesn’t need college for that. I want him to go back to college so he can get a real job.”

I laughed out loud. A deep belly laugh, it was so funny. I didn’t mean to, and I immediately worried that I would offend him, but he grinned.

Then he shook his head. “I know it’s crazy, but I just keep worrying about him even though he’s the only one in the family who is really doing well. The others are struggling, all moved back in with their parents — spouses and little kids all in tow. But they have college degrees, so I keep thinking they’ll be fine. But they’re not. They’re drowning in student debts and a bunch of other debts. It just makes no sense.”

He sighed and talked bad about Washington again. Finally he said, “I’ve poured so much money into helping those kids go to college, and now the only one who has any money to raise his family is the one who dropped out. It just doesn’t make any sense.” He kept shaking his head, brow deeply furrowed.

I left his office thinking that he’s so steeped in the two economies he just doesn’t really believe the third economy exists. He just doesn’t buy it, even when all the evidence is right there in front of him.

He’s not alone. The whole nation — most of today’s industrialized nations, in fact — are right there with him. We believe in the two economies, high school/blue collar jobs on the one hand, and college/white collar careers on the other. Most people just never quite accept that the entrepreneurial economy is real.

It’s too bad, because that’s where nearly all the current top career and financial opportunities are found. The future is in the third economy, for those who realize it and get to work.

If you’ve got kids, I hope you can see the third economy — for their sake. Because it’s real, and it’s here to stay.

The first two economies are in major decline, whatever the so-called experts claim. Alvin Toffler warned us in his bestseller FutureShock that this was going to happen, and so did Peter Drucker, back when they first predicted the Information Age. Now it’s happening.

I hope more of us realize the truth before it’s too late. Because China gets it. So does India, and a bunch of other nations.

The longer we take to get real and start leading in the entrepreneurial/innovative economy (the real economy, actually), the harder it will be for our kids and grandkids.

The third economy will dominate the twenty-first century. It already is, in fact. Whether we’ve chosen to see it yet or not.

Oliver DeMille is the New York Times, Wall Street Journal and USA Today bestselling co-author of LeaderShift: A Call for Americans to Finally Stand Up and Lead, the co-founder of the Center for Social Leadership, and a co-creator of TJEd.

Among many other works, he is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, The Coming Aristocracy, and FreedomShift: 3 Choices to Reclaim America’s Destiny.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.