The share of American adults who live in middle-income households dropped from 61 percent in 1971 to 51 percent in 2019. Meanwhile, the cost of three important categories impacting American lives are skyrocketing well beyond the officially published consumer price index for inflation:
- Housing: Rents increased as much as 30 percent in some cities over the past year, while housing costs grew over 30 percent over the last decade (compared to 11 percent wage growth).
- Health care: Spending in the U.S. went up from $2,900 per person in 1980 to $11,200 per person in 2018.
- Higher education: The average cost of an American four-year college degree is $127,000 in 2022 compared to $12,404 in 1980, according to the U.S. Department of Education.
From wherever you sit on the ideological spectrum, it’s clear America’s middle class is eroding. Politically, views on what can be done about it vary immensely and drastically.
From an innovation perspective, the challenge of rebuilding the middle class is bigger than any one company or invention. And that’s exactly what makes it a challenge worth pursuing—and why it’s become a core focus area for me as an investor.
Looking inward to make a big impact
As a tech community, we need to band together to prioritize expanding opportunities to make a solid wage doing community-facing work. Specifically, we should refocus some of the hundreds of billions of dollars that go into developing enterprise software and consumer apps to marketplaces and ventures that apply innovation’s pace, to expanding access to well-paying jobs and training opportunities.
For example, multiple investments in my current portfolio at Canvas Ventures employ a labor marketplace element that matches workers with specialized skills and consumers who need their services.
Flyhomes is reinventing what real estate agents do by outfitting staff with training and skills to provide comprehensive home searching and buying guidance to clients. ResQ matches technicians who specialize in kitchen hardware with restaurant operators in need of timely maintenance or complete renovation. NuBrakes employs a fleet of repair people who earn a salary, benefits and stock options as they respond to community work orders through the company’s digital platform.
In every case, pathways exist for people to gain on-the-job experience, as well as broader vocational training, while earning a paycheck that puts food on the table and supports loved ones.
The secret sauce: filling the cracks where America’s middle class has eroded with these tech-powered opportunities.
Looking beyond the marketplace
Online marketplaces aren’t the only avenue for innovators looking to rebuild the middle class. Here are three other categories with immense and immediate potential:
- Innovators can create new tech-enabled business models that mobilize people to do a certain job beyond the realm of software engineer or developer—like vehicle repair with NuBrakes or commercial restaurant maintenance with ResQ. Other examples are companies, like WorkStep, helping to build the industrial workforce, and Incredible Health, which helps nurses get jobs and find accredited continuing-education opportunities.
- Innovators can build software that serves the middle class outside of the public sector context. The ideal offering: An app or platform that provides clear, helpful information to consumers and users, like how to think about health care savings, debt management, transportation, etc. For example, Chapter helps senior citizens find the best Medicare Advantage Plans.
- Innovators can deliver more comprehensive sub-degree training and workforce education programs through a platform, app or SaaS solution. Instead of only teaching how to code (a valuable skill), startups like Greenwork can offer vocational training to enhance marketability to employers and consumers looking for technicians, repair people, mechanics and other hands-on professionals. Another good example, Guild Education, is an upskilling platform with a dual focus on learning and empowerment.
Along with jobs and training, the tech community needs to focus on boosting efficiency, productivity and satisfaction within a venture funding-flooded market. This community also needs to acknowledge that a lot of white space remains when it comes to applying innovation to the labor market in a way that empowers and educates the many, rather than fills the pockets of the few.
Startup founders, in particular, are in a unique position to respond to this challenge. There’s a clear role for tech in rebuilding the middle class beyond the borders of Silicon Valley, New York City, Boston, Austin, Chicago and other tech hubs to every pocket of America. Let’s get to work.
For more insights and to connect directly, you can find Mike on Twitter and LinkedIn.
This article originally appeared on Crunchbase.