CONFRONTING CHRONIC CRISIS: WORKERS, THE AMERICAN ECONOMY, & THE 2016 ELECTION

Submitted by Dan Graff on October 10, 2016 – 9:39pm

BY DAN GRAFF, DIRECTOR, HIGGINS LABOR PROGRAM

Today the American worker confronts uncertainty, insecurity, confusion, and even chaos, an unwelcome environment that can only be described as an economic crisis. The litany of the laborer’s woes is long, with stagnant wages, shredded benefits, high-paying job loss, and union decline topping the list. But before proceeding further, let me clarify my terms. By “the American worker” I don’t mean to conjure only old-fashioned images of manly men in hardhats, but also techies and teachers, clericals and custodians, and food servers and pharmacy assistants. In other words, I’m talking about most people who work for somebody else. Moreover, by “economic crisis” I don’t mean to suggest a momentary emergency whose resolution must come soon, because — to be blunt — the US workforce has been enduring this state of things for four decades now. What the American worker really faces, then, is a chronic crisis forty-plus years in the making.

While wages only tell part of the story, the part they tell is highly illustrative: the minimum wage’s value in terms of real dollars peaked in 1968; if it had kept pace with inflation since then, it would now be $10.68. And it hasn’t just been minimum wage workers who haven’t had a raise in decades: since 1973, the hourly compensation of the average worker has grown less than 10% in real dollars, meaning that wages for the bulk of the working population have been largely flat for over forty years. Four decades — that’s more than half a lifespan! The only way most households have been able to weather this wage stagnation is by sending two adults into the full-time paid labor force, an ironic legacy of the feminist movement’s partially realized crusade to end sexism in the job market.  In short, for most American workers and their families, the American economy seems to be in a perpetual state of chronic crisis with little hope for a cure.

And yet, few of our political leaders, pundits, and policymakers seem to grasp the severity and scope of the problem. Those like me who study these trends have long puzzled over the lack of political traction for calls to address the very obvious economic  problems experienced by growing numbers of Americans, especially in the wake of the economic collapse of 2008 that fully exposed the chicanery and outright crimes perpetrated by the nation’s leading financial institutions. While there’s been plenty of mobilization of the grassroots in the short-lived Occupy Wall Street, state and city-based living wage campaigns, and the service workers’ Fight for $15 movement, things seem stuck at the national level, not just in terms of the paltry minimum wage, but also on critical issues like skyrocketing consumer and student loan debt, crumbling infrastructure, and investment in clean energy, all of which would help ease the squeeze on working families.

Then suddenly this past spring, with the strangest presidential primary campaign in memory, the politics of economic anxiety returned to the national stage with a vengeance. A self-declared socialist mobilized millions of Americans and actually came reasonably close to capturing the Democratic nomination, while a self-declared non-politician millionaire outsider promising to bring manufacturing back actually did capture the Republican nod. Now, as we enter the final month before the election, the presidential candidates of both major parties express great concern about low wages, propose childcare plans to confront the work-life imbalance drowning many households, and talk about the need for employers to provide good paying, full-time jobs. To be sure, Clinton and Trump don’t offer similar solutions to our economic problems — indeed, they propose very distinct agendas — but the fact is that their responses to the chaotic, chronic crisis confronting working Americans creates a political opening to discuss just what it would take to jump-start an economy that works for the working people of this country.

First, we need not just to boost the wages of American workers, but to reverse the forty-year trend that has led to nearly all gains in productivity to go to the top 10%. To see how the US economy has become so unequal, all we have to do is look at the decoupling of productivity gains from hourly compensation over the past four decades. For thirty years after World War 2, the American standard of living doubled as productivity improvements saw a corresponding gain in wages for ordinary workers, illustrating the old adage that a rising tide lifts all boats. Since the mid-1970s, however, nearly all those gains have been pocketed by the top 10%, and most remarkably, the top 1% within that. Since 1979, the top 1% of earners have seen a 138% wage increase, while the bottom 90% has experienced only a 15% increase. The reason why many Americans see the midcentury US as a golden age is because all American workers — from bottom to top — enjoyed massive leaps in income growth that paralleled the productivity of the economy. While the reasons for the end of that golden age are multiple — globalization and technological innovation led to industrial outsourcing and union decline, for example, while corporations and the rich now pay a much lower share of taxes now — but the central point is that Americans as a whole don’t benefit from economic growth and productivity any more, and it will require active government policies on  jobs, investment, and taxes to make productivity pay again and reverse the past forty years of wage and wealth divergence. If candidates for higher office talk only about job creation but don’t address the need for greater fairness in the labor markets and tax brackets, they only nibble around the edges of the problem. We need another Great Compression that makes our prosperity more widely shared.

Central to reining in and reversing the great divergence in incomes is the need to raise the pay of the vast majority of American workers. In the US we talk a great deal about the unemployment rate and the numbers of jobs that will be created when a local business expands. It’s great to create jobs, no doubt, but too often we don’t ask what kinds of jobs we’re creating. We know that part-time  jobs, and even $10-an-hour full-time jobs, cannot produce successful individual careers, so why should we think they can produce a successful economy as a whole? The ongoing political debate about just who creates more jobs in the US economy — large corporations or small businesses — is a distraction from a more fundamental fact: the most significant job creators in the US economy are the consumers who spend their hard-earned bucks buying food, clothes, and services while investing in a new car, home, or a child’s education. Simply put, if you boost the income of the bottom 25%, they’ll spend nearly all of it, creating demands for goods and services that will have direct, positive spillover effects; alternatively, if we continue to boost only the wages of the top 10%, yes, they may invest some of it in new enterprise, but most of it will become savings. In any case, the rich cannot consume enough goods and services to spark our economy like millions of ordinary workers can. This idea was at the heart of the New Deal’s solution to the Great Depression eighty years ago, and its logic still applies today: if you want to promote economic growth that works for the masses, then you must use government policies to increase mass purchasing power. That starts with raising the income of the households headed by American workers.

The tools available include raising the minimum wage, expanding the earned income tax credit, reducing low-wage workers’ contributions to the social security system without reducing their eligibility, and the like. But one of the biggest tools is to empower workers to form unions and let unions do what unions have always done well — bargain for higher wages and better benefits for their members. For much of the twentieth century, unions were the primary vehicles for making sure productivity gains made it into American workers’ wallets. Fifty years ago, about one-third of private sector workers were unionized; today it’s only 7%. Union decline was not inevitable nor automatic, despite what we are often told. To make a long story short, over the past forty years employers have learned just how weak US labor law is at protecting those who want to unionize. So, as unionized factory jobs have been eliminated by technology and global competition, they have not been replaced by the massive unionization of store clerks, bank tellers, and fast food workers.

Nowadays, in fact, even when workers successfully unionize a workplace, the odds of them getting a first contract are not that great. Why? Because while US labor law requires employers to recognize and bargain with a union, it does not require that an agreement is ever reached. One great way for us to build an economy that works for working people, then, is to strengthen the laws protecting workers’ right to organize, because with greater union density, more workers would gain greater pay, they would spend more in our communities, and they would prompt economic expansion.

For the past thirty years, US unions have been the victims of a highly successful public-relations hit job delegitimizing them as dinosaurs defending lazy workers, denying competitive realities, and destroying entrepreneurial energies. But while the labor organizer has become an endangered species, the labor movement is not yet extinct. No doubt bruised and battered, organized labor is also lean, mean, and poised with potential to rise again. And for those who haven’t been paying attention, this is not your grandfather’s or even your father’s labor movement. I use the gendered pronoun advisedly, because while certain unions still drag their feet on diversifying their membership, organized labor as a whole is more inclusive than ever in terms of race and gender, and it’s increasingly fighting for those workers at the bottom who are still primarily black, Latino, and female. It’s looking for — and in need of — organizers and allies.

Reform of the American economy in the interests of working people has always relied on labor advocates working inside and outside government simultaneously, and what was true in the Progressive, New Deal, and Great Society eras is no less true today. Echoing the words of the 19th-century abolitionist Theodore Parker, beginning in the 1950s Martin Luther King would galvanize civil rights activists by reminding them that  “somehow the arc of the moral universe is long but it bends toward justice.” The “somehow,” he knew, was rooted in massive, patient, and thorough organization, education, consciousness-raising, and protest, for systemic change that improves people’s lives requires both advocacy from the top and agitation from the bottom. Similarly, if today we are to bend the arc of the chronic crisis facing American workers toward economic justice, then we’ll need to get busy promoting government regulation and labor activism simultaneously. After forty years, it’s long past time.

Note: This is a revised version of remarks delivered at the Community Forum for Economic Justice’s “Making Informed Choices” panel discussion at St. Augustine’s Church in South Bend, Indiana, on Sep. 20, 2016.