Class and the English Riots

A few weeks ago, England erupted with protests that many saw as tied to the global economic crisis.  What began as a peaceful protest against the police, who had shot dead a suspect in Tottenham North London on August 6, rapidly spread across London and then to other parts of the country. Over the space of the next five days, Birmingham, Liverpool, and Manchester all experienced a wave of rioting and looting.

Politicians and commentators proceeded down a well-worn path of analysis and political point scoring. Most politicians were quick to blame “mindless thugs,” “gangs,” and “feral youth.”  They pointed to the lack of moral values in contemporary society, and the Conservatives, who are the senior partners in our coalition government, saw the riots as yet more evidence of their narrative of “Broken Britain” (conveniently ignoring the fact that other parts of Britain, such as Wales and Scotland, suffered no problems).

What was lacking, initially at least, was any mention of class. It appeared only in references to an underclass. Rhetorically this is a really useful piece of shorthand for the political classes in Britain, as I guess it is in the US. Talk of the underclass allows critics to blame society’s troubles on an ill-defined amorphous band of cultural stereotypes and folk demons.  It also allows for a wider sidestepping of questions of class and inequality that has been rising for the last three decades or more and is sure to increase further in the age of austerity. In this narrative, the riots are defined as the work of the work shy, the amoral, and the feckless; looting represents a mindless opportunism of those lacking a basic ethic of responsibility.

Any other mention of class takes the form of a kind of nostalgic lament for the working class of old. You remember, when the working class knew their place, worked hard, and got on with their lot without complaint. They, the old respectable working class, never complained about deprivation or went out and rioted.

When he was the leader of the opposition, David Cameron — now British Prime Minister — developed his party’s social policy around the concept or sound bite of “Broken Britain.” This was an interesting strategy and not without risk.  It allowed him to reclaim social policy for the Tory party and create a British version of compassionate conservatism. In this way, Cameron could blame the Labour government, which by that time had held power for over a decade, for all of Britain’s social problems. Rather than the solution, state intervention was identified as the cause of the problem. Labour was strangely quiescent in the face of these charges for a number of reasons. It had itself been largely silent on the question of class; it had also been, as one senior New Labour figure put it “relaxed” about the super rich.  But above all, the Party’s acceptance of Thatcherism and the wider neo-liberalism of the 1980s and 1990s meant that they were unable to develop a more critical analysis of deepening inequality.

In the wake of the riots, other voices that do want to talk about class and social and economic inequality have begun to be heard. At first this line of explanation was a difficult one for politicians and commentators as it was portrayed as a causal argument – poverty equals riot – and therefore easy to criticise as not all rioters were poor, and not all poor areas went up in flames. Gradually what has been emerging, I think, is a more nuanced account of the riots which begins to look harder at the nature of social inequality in Britain. This more self-confident attempt to talk about these issues emerges from a range of academics through to journalists.

In their wake, Labour politicians and some liberals one have begun to deploy these arguments themselves. The most high profile academic in the UK addressing inequality is the social geographer Danny Dorling (most recently in Injustice: Why Social Inequality Persists), whose detailed reading of a range of materials places in long-term perspective the widening gap between rich and poor. Dorling is joined by journalists such as Polly Toynbee, who writes for the left of centre Guardian newspaper and who has been a longstanding voice for those left behind by neo-liberalism. Finally, the riots have thrust centre stage a young social and political commentator Owen Jones, author of Chavs: The Demonization of the Working Class – whose book charts how the working class has been marginalized within political rhetoric and had its  problems ignored. While none of these commentators seeks to excuse civil unrest, they all, in fairly similar ways, explain the complexity of British society and its longstanding problems. All three recognize that contemporary social problems and community breakdown have their origins in the deindustrialization and subsequent joblessness in Britain since the 1970s and 1980s.

The hopeful development from the tragic events of early August is that class is once again beginning to be rediscovered in the political lexicon.  It is interesting to note that some commentators draw parallels between the unbridled acquisitiveness of the looters and the compensation paid to bankers and the fraud so recently committed by members of Parliament in their expenses claims. This may suggest the potential to shift the discourse about class, so that inequality is no longer seen as evidence of individual moral failing. It also might herald a shift in the vernacular where class can be really talked about and “working class” ceases to be a pejorative label. It might also allow those critical of the current government to pose two questions.  First, if Britain is broken, who broke it? And, secondly, if you didn’t like the organized working class of the 1980s, how do you like the disorganized working class now?

Tim Strangleman

Strangleman is a Sociologist at the University of Kent and co-author of the  textbook, Work and Society: Sociological Approaches, Themes and Methods

How to Build a Strong Economy: Education or Unions?

On May 15, The Chronicle of Higher Education reported that

The American higher-education system has long been seen as a leader in the world, but confidence in its future and its enduring value may be beginning to crack along economic lines, according to two major surveys of the American public and college presidents conducted this spring.

The surveys, conducted by The Pew Research Center and The Chronicle, reveal few surprises to those of us who have been paying attention to the latest crisis of higher education, but several points underscore the different views of the purpose of higher education among education professionals and between those with degrees and those who have not gone to college . For example, of the 1,055 presidents of colleges and universities across a broad spectrum, including four-year, two-year, public, private, and for-profit institutions, respondents are split roughly in half on whether colleges should be about work force preparation or “intellectual growth,” and the responses fall along a predictable axis, with four-year institutions arguing for the latter, and two-year and for-profits advocating the former.

Equally interesting is the difference between college graduates and those who have not (or have not yet) attended college in their responses to the same question on the mission of higher education. According to Pew, those who attended college more often believe that the mission of college is intellectual growth, while those who have not feel it should be work-force preparation. As significant are the responses, across all educational levels, to the question of what a young person needs to succeed in the world: a college education comes in third, behind a “strong work ethic” and the ability to get along with people..

The Chronicle survey addresses President Obama’s statement in last year’s State of the Union address of a national goal that the U.S would lead the world in degree attainment by 2020, so that we can lead the global workplace. The assumption that America will regain its competitive edge simply by awarding more college  degrees seems naïve, , particularly when the same respondents to the Chronicle survey report overall “lower quality” of preparation on the part of incoming students. Indeed, few of the college presidents surveyed think the goal is attainable: only three percent believe it is “likely” that the U.S. will achieve this benchmark, while 50 percent say it’s not likely.

Compounding the problem is that, even if this goal were achieved, a college degree is not a guarantee of gainful employment, though university marketers often suggest it is. Just last week, Catherine Rampell of the New York Times cited a study by Andrew Sum of Northeastern University that shows that only 55.6 percent of 2009 college graduates are working in jobs that require a college degree, while the other 44.4 percent are almost evenly split between working in jobs that require no degree and not working at all.  In the current economy, and as Sherry Linkon and Jack Metzgar have suggested in their analyses of predictions about job growth in the service sector, in the long run, college degrees are clearly not the answer for everyone.

Indeed, in his response to Obama’s aspiration, Brookings Institute fellow Grover J. ‘Russ” Whitehurst noted:

Germany has a stronger economy than France but half the percentage of young adults with a college degree.  Further, France has increased its percentage of young adults with college degrees by 13 percentage points in the last 10 years whereas Germany’s output of college graduates has hardly budged, yet the economic growth rate of Germany has exceeded that of France over this same period.  Obviously increasing educational attainment is not a magic bullet for economic growth.  Education credentials operate within boundaries and possibilities that are set by other characteristics of national economies.  We must attend to these if more education is to translate into more jobs.

And what are those “other characteristics” that might generate a stronger national economy? The answer is ironic, especially as governors in Ohio and Wisconsin are pushing anti-union bills through state legislatures. According to several studies, one of the conditions of strong economies like Germany’s is not increased degree attainment but strong unions and worker protections.

Marc McDonald suggests that when looking at two of the world’s nations with the lowest jobless rates, Germany and Japan, what emerges is a common factor of heavily unionized workforces:

Take a look at two of the most heavily unionized nations in the world: Germany and Japan. Both nations are thriving and have jobless rates far below the U.S. rate. Both nations still have large manufacturing sectors, which are heavily unionized. And both nations are exporting more than ever—even to low-wage nations like China. (Japan, for example, is one of the few nations on earth that has enjoyed a trade surplus with China much of the time in recent years)… Not only are Germany and Japan heavily unionized, both nations have strong pro-worker laws that back up their labor movements. In both nations, for example, it’s virtually impossible to fire full-time workers. Mass layoffs are very rare in both nations.

While many would balk at the suggestion that the U.S. emulate Japan, with its notorious reputation as a stressed out, all-work economy, McDonald notes that, on average, Japanese workers work fewer hours than their American counterparts and enjoy greater benefits. McDonald argues that because workers are protected within these economies, the companies that employ them must think beyond the immediate and develop long-term strategies, rather than short-sighted policies that focus solely on short-term growth and quick shareholder gains.

McDonald may be on to something in his suggestion that as corporations –  and increasingly universities — clamor for the “flexibility” that non-union and non-tenure workplaces promise, they may be embracing a short-sighted strategy. Writing in Harpers last year, Thomas Geoghegan, urges Americans to “Consider the Germans,” and in so doing he counters the claim that what American employers need is greater flexibility and fewer fetters that come with worker representation. In considering the ways that Germany continues to thrive in high-market manufacturing he notes:

All my life as a labor lawyer I have read the same thing in The Economist, about the United States and its wonderful labor-market flexibility. What they mean is: Unlike the Germans, U.S. working people are completely powerless. But it’s precisely because of our labor-market flexibility that we can’t compete. Our workers have been flexed right out of their high-wage, high-skill jobs and into low-wage, low-skill jobs. That’s bad for the workers, of course, and it’s also bad for the economy. The German model—with worker control built into the very structure of the firm—keeps bosses and workers in groups, rubbing elbows with each other, and sometimes just elbowing. It creates a group interaction that over time builds and protects what economists like to call human capital, especially in engineering and quality control. It’s precisely this kind of valuable capital that our atomizing “flexible” labor markets are so good at breaking up and dispersing.

Both McDonald and Geoghegan share the belief that while America obsesses (with good reason) over China, that the model to emulate is that of Germany, with its strong secondary education system and clear worker rights’ laws.

What’s the connection between the value of a college degree and the economic impact of unions?  Just this: if our goal as a nation is economic growth, then we might do better to focus on the rights and status of workers rather than on getting more people to go to college.

Tim Francisco, Center for Working-Class Studies

Welcome to the Informal Economy

It’s graduation season, and while commencement speakers encourage graduates to work hard and pursue their dreams, most new grads are worried about finding a decent job.  All their professors can suggest is that students use internships to gain valuable work experience and be prepared to have five jobs by the time they are 35.

Here’s the reality, grads: things are worse than you fear.  When you’re 35, you could still be looking for a good job. You’ll have a family to support, your salary could well be lower than you expect, and you’ll receive little or no pension contributions or health care benefits. Taken together, episodic work with little opportunity for advancement and poor wages and benefits reflect the characteristics of work life once found largely in the informal economy but now becoming all too common in the formal economy.

According to UNESCO, the informal economy involves the largely unregulated exchange of goods and services and is characterized by intermittent employment, short job ladders, and substandard wages and working conditions.  Historically, the informal economy has referred primarily to workers paid under the table, like many nannies or home health care aides, itinerant workers, and those involved in black market exchanges. But increasingly, the conditions of the informal economy are being experienced in the formal economy, though they are generally ignored or hidden by such glossy terms as consulting, internships, subcontracting, and privatization.

The economic crisis is pushing more people into the informal economy. USA Today reported that in 2010 only 45.4% of Americans and 66.8% of men had jobs. Both statistics are among the lowest on record, and now the United States has a lower share of prime age men in the work force than any other G-7 nation. According to David Brooks, writing in the New York Times, this is the result of early retirements, work disability, the decline of manufacturing jobs, and poor job fits in the new economy. Regardless of the reasons, the number of unemployed and underemployed people, who are most likely to participate in the informal economy, is growing in every sector and profession as the recession/regional depression continues. Many of those who do not have jobs are finding ways to support themselves, at least minimally, within the informal economy.  They have no choice.

At the same time, employers are taking advantage of desperate, young, less expensive workers, often hired on a temporary or contract basis, who are displacing older professional and non-professional workers or simply allowing companies to avoid committing to permanent hires.

As companies resist hiring full-time workers, and as young workers clamor for any possible job opportunity, internships have become increasingly significant in American business, and informal economy conditions apply to many internships.  According to the Economic Policy Institute, 1 to 2 million people today work as interns in the United States, and most are either unpaid and poorly-paid. In his book, Intern Nation, Ross Perlin reports that internships usually don’t conform to labor regulations, contribute to socio-economic inequalities, and rarely provide a useful job ladder – conditions that are typical in the informal economy. Offering college credit in lieu of an hourly wage does not necessarily mean that employers are free to ignore wage and hour restrictions. The U.S. Department of Labor has begun to take note of these problems and plans to increase regulation of unpaid internships nationwide.

Another growing category of informal workers is home-based caregivers. While some work through employment agencies, home-based employment is largely unregulated and dominated by non-white and female workers who earn low wages and no benefits. As more families need help caring for young children, disabled family members, and aging parents, demand for home-based care services has grown. Personal home and health care employment now exceeds 3 million and is projected to be the largest sector of new job growth between 2008 and 2018, with 1.1 million new jobs.  In the last decade, these workers have won union organizing and bargaining rights, but Steve Early reports that there is bi-partisan support among many current governors to rescind executive orders or pursue legislation undermining these workers’ attempts to improve their working conditions.  As a result, their wages will decline, their working conditions worsen, and they will sink even deeper into the informal economy.

So what is to be done? A number of labor and social justice organizations have formed the Excluded Workers Congress with goal of organizing workers in the informal economy, connecting them with grassroots movements, and developing strategic responses to informalization. They aim to challenge discrimination in the current labor market, build support for ongoing campaigns to improve working conditions, expand labor rights for excluded workers, and advocate for policies that support all workers’ right to organize.

Acorn International’s founder Wade Rathke suggests that there is no quick fix for the informal economy.  Rather than offering programs to retrain informal workers to enter the shrinking formal economy, he argues, we should “embrace the informal economy and engage in survival strategies that provide sustainable livelihoods and community redevelopment.” With short timelines and low investment, communities could organize  “localized informal workshops, training, production, marketing, and sales that can provide dignified, remunerative work for millions.” The work would range from home repair and rehab to food and bio-diesel production to recycling and technical repair services. He also advocates social networking to facilitate the sharing of job information, dispatch, and distribution and micro-lending adapted to broader social and community purposes. Put differently, he thinks the solution to the problems of the informal economy lies in changing the conditions of the work, not the workers.  Rathke wants to make work in the informal economy legal and formalized.

Most certainly, Rathke’s ideas may seem out of the box in advanced economies that often look for quick fixes. But as we in Youngstown know from more than 30 years experience, large-scale, structural economic problems don’t have easy solutions. On the other hand, the solutions Rathke advocates have helped alleviate poverty in developing nations. They may offer a more sustainable model of economic recovery, one that acknowledges significant structural and social changes.

That doesn’t offer much immediate hope for this spring’s graduating class or those being displaced within the formal economy.  The jobs outlook remains bleak.  But their long-term prospects might be better if, instead of normalizing the poor working conditions of the informal economy, we organized to ensure decent wages, reliable pensions, good health care, and greater opportunities for workers across the spectrum.

John Russo, Center for Working-Class Studies

How Unequal Should Our Incomes Be?

I think the top one-tenth of U.S. households should get about one-third of all income.  I may be unduly influenced by living in a household that is part of that top tenth, but here’s my reasoning.

Absolute income equality would be great, but it won’t work.  Per capita income in the U.S. is about $47,000, so if income were shared equally, every person would receive that amount, regardless of their age, whether they worked, and whether they are talented or hard-working.  Thus, a single parent with two children would have $141,000 to live on, while a couple with two children would have $188,000, and an empty-nester married couple like my wife and me would have $94,000.  These are not averages.  Every three-person household, for example, would get exactly the same amount, $141,000 — and that amount happens to be enough for everybody to live pretty well and for the vast majority of people to live much, much better than they do now.  And, as productivity increased and the economy grew, everybody would get more.

Most economists will tell you, however, that the economy would not grow under those conditions because incentives to work and innovate would disappear.  Though I suspect they’re probably right, these economists’ wisdom is based on a speculative assumption about a fixed human nature that a lot of world-class philosophers have contested.  And that would be a great discussion to rekindle if only somebody could figure out a workable, sustainable, and just mechanism for completely equalizing income without giving the government totalitarian powers.  So far as I know, nobody has figured out such a mechanism, and those who were trying to find a way have given up trying.

So, anything like absolute equality of income is impossible – or at least not practical enough to be worth thinking about for now.  Nor is it necessary.  During the period in American history when economic growth was strongest and when real wages, family incomes, and the general standard of living improved the most – from the 1940s into the 1970s – the top ten percent received one-third of all income in the U.S.  Historians refer to this era as “postwar prosperity.”  One-third was our share of the pie when the pie was growing at its best, and almost everybody benefited from that distribution.

Degrees of income inequality matter.  In a recent study, The Spirit Level: Why Greater Equality Makes Societies Stronger, two British social scientists have assembled data from nearly two dozen of the richest countries in the world.  The data shows how strongly levels of income inequality correlate with a variety of indicators of social well-being.  As a rule, more unequal societies have more homicides, violent crime, and prisoners; more mental illness (including drug and alcohol addiction), obesity, teenage births, and infant mortality; lower levels of trust, child well-being, children’s educational performance, and social mobility; and lower life expectancies.

The U.S. is by far the most unequal of these societies (with Portugal and the United Kingdom coming in second and third), and Japan, Finland, Norway, and Sweden have the most equal incomes.  In chapter after chapter, with only a few exceptions here and there and some nuances on some of the indicators, the U.S. is Number 1 in negative social indicators, followed by Portugal and the UK, and near the bottom in positive ones (including social mobility!).  Likewise, Japan and the Nordic countries uniformly have the most positive outcomes.

The Spirit Level authors, Richard Wilkinson and Kate Pickett, make the argument that we now know “how to make substantial improvements in the quality of life for the vast majority of the population” (p. xi): move toward greater equality of income.  For a variety of sometimes complicated but often simple reasons, greater equality of income improves social well-being across a society – including for the top fourth and probably even for our top tenth (though the data they are working with does not allow a firm conclusion by tenths).

So where does this leave my thesis that the top tenth should get one-third of all income?  It actually strengthens it, because right now we’re getting about half of all adjusted gross income in the United States, with the other 90 percent of people sharing the other half.  Our share used to be about one-third, from the 1940s to the 1970s during the most prosperous period in American history, but it has been increasing pretty steadily since about 1980.

My guess is that most people in the top tenth, like my wife and me, did not intend to grab such an outsized share.  We didn’t even know we were doing that, and we certainly didn’t intend for our share to correlate with increased violence, lower rates of child well-being, and lower life expectancies.  But guilt, like blame, looks back, not ahead.

If we top-tenners got one-third instead of one-half of all income, we’d still be doing very well, and there would be about $1.5 trillion more for the other 90 percent.  That’s a lot of money, and it means that we could live in a society where no one would be poor, especially not the nearly one-half of people who work full time for less than a livable wage.

What’s more, as a society we probably know a lot about how a substantial redistribution of income could be accomplished over time.   We can look at how we did it during the period of postwar prosperity, when there were strong labor, then civil rights, then women’s and other social movements; much more progressive income taxes; a growing social wage; actual enforcement of fair labor standards; and a steadily increasing minimum wage.

How to do that again in very different circumstances, both political and economic, is undoubtedly more difficult than I imagine.  But it is valuable to know just how unequal our incomes have become and how big a price in social well being all of us pay for that, some more than others.  It’s also good to have a clear goal for just how unequal our incomes should be.  I think that goal should be that old-fashioned postwar prosperity share of one-third for the top tenth.

Jack Metzgar

Rethinking Work and Non-Work in the Recession

For over the last 18 months, the Center for Working-Class Studies has been publishing the “De Facto Unemployment Rate” (DFUR).  The DFUR includes all those who are officially unemployed, those looking for work, the underemployed, disabled or in early retirement, and those receiving government work subsides.  It also estimates those who are in prison or have joined the military because they can’t find work in the private sector. The most recent analysis estimates that the DFUR continues to hover around 30%.

At first, the DFUR did not receive much attention, perhaps because it differs from the typically reported unemployment rate.  But in the last six months, it has been featured in the Manufacturing and Technology News and the Wall Street Journal. More important, the idea of understanding unemployment in broader terms has gained more acceptance as the media has begun to use the Bureau of Labor Statistics’s (BLS) alternative measures of labor underutilization.

In terms of actual job growth, the most recent study by the BLS indicates that almost all employment growth in last six months is due to government jobs, specifically jobs with the U.S. Census. While some have argued that the recession may be over, the lack of private sector job growth indicates that we may be on the brink of another jobless recovery. If the U.S. is to avoid falling back into recession, we must continue to extend unemployment benefits and/or craft another stimulus package.

Yet recent bills to create additional jobs and extend unemployment benefits have met with resistance, and even when such benefits exist, many states make it difficult for those who are out of work to receive any benefits. For example, some states limit benefits for part-timers and those who leave a job for medical reasons or due to the lack of available childcare. A recent study by Economic Policy Institute indicates that less than 67% of the long-term unemployed are receiving benefits.  If unemployment benefits had not been extended, only 35% would have been covered.

The high, persistent unemployment rate suggests a long and very slow economic recovery, and we may, in fact, be entering a “jobless era,” as Don Peck wrote in The Atlantic in March.  But having a job in the current economy doesn’t necessarily protect workers in this recession.  As Jamie Smith Hopkins reported in last week’s Baltimore Sun, 13 percent of employers cut salaries last year, and for many of those workers, their earnings levels may never recover.

But the problems go beyond earnings.  Not only do many workers feel anxiety about keeping their jobs, the quality of work is declining.  The effects of the recession are being exacerbated by changes in the labor market and organization practices based in economic globalization. Trade liberalization, deregulation, privatization, and reduced welfare programs have led to social and economic insecurity, income inequality, weaker unions, reductions in public sector services, and geographical shifts that have resulted in downsizing, restructuring, irregular work hours, electronic monitoring, and the intensification of work.  In turn, these changes have increased job demands, work hours, job insecurity, and control while reducing rewards and social supports making work more precarious.  All of this not only contributes to unemployment in the U.S., it also contributes to work-related stress for those who are still working, as Paul Landsbergis of the Center for Social Epidemiology argued in a recent presentation at the How Class Works Conference.

Increasing levels of job-related stress threaten the health of those who are employed. Landsbergis suggested that while the dramatic deaths and illnesses associated with the “accidents” at the Massy coal mine and BP’s off-shore oil rig get national attention, the insidious influence of job stress increases cardiovascular disease, sickness absence, and acute injuries.  Psychological and musculoskeletal disorders remain under reported, especially among the working class.

Taken together, the DFUR and the impact of economic change on the workplace remind us of the widespread effects of global and national economic trends. We need to think about both the effects of unemployment and the relationship between current economic policies, work practices, individuals, and health in the modern economy. Globalization doesn’t have to cause unemployment or undermine the quality of work.  Government, business, and labor leaders should not wait for an economic recovery to reconsider the impact of globalization on both work and non-work.  Any future economic recovery will be more stable and effective if it not only creates new jobs but also places value on what the International Labor Organization calls decent work for all working people.

John Russo, Center for Working-Class Studies

The House is on Fire

A few weeks ago, Charlie Rose facilitated a discussion about the perils of the U.S. national debt among a thoughtful, articulate group of one politician, two businessmen, and two economists.  Except for a brief discussion of the bond market, I was able to understand the various points of view about how menacing the projected growth of the debt is and the various things we might do about it.  Though tilted toward business-class conservatism, Nobel economist Paul Krugman ably presented a progressive view, and I found the conservatives thoughtful and sensible.

I came away from this discussion among what Rose likes to call “the smart people” convinced that we must address our ballooning debt sometime in the next decade or so.  I also came away wondering why the smart people are not devoting similar attention to the President’s budget projections that unemployment will remain around 10% (using the official rate) the rest of this year and not drop by much after that.  It strikes me that this is like carefully discussing cracks in the foundation while the house is on fire.

It’s not that the panelists were indifferent to unemployment.  Continuing high unemployment is one of the major contributors to our growing national debt.  When people are out of work, they don’t pay income taxes, reducing government revenues, and they don’t pay Social Security and Medicare taxes, bringing those entitlement programs’ long-term fiscal problems at us sooner rather than later.  Likewise, nobody in this group, not even the guy from the often shrilly conservative Peterson Institute, spoke against the need to increase social-safety-net spending such as unemployment insurance and food stamps in order to reduce some of the suffering among the unemployed.

But while not indifferent to unemployment, they conveyed no sense of emergency.  They didn’t seem to realize that the house is actually on fire and even if the fire is not spreading as dramatically as it was last year at this time, letting it smolder indefinitely will eventually destroy the house, even if it doesn’t reignite and burn the house to the ground.

This is why a recent story in The Atlantic, “How a New Jobless Era Will Transform America,” is so important.  Though much of the information and analysis in the article will not be new to readers of Working-Class Perspectives, it reaches the right audience: Charlie Rose’s “smart people.”  The author, deputy managing editor Don Peck, is a certifiably smart person himself who writes in a clear, compelling but relatively understated way.  The article has already gained a lot of attention among leading opinion-makers and, therefore, has a shot at generating a sense of urgency about what Peck very convincingly shows is “a slow motion social catastrophe.”

Peck is not predicting a second dip to the Great Recession.  He simply accepts White House projections of persistently high joblessness as the economy keeps “recovering.” Rather, he explains what social science investigation over the past half-century shows about the devastating long-term consequences of such sustained unemployment – its impact on individuals (even after they go back to work), on families, communities, and the nation as a whole, even the majority of those who stay employed through it all:

The Great Recession may be over, but this era of high joblessness is probably just  beginning.  Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades.   Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.

The article is all the more effective, in my view, because it does not lay out its own or report others’ strategies for reducing unemployment.  Instead, Peck focuses on convincing us of the depth, extent, and urgency of the problem.  It’s like a 9-1-1 call reporting “the house is on fire,” and urging us, in Peck’s concluding words, “to do everything in our power to stop it now, before it gets even worse.”

The American labor movement has been making that 9-1-1 call to the White House for several months now, and not getting through.  Unions in coalition with the Center for Community Change and the National Urban League are backing variations of “A Five-Point Plan to Stem the U.S. Jobs Crisis”.   The plan would create (or save) more than 4 million jobs.  Though it would add $400 billion to the federal government deficit this year, it would be paid for over the next 10 years by a small (1/2 of 1%) tax on stock trades and other financial instruments — a tax initially proposed more than a decade ago to discourage speculative investment of the sort that led to the financial meltdown in 2008.  In other words, the tax is probably a good idea anyway, would be paid only by investors, and it would allow job creation now to reduce the national debt in the long run. Economists from the AFL-CIO and its rival Change to Win met with White House economists to advocate for this program about the same time as Don Peck’s article appeared.  The response, I’m told, was “politely dismissive.”

As a Chicagoan who roots for our home-town heroes, I’ve been especially forgiving of Barack Obama.  Most of his critics seem to me to underestimate the level of difficulty Obama has faced given the character, severity, and timing of the Great Recession, the anti-functional rules of the U.S. Senate, the complexity of health care economics, and many other things.  But it is not difficult for a U.S. President to prioritize a house on fire over a crack in the foundation.  Part of the President’s job is to set the agenda for what gets public attention.  By establishing a bi-partisan commission to address the national debt while presenting a budget that basically says double-digit unemployment is acceptable for the next couple years, the President is making errors of both mind and heart.  It also seems like really dumb politics.   Pick up the phone, Barack, the house is on fire.

Jack Metzgar, Chicago Center for Working-Class Studies

Welcome to the Working Class

As the financial industry celebrates its recovery from the Great Recession with huge bonuses, attention has turned increasingly to jobs.  But that’s not a new concern: over the past three decades first the working class and then the middle class faced unemployment caused by economic restructuring and globalization.  Back in the 70s and 80s, when working-class people were losing thousands of blue collar manufacturing jobs that paid middle-class wages, many economists brushed the problem aside, insisting that new forms of work would soon replace disappearing blue-collar jobs.  Industrial workers and their unions knew better 30 years ago.  They’ve long warned that economic restructuring, globalization, and unfair trade laws would result in the loss of the middle class.  Today we’re learning that they were right.

With the jobless recovery of the early 2000s and the ongoing unemployment crisis of today’s recession, the middle class is discovering that sociologists Richard Sennett and Jonathan Cobb were accurate when they suggested that what it means to be middle class is to be just one job away from poverty.  In Fear of Falling, Barbara Ehrenreich explored the impact of this decline on individual consciousness.  But it is only within the last decade that people who thought they were safely middle class have come to understand the episodic, anxiety-ridden, contingent, low-wage-and-benefit life of many in the working class.

And that experience seems likely to become permanent reality for many.  Unlike in past business cycles, the middle class has not been able to recover so far, despite increases in productivity and stock prices. In “America Without a Middle Class,” Elizabeth Warren documents how the de facto unemployment rate, credit debt, “underwater” mortgages, increased use of food stamps, personal bankruptcies, and the loss of pensions and health care have all dramatically increased.  Middle-class households have depleted their savings and are increasingly accruing debt to pay for college, health care, and other expenses.

The situation continues to worsen.  The latest monthly Bureau of Labor Statistics Employment Report shows an additional 85,000 jobs lost. As the U.S. population grows, the need for jobs increases.  The economy would need 100,000 new jobs just to keep up. In other words, the net effect puts us 185,000 jobs behind where we need to be to stay even with current misery.  To make matters worse, 600,000 gave up looking for work and so were not even counted in the official unemployment rate.  Over the last decade, the data shows no net creation of new jobs.

Some experts believe that the decline in jobs will only continue. For example, Alexandra Levit predicts significant losses in a number of key industries between 2008 and 2018:  semiconductor manufacturing(33.7%), motor vehicle parts manufacturing (18.6%), printing and related jobs (16%), apparel manufacturing (57%), newspaper publishers (24,8%), mining support jobs (76,000 or 23,2%), and the postal service (13%). Corporations are moving many of these jobs offshore or replacing them with technology rather than paying middle class wages and benefits. The economists are right that new jobs are being created in place of these.  But as Jack Metzgar discussed last week, most of the new jobs offer even lower wages and benefits and require less education.

Since private sector jobs cannot or will not be replaced in significant numbers, working people will have to rely on government spending to fill the gap.  The first Obama stimulus, while important (see The Stimulus at Work), has clearly proven insufficient. The limits of this approach can be seen in California, Illinois, and New York.  No wonder business leaders like Warren Buffet, economists like Paul Krugman, and others are calling for second stimulus directed more at creating new jobs.

While many approaches have been offered, the Economic Policy Institute has outlined a simple plan to create jobs and stem the unemployment crisis. It contains five major themes: strengthening the social safety net (including unemployment compensation, COBRA health coverage, and nutrition assistance); providing additional fiscal relief to state and local governments; making renewed investments in infrastructure including transportation and schools; supporting direct creation of public service jobs; and establishing a new tax credit to employers who create new jobs.

No doubt, we need stronger government leadership in creating the jobs that will expand the so-called recovery from the financial sector to the jobs sector.  But making real, lasting change requires something more:  a reexamination of the neoliberal ideology that has been responsible for current economic crisis that is moving so many from the middle class to the working class.  As a recent Special Report in The American Prospect suggests, nothing short of an complete overhaul involving industrial, trade, and foreign policy will do, especially involving the revival of American manufacturing.

Why manufacturing? As Richard McCormack has found, the loss of a single manufacturing job in a single large manufacturing plant, such as the GM Moraine Assembly in Dayton, can result in the loss of 15 additional jobs in the local community and through supply chains – job losses that affect both working- and middle-class workers.  But it’s not just that lost manufacturing jobs have wide-ranging effects.  It’s also that manufacturing jobs, unlike the low-wage service jobs Metzgar wrote about last week, are more likely to pay a liveable wage and provide decent benefits.  Manufacturing jobs can be good working-class jobs, working-class jobs that can in turn help rebuild the middle class.

With a new stimulus package and a revitalized manufacturing sector, the Great Recession may – like the Great Depression before – provide the ideological stimulus to create a more humane economy that is supportive of the working class.  We need such a shift now, especially as the working class increasingly includes thousands who once thought they were solidly middle class.

John Russo

America’s Low-Wage Future

British historian E.H. Carr once said something to the effect that while no serious scholar makes up the facts, they all choose which facts “to put on stage.”  The problem of cultural bias is that there are way too many facts to give them all their proper due, and in choosing what we think is most significant among them, we are guided by our own focus and general sense of significance – that is, by our values, our hopes and fears, and our everyday sense of how the world works.

Every two years the Bureau of Labor Statistics (BLS) makes detailed projections of how many jobs there will be in which occupations ten years from now.  The latest one came out late last year, and among a dizzying array of facts and figures, here’s what they headlined in italics at the top of their report:

Professional and related occupations and service occupations are expected to create more new jobs than all other occupational groups from 2008 to 2018; in addition, growth will be faster among occupations for which postsecondary education is the most significant form of education or training. . . . .

This was duly reported by The New York Times under the headline “Where the Jobs Will Be,” with the same emphasis on “professional and related occupations” and “postsecondary education.”   The message is that our society is going to need many more college graduates than it has now, which is true.  The impression most often left, however, is that we are rapidly becoming a society of “professionals” and “knowledge workers,” and that the key to our future is making sure that almost everybody gets a college education.  This impression is not only false, but spectacularly so.

Disguised in the text, but present in the BLS tables is another set of facts: Only 21% of jobs now require a bachelor’s degree, and despite faster growth among these credentialed occupations, that isn’t going to change much.  By 2018, according to the BLS, only 22% of jobs will require a bachelor’s degree or more.  Of the 51 million “job openings due to [both] growth and replacement needs” in the next ten years, fewer than 12 million will require a bachelor’s degree.

At the heart of what the BLS and The New York Times choose to put on stage is a confusion between the fastest growing jobs and the jobs with the largest job growth.  Though the BLS tables report both the fast and the large in detail, the headline and the text emphasizes speed over size.  For example, the fastest growing occupation in the next ten years will be biomedical engineers; these jobs will increase by a whopping 72% from 16,000 to nearly 28,000, a net increase of 12,000 jobs.  Meanwhile, retail salespersons will see job growth of a meager 8.4%, but since there are now more than 4 million of them, that’s an increase of 375,000 jobs.

A second confusion involves the word “service,” which in other contexts is used to indicate all work that does not involve making or building things, as in “service economy.”  This usage conjures images of doctors, lawyers, teachers, and management consultants – all of them growing occupations and highly paid.  But that’s not what the BLS means by “service occupations.”  The BLS service jobs with the largest projected growth are home health and personal aides; food service workers (including fast food); nursing aides; landscaping and groundskeeping workers; medical assistants; security guards, and child care workers – all of them already very large and all of them paying “low” or “very low” wages.

Of the 30 fastest growing occupations, 14 require at least a bachelor’s degree and another five will require an associate’s degree; all 19 of these fast-growing jobs pay “very high” or “high” wages by BLS standards.  That is good news.  But among the 30 with the largest growth, only seven require a bachelor’s and one more requires an associate’s.  And, unlike the fast, of the top 30 for size, the majority of new jobs are either “low wage” or “very low wage.”   Here’s my tabulation of the largest 30 by how well they pay:

Top 30 occupations with largest projected job growth, 2008-2018

2008 median annual earnings by quartiles (# of occupations)	# of new jobs projected	% of top 30 jobs
Very High: $51,540 & above  (7)	1,771,100	24%
High: $32,390 to $51,530  (8)	1,523,100	21%
Low: $21,590 to $32,380  (9)	2,131,400	29%
Very Low: Less than $21,590 (6)	1,899,400	26%

These top 30 occupations account for about one half of the net new jobs the BLS projects, and other data show that the wage composition of these 30 is not unrepresentative of the job structure as a whole, now and in 2018.  If these were the facts the BLS chose to put on stage, the headline might be: Majority of American workers projected to remain poorly paid and in need of a living wage.

We might then realize that we cannot close the widening gap between the earnings of high school graduates and college graduates simply by producing more college graduates.  There simply are not and will not be enough jobs requiring a college education. With a different set of facts on stage, we would understand that we need to do something to increase the majority’s wages and incomes directly.

What’s more, as a nation we know how to do this because we’ve done it before, in the three decades after World War II.  Though each has its limits, we need some combination of greater unionization, steadily improving minimum wage laws, and enhancements in the social wage, now called “work supports.”  Democrats, for all their other faults, have committed to advancing on all three of these fronts, and in the last three years have advanced a little on each of them.  College professors (called “postsecondary teachers” and #10 on the BLS largest list) could lend a hand simply by putting some of these “other” facts on our stages.  The BLS largest list is a richly complex document that reveals contradictory tendencies in what some 150 million of us do and will do to earn a living.   My arrangement of that list by educational requirements and pay simplifies it some by separating out those countertendencies.  No facts are made up, but by reorganizing the stage, the same facts make a decidedly different impression.

Jack Metzgar

Jobs, Ideology, and Policy: Putting Workers First

During the 1980s recession, as steel mills closed and auto plants began downsizing around the country, neoconservative economists insisted that the jobs lost to deindustrialization would soon be replaced by new jobs.  In Youngstown then, we knew better.  And as we wrote seven years ago in Steeltown U.S.A., Youngstown’s story in the late 70s and early 80s has not only persisted here, where unemployment is among the highest in the state and the poverty rate hovers around 30%, but has become America’s story today.

Youngstown learned then how real economic shifts could be exacerbated by ideology: the idea that businesses and investments matter more than ordinary human beings and the notion that we should just get used to economic patterns that create long-term hardship for those with the least power and resources.  Youngstown learned more than 30 years ago how damaging such ideas can be.  Once again, the rest of America is learning that lesson today.

The gap between the Wall Street recovery and the continuing jobs recession was highlighted by Friday’s jobs summit.  Communities around the country understand that we are in another jobless recovery that leaves hundreds of thousands of American families vulnerable.  While markets have stabilized for the moment and investors are feeling more confident, the economy isn’t improving for most Americans.

So is the current situation just like the earlier recession? No. It is worse. As Peter Edelman and Barbara Ehrenreich note in Sunday’s Washington Post, the current economic crisis reveals the glaring problems left behind by the welfare reform of the 1990s, a policy change that reflected the long-standing assumption that poverty is a “voluntary condition” and that every able-bodied adult should simply find a job – “even when there are obviously no jobs available.”  When we removed the safety net because of conservative and neoliberal worries about “fostering dependency,” we created the economic conditions that left 17.1 million Americans living in extreme poverty in 2008 – and no doubt even more today. As we learned last year, we’re willing to bail out corporations but not working people.

The current recession is also worse because it isn’t just a matter of jobs.  It’s a matter of ideology.  Blaming the victim and normalizing long-term economic struggle were part of the discourse at the jobs summit, during which Jan Hatzius, chief domestic economist at Goldman Sachs, acknowledged that unemployment will likely remain high for a long time.  She suggested that we may just have to get used to it.  Why?  Because those who have been unemployed for a long time are losing their skills and their work habits.  No doubt, long-term unemployment affects people, but the idea that unemployment will last a long time because workers won’t be prepared to return to work represents the most absurd, cruel version of blaming the victim.

On the other hand, Hatzius is not wrong that we’re in for long-term unemployment and underemployment– problems which are far worse than the official unemployment rate suggests. No doubt, business takes the cautious path during economic downturns, often by adding hours to workers’ schedules rather than by hiring additional workers. But as we learned in Youngstown, the reality is that those jobs may never come back as businesses, especially manufacturers, continue to disinvest in the United States.

At the same time, as we have argued before, we’re also witnessing long-term shifts in the nature of the jobs available.  Promises about a new “creative worker” economy or green jobs that will someday provide some former steelworkers and autoworkers with new versions of manufacturing jobs fall short when we remember the latest predictions of the Bureau of Labor Statistics:  that the job categories predicted to grow most over the next few decades involve primarily low-wage, low-education service positions.  Many of these jobs pay less than $21,000 a year.  That means that poverty is going to be a long-term problem for American workers.

What we need, in other words, is not a single jobs summit. We need long-range policy planning aimed at creating a better system of supports for the working poor and unemployed.  We need to recognize that as much as education matters, it won’t necessarily overcome long-term employment trends and growing income inequality.  We need economic policies that focus on the poor and working class and that treat them with respect, rather than blame.

Too often, economic theory has provided a distraction from the real struggles of real people.  Jan Hatzuis and her colleagues might do well to stop worrying about the work habits of the unemployed and start learning about what it’s like to lose a job after you spent years doing everything right, about the indignities associated with applying for government aid as you struggle to survive job loss, about how limitations of K-12 education, urban transportation, limited access to fair banking, overcrowded housing, persistent hunger, and lack of health care make finding a steady job that pays enough to support a family incredibly difficult.   A little moral education might help as well.

We need to stop thinking about the current crisis as a temporary recession, and we certainly have to stop talking about the economic crisis as part of an inevitable shift we can’t do anything about.  We have to recognize and act on the situation as what it is: a moral crisis.

The Obama administration must take the problem as a moral imperative, acknowledge that the private sector simply won’t solve the problem on its own, and like Franklin Delano Roosevelt, create a jobs-centered stimulus that is environmentally sound, improves the national infrastructure, and provides an economic foundation for working Americans and rebuilding the American economy.

The economy isn’t a game, with winners and losers who deserve what they get, because the players don’t occupy a fair playing field and the rules are biased.  Inequality has long been and is becoming more deeply engrained in the American system.  We cannot continue to view long-term high unemployment rates, minimal public supports for the poor, and a permanent and increasing gap between rich and poor as normal much less acceptable.  We can do better.  “Yes, we can.”  And we must.

John Russo and Sherry Linkon

Fixing the Foreclosure Problem

One of the sad legacies of the housing and mortgage securitization bubble and the subsequent collapse of the economy over the past two years is the virtual devastation of working-class neighborhoods throughout the United States.  Thousands of homes sit vacant and deteriorating after foreclosure or are listed for sale at a price half or less than their value just 18 months ago.

Foreclosures aren’t hitting just the working class, but The New York Times reports that workers in the manufacturing and distribution sectors were keeping up mortgage payments until they found themselves unemployed and unable to pay for their homes, complicating efforts to stem foreclosures.

Even as the Treasury Department appears poised today to announce efforts to force more banks to modify loans, increasing evidence suggests that the federal government’s efforts are floundering.

Rather than focusing their efforts on the complicated Homeowner Affordable Modification Program (HAMP), or on bailing out banks in the hope that they will loan more money to homeowners and small businesses, federal policymakers can accomplish more  for those facing foreclosure, not to mention their neighbors and American taxpayers, by making relatively modest changes to the business practices of the Federal Housing Administration and HUD.

The story of an Ohio worker and homeowner illustrates how the federal government is missing easy opportunities to play a meaningful role in reducing the impact of the foreclosure crisis and the recession on real people.

In 2007, Bob was employed by DHL as a driver earning over $20 per hour. He bought a modest house in a middle-class suburb of Cleveland for a fair market price of $90,000 to live in with his son.  When DHL shut down its U.S. operations in 2008, Bob, along with thousands of others nationally, was laid off.

Meanwhile, back on Bob’s street, for sale signs proliferated and one of six homes in his community is in foreclosure.  As a result, the market value of Bob’s home has dropped to less than half of what he paid for it.

Bob and his son were able to survive on his unemployment benefits but couldn’t pay the monthly mortgage.  Bob recently took a job with FedEx paying less than half of what he earned at DHL and less than his unemployment benefits, because he simply couldn’t stand “not working any more.”

His mortgage, which was insured by the FHA, is being foreclosed. With the costs of foreclosure and 18 months of late fees included, the lender claims to be owed $120,000 on a house optimistically worth $50,000.

Bob requested that his foreclosure case be sent to mediation, and he provided the lender with extensive documentation of his income and expenses and the current value of his home during the course of those negotiations. The loan servicer has refused to agree to a modification of the terms that makes any sense to Bob. They are completely unwilling to consider any modification that reduces the principal balance at all, let alone bring the figure anywhere close to the current value of the home.

Bob does not qualify for the H.A.M.P program, the centerpiece of the Obama Administration’s effort to assist homeowners in default and foreclosure, because his loan (like the loans of most people in foreclosure) is more than one year behind. That program actually pays cash to lenders and mortgage services who agree to modify loans.

During the course of the negotiations it became increasingly clear that the lender or loan servicers have no incentive to enter into any kind of meaningful modification.

Why?

Because after foreclosure, FHA stands ready to pay the lender 100 percent of its loss on the loan, including the cost of foreclosure. If the lender were to agree to modify the loan, it would be paid far less.

Here is the outrage. If the lender proceeds to foreclosure, Bob and his son will be thrown out of their home and the lender will be made whole at the cost to FHA — and ultimately the taxpayers — of $80,000 or more.

This scenario is repeating itself in mortgage foreclosure cases throughout the country, putting the solvency of the FHA at risk while throwing thousands of working people out of their homes. The New York Times recently reported that FHA itself might be in need of an infusion of cash.

If FHA were included in the negotiation and would agree to pay lenders some amount –say half of what they are likely to lose, $40,000 — to allow the principal to be reduced, Bob could refinance at competitive interest rates and stay in his home, the federal Ggvernment and ultimately the taxpayers would save $40,000, and the lender would have an interest-paying borrower (who can afford the lower payment) and earn profits from the interest.

Everybody wins under this scenario.

Another problem that could be fixed by a more realistic approach by HUD and the FHA was detailed in a recent Cleveland Plain Dealer Story about problems created by HUD’s failure to demolish or fix homes they own (mostly as a result of FHA insured foreclosures) in greater Cleveland.  Dilapidated houses drive down housing values for entire neighborhoods.  Making it tougher for guys like Bob to sell or refinance their homes and making community problems worse. Local communities are struggling to maintain housing stock in aging neighborhoods, and HUD’s failure as a homeowner has devastating effects on entire communities.

The Federal Government has a chance to raise the bar for responsible homeownership, yet instead they appear to be lowering it. HUD should be a model community citizen, collaborating with local housing officials on neighborhood wide efforts to improve home values.  The agency should hire local consultants or even contract with local governments and empower them to make quick and honest assessments of the likelihood of selling any particular piece of real estate with an eye toward the best community use for the property.  For houses that will not realistically sell in a reasonable timeframe, HUD should require that the houses be demolished within 30 days.

Increasing evidence suggests that the new programs being created by Congress and the Obama administration are not having a significant impact on the foreclosure problem. Only 1711 homeowners nationally had completed a modification by September 1, 2009 under the HAMP Program.

Bob’s story suggests that a better approach may be to find ways to make the existing machinery of the federal government’s mortgage programs work in the interests of homeowners and taxpayers.

Marc Dann

Marc Dann is a Cleveland lawyer who represents homeowners in foreclosure.