The current economic crisis is the result of the financial practices of the past decade, but we talk about it as if it were a new thing. We also focus on what the crisis means for banks, insurance companies, and investors, forgetting that the working class have been and are likely to continue to struggle the most.
For working-class people, this crisis is more than three decades old. Starting in the 1970s, workers’ wages began a steady decline. Deindustrialization, increased technology, and globalization eliminated many of the jobs that once provided working-class families with a middle-class lifestyle. Service industries create new jobs, but they pay less, offer fewer benefits, and are less secure than industrial jobs. Laid-off industrial workers found themselves working two or even three part-time service jobs and still earning less than they had at the auto plant or steel mill.
As Robert Reich pointed out in the San Francisco Chronicle a few weeks ago, working families have been struggling to maintain their economic security for a long time. First, married women, many of them mothers, entered the workplace — not for self-fulfillment but as a means of household economic survival. Then workers began to take on overtime and additional part-time jobs. When neither of these was enough, families relied more on credit, a move that, while sometimes necessary, could make household finances even worse.
Now a declining economy is causing widespread layoffs. In September, 2008, more than 235,000 people were laid off. Experts predict the same for October, and the trend will likely continue. While that includes many middle-class, professional workers, like those at Lehman Brothers, many working-class people are also losing their jobs. The difference is that better-off workers are more likely to have the financial cushion and job skills to recover, or at least survive. Many working-class families are just a paycheck or two away from losing everything.
For many, sub-prime mortgages offered the first opportunity, after many years of hard work, to achieve the American dream of home ownership. Mistakes on all sides, including, to be fair, on the part of working people whose eyes were bigger than their pocketbooks or who didn’t have the financial education to understand what they were getting into, have left many working families without a home. Many have used up their meager financial reserves trying to pay the mortgage. As in the 1980s, we will likely see a rise in homelessness over the next few years.
All of this creates feeds a growing class resentment, which might explain why voters don’t seem to have a problem with Barack Obama’s promise to “spread the wealth,” despite John McCain’s warnings about creeping socialism. Working-class people have grown tired of promises that tax cuts for corporations and the wealthy will eventually trickle down to improve the economy for everyone. Instead of fueling the economy, investors and the finance industry have put everyone’s economic security at risk. Working-class Americans know that they have been getting poorer over the past few decades, while the richest Americans have been getting even richer. In 2007, CEOs earned, on average, 364 times what workers made.
Many have debated whether the current economic crisis parallels the Depression of the 1930s. Economic analysis aside, there may be a parallel cultural shift. In the 1930s, the American labor movement gained momentum, leftist politics flourished, and artists and organizers created what Michael Denning terms “the cultural front,” an array of art, film, music, and literature that reflects working-class perspectives. Those social movements worked together with economic policies to create political change.
We may well be on the brink of a similar transformation. While the labor movement continues to struggle, the AFL-CIO has started a grassroots organization, Working America, to engage people who don’t belong to unions in organizing for economic and social justice policies (more on this from Jack Metzgar next week). Voter registration patterns show a clear shift if not to the left then at least to the Democrats. “Rock the Vote” concerts, the popularity of “The Daily Show,” and the rising ratings for MSNBC’s left-leaning commentary programs suggest the convergence of politics and pop culture. So while the working class may suffer the most from the economic crisis, they may also have reasons to hope that it will bring real change.