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