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

Economic hope for the Mahoning Valley

On August, 21, 2008 General Motors’ CEO Rick Wagoner stood on a makeshift stage in front of a packed audience of Lordstown autoworkers, state and local politicians, and civic leaders from the Mahoning Valley to announce that his troubled global company would invest $350 million to retool the plant for production of the new Cruze line. GM’s announcement represents more than just an infusion of corporate capital in a production line. It is a profound vote of confidence in the future of the Mahoning Valley.

Almost 31 years ago, on September 19, 1977, Youngstown Sheet and Tube’s Campbell Works was closed without notice, leaving thousands out of work and beginning to dismantle the country’s third largest steel producing center. For decades, the people of the Valley had boasted of “Thirty Mills in Thirty Miles.”  By the mid-80s, that had became a bitter memory as mill after mill closed.  Ultimately the demise of the steel industry left 50,000 people out of work and devastated the Youngstown area.

Over the next 25 years the city’s population shrunk in half. As laid-off workers left to pursue opportunities elsewhere, foreclosures, abandonment, and tax delinquency ripped through once proud neighborhoods.  Along with manufacturing jobs, families lost their houses, their dignity, and their hope for the future. The Valley’s social service agencies were stretched to the breaking point.  Local governments cut staff dramatically, shut off street lights, and deferred all but the most essential services.  Downtown Youngstown became a stage set of the empty storefronts, roofless commercial buildings, and abandoned lots, used by reporters and politicians to illustrate the impact of deindustrialization in the Great Lakes. The once fierce sprit of the Valley, like the fires of its mills, was extinguished. For many, optimism was replaced by despair, anger, and resignation.

A generation was to pass before the devastation began to reverse. The past 5 years have been a time of profound change.  New leadership has emerged in the Valley’s two major cities-Youngstown and Warren-and in the region’s Congressional and state legislative delegations. New IT companies, focused on “business to business” software applications, are developing at the Youngstown Business Incubator. YSU began construction of a new $34 million Williamson College of Business Administration, and the state chancellor of higher education announced plans to develop a community college in the Mahoning Valley.

Despite the steady progress of the past five years, the Valley’s future has remained uncertain as people await evidence that manufacturing-long the cornerstone of the region’s economy-will once again provide opportunity and prosperity.

GM’s investment marks one of the most significant private sector capital infusions in the Valley in recent decades.  It is also a profoundly important acknowledgement by a global corporation that the Mahoning Valley is back in the game as a place to do business.

Standing shoulder to shoulder that afternoon with hundreds of UAW members and with cars moving on the production line all around us, we heard union reps talk with sober pride about the effort they and their fellow workers had made and the sacrifices they had accepted in the most recent contract negotiations to insure that Lordstown would remain competitive in the cutthroat world of global auto production. Their hardnosed realism was balanced by the enthusiasm with which they and the entire audience greeted the full-scale mockup of the new Cruze-a sleek, stylish global automobile that will go head-to-head with the competition from Honda and Toyota. What I witnessed was a team proud of wining without compromising fundamental values, of producing quality work at a competitive price, and of earning a fair wage and benefit package. It was clear that this investment in the Lordstown plant and in the Mahoning Valley economy was enormously important economically and spiritually both to the Lordstown workforce and to the wider community.

It was no small feat to get GM to add a third shift, to integrate the new workforce-drawn from places as far afield as Shreveport Louisiana-onto the line in record time and to compete for $350 million in scarce corporate capital even as GM closes other factories in the region.  Many of the speakers-from labor and management-stressed with hard won pride the importance of this accomplishment and the fact that this success resulted from collaboration and cooperation within the workforce and between labor and management.  Lordstown’s message might apply both to Northeast Ohio’s manufacturers and their employees: tough, fair, reality-based negotiations combined with a renewed competitive drive and a fierce dedication to producing a quality product can lead to success in the global marketplace.

While GM’s investment will yield tax revenues for state and local governments and create additional new jobs in the region, the most significant outcome is its effect on the heart and soul of the Valley.  As Congressman Tim Ryan told Wagoner,  GM had given the Valley something it hasn’t had for a long time: hope. He predicted that a decade hence people would see August 21, 2008 as “the day the Mahoning Valley turned the corner.”

The GM Lordstown story demonstrates that economic development is not just about making deals and cutting ribbons. It is about giving people back their hope and giving communities back their future.

Hunter Morrison