AN AUTOPSY OF THE AMERICAN DREAM

Lee Sustar
AN AUTOPSY OF THE AMERICAN DREAM
Sat Sep 25, 2004 15:10
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AN AUTOPSY OF THE AMERICAN DREAM
The State of Working America
By Lee Sustar 9-17-04

Propagandists for Corporate America often point to the long-term growth
in family income as evidence that the American Dream of constantly rising
living standards still exists. Yet a closer look at the statistics in the State of
Working America, the new report on the American economy put out by the
Economic Policy Institute, shows that increases in family income in recent decades
have come about almost entirely as a result of women's additional work in
families where men also hold jobs. The trend towards greater female participation in
the workforce began during the long economic expansion following the Second
World War. The women's movement pushed open the doors to some traditionally
male-dominated, better-paying jobs for women.

Since the early 1980s, however, married women have increasingly felt
financial pressure to work as a result of stagnant or declining wages. By the year
2000, some 47.7 percent of all families were two-earner, married-couple families,
up from 41.9 percent in 1979. This trend kept median family income growing,
if slowly, over this period--but it masked the stagnation or decline in men's
real wages.This is particularly true for those in the poorest 20 percent of the
population. Over the 1979-2000 period, income for this group increased 7.5
percent thanks to married women's income. Without it, income would have plunged
13.9 percent. Better-paid workers faced the same pressures. Their income grew
24 percent over the same period, but without wives' earnings, the gains would
have been just 5.1 percent.

The higher income came at a cost. Moderate- and middle-income families
saw their total work hours increase by the equivalent of three months a year,
ratcheting up the pressure to obtain affordable child care and generally raising
the level of family stress. Overall, household work hours increased 11
percent between 1975 and 2002 as families scrambled to compensate for stagnant
wages.In fact, it took until 1997 for the median hourly wage to surpass the
previous high level of 1979. The tight labor markets of the late 1990s boom did lift
real hourly wages by an average of 1.8 percent a year between 1995 and
2000--the fastest such growth since the late 1960s.

Real hourly wages continued to grow, though slowly, during the recession and
after--but the decline in hours worked led to a drop in annual wages from
2000-2002. The recession of 2001 and the weak recovery led to a sudden drop in
work hours, especially for workers whose income was in the bottom fifth, or
quintile. Hours for those workers dropped by 6.7 percent in the 2000-2002 period.
For workers in the second-lowest quintile, the decline was 2.9 percent. The
reduction in work hours hit family income hard, resulting in a real decline of
2.4 percent between 2000 and 2002. The drop in work hours exposed how nearly two
decades of stagnant wage growth made workers more vulnerable to the effects
of recession--even when they held onto their jobs.

Jobs and joblessness

THE SHARP downward swing in wages and family income since the
mid-1990s--along with the impact of the terrible job market--highlights the harsh impact
of free-market policies on the U.S. working class. Since the late 1970s, U.S.
workers have seen the quality and security of their jobs continuously eroded
through deregulation of industry, privatization of public-sector jobs, cuts in
social spending, "flexible" labor policies and free-trade deals.Known as
"neoliberalism" to much of the world, these policies have been pursued by both
Republican administrations (Ronald Reagan's and George W. Bush's tax cuts and
frontal attacks on unions) and Democratic ones (Jimmy Carter's deregulation of
airlines and telecommunications, and Bill Clinton's championing of NAFTA and
abolition of the federal welfare system).

The combined effect of these policies has given employers the leverage to
compel workers to toil harder and longer for less, while the gains of higher
productivity have flowed away from labor to capital. Again, this is a long-term
trend that began in the late 1980s--and accelerated as pre-tax profit rates
peaked in 1997 at their highest level since the 1960s.The increase in capital's
share of overall income in this period meant that the economic gains of higher
productivity went overwhelmingly to the top. The authors of the State of
Working America calculate that in the boom year of 2000, for example, the increase
in pre-tax returns on capital compared to 1979 levels was the equivalent of a
$56.8 billion transfer from labor to capital.

This squeeze on income continued during the recession and weak recovery
up to 2003, the authors found. "These shifts from labor to capital are large,
comparable in size to the loss of wages for the typical worker due to factors
such as the shift to services, globalization, the drop in unionization or any
of the other prominent causes of growing wage inequality," the authors wrote.
The 1990s boom did benefit the lowest-paid workers in the U.S. The percentage
making poverty-level wages fell from 30.5 percent to 25.1 percent--the lowest
level since 1973. Apologists for the Clinton boom--and now the Bush bust--use
such figures as evidence that a rising economic tide lifts all boats.

The problem is that the boats of the working poor are leaky--and easily sink
in rough economic seas. As the authors of the State of Working America put it,
"Those earning very low wages still represented 9.8 percent of the workforce
in 2000, 4.9 percent more than in 1979...[A] large share of the workforce,
roughly a fourth, still earns poverty-level wages." The author's analysis of
wages by race and gender also sheds light on the interplay of racism and sexism in
the low-wage, Wal-Mart economy. Some 30.4 percent of Black workers earned
poverty wages in 2003. For Hispanic workers, the figure was 39.8 percent. White
male workers have also suffered from some of the same trends.

About 15.1 percent of white men earned poverty-level wages in 2003, while
another 10.6 percent were close to the poverty line. Black men in particular have
suffered disproportionately from the loss of good paying, unionized
manufacturing jobs in such industries as auto and steel. What authors call a "dramatic
downward shift" for Black men can be seen as a statistical reflection of the
de-industrailization of the inner cities in Detroit or Gary, Ind. This trend
is sometimes obscured by the fact that a visible layer of Black men--thanks to
the civil rights and Black Power movements--have been able to break into
well-paid skilled or professional jobs. Vastly greater numbers of Black men,
however, are forced to take service jobs that pay miserably--if they can get work at
all.

Black unemployment at the height of the economic boom in 2000 was still 7.6
percent, double the 3.5 percent figure for whites. It shot into double digits
in the recession of 2001. Measured another way--from the standpoint of
workforce participation--the real unemployment situation for African American men is
simply shocking. Black men's participation in the workforce was 73.7 percent in
1973, but only 67.7 percent in 2000--and it dropped to 64.1 percent in 2003
as the recession rapidly drove large numbers of African American males out of
the labor market. This is the sharpest expression of what the State of Working
America authors call the "missing workers"--some 2.5 million people who, based
on population growth and the experience of the late 1990s, should be in the
workforce, but who were forced to the sidelines by the worst jobs picture since
the Great Depression of the 1930s.

If these people were included in the official statistics, the jobless
rate in June 2004 would have been 7.3 percent, rather than the 5.6 percent
figure calculated by the federal government. And the job losses didn't end with the
end of the recession. They continued for the first two years of the recovery,
with the technology industry crash leading to white-collar layoffs and global
overcapacity in industry that triggered 41 consecutive months of losses in
manufacturing jobs. By June 2004--39 months after the last economic peak--job
gains were just 0.2 percent, by far the weakest gain at similar points following
recessions since the Second World War. This is why long-term unemployment
among the jobless reached the highest percentage since the recession of 1983,
when the unemployment rate was much higher.

The bad news on jobs doesn't end there. The net increase in employment in
recent months is made up of jobs that typically pay less and have fewer benefits
than ones that were eliminated. Some 13 percent of all jobs created since
growth in employment resumed have been in the temporary employment industry. This
is part of a larger trend called "nonstandard employment"--those who work
part-time, are self-employed or are under contract.

These jobs typically pay about 10 percent less than their full-time
counterparts, and they are much less likely to have benefits such as health
insurance--adding to the numbers of the 45 million without health care coverage.
About 31 percent of women and 22.8 percent of men were in this category in 2001.
The authors of the State of Working America view this as part of a trend
towards "just-in-time" work, which includes the tendency of employers to force
overtime work out of existing employees rather than hire new workers. The push
towards labor "flexibility" is a hallmark of neoliberalism--and it's driving the
Bush administration's attempt to rewrite overtime pay rules to exclude millions
of workers. THE OVERALL impact of these trends has been, unsurprisingly, to
dramatically increase social inequality. The statistics are stunning.

The wealthiest 1 percent of all U.S. households control one-third of the
wealth of the entire country, while the bottom 80 percent of household have just
16 percent. Turns out that the claims during the late 1990s about popular
ownership of stocks were so much hype--the top 1 percent of stockowners hold nearly
half of the total value of all stocks, while the bottom 80 percent have just
5.8 percent. The percentage of households with net wealth of $10,000 or less
was 30.1 percent in 2001--not much of improvement from the 34.3 percent in
1962. Wealth statistics also show the reality of racism in the U.S.--with the
average Black household having a net worth of just 14 percent of the average white
household (largely due to the disparity in home ownership).

As the authors of the State of Working America put it, "The data on net worth
reveal the highly unequal distribution of wealth by class, which is further
exacerbated by race.

"A large share of the population has little or no net worth, while over the
last 40 years at least, the wealthiest 20 percent has consistently held over 80
percent of all wealth, and the top 1 percent has controlled close to 40
percent."But for tens of millions of workers, their wealth--mainly homes--isn't
free of risk. Mortgage debt totaled 74 percent of all debt by 2003. Overall, debt
was 114.5 percent of disposable annual income. In other words, people spend
more than they earn.The banks know that this isn't a stable situation--which is
why they've been pushing hard for a "bankruptcy reform" bill that would keep
people permanently on the hook for debts. The bill has bipartisan support and
would have passed years ago but for a push by Republican conservatives to gain
exceptions for anti-abortion activists who are forced into bankruptcy by
lawsuits. Where's the debate?

THE WORSENING conditions facing working people in the U.S. are only
discussed superficially in mainstream political debate--especially during the 2004
presidential campaign. While Democrats hammer George W. Bush for a terrible
performance on jobs, there's an underlying bipartisan consensus shaped by the
corporate backers of both parties--which is why significant numbers of Democrats
in Congress backed Bush's tax cuts. So don't expect Democrats to raise
proposals for a government-funded jobs creation program, an increase in the minimum
wage big enough to lift millions out of poverty, or a nationalized, universal
health care system. Fortunately, the State of Working America provides an
invaluable tool for those who do want to expose the endless attacks on the
working-class majority--and to organize to do something about it.

Lee Sustar is a regular contributor to CounterPunch and the Socialist Worker.
He can be reached at: lsustar@ameritech.net



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