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April 26, 2007

An Economy Unbalanced

Posted in: Labor,Uncategorized


The perversity of the nation’s seemingly strong economy is that it:

A. Enables Bush to brag about what a great job he’s done as president.
B. Hides what’s really going on.

And what’s really going on is that many of us every-day working people are running just to stay in place, while even more are falling behind. The statistics about the nation’s health care crisis are well-known–45 million Americans without health care coverage in 2005. Other data are less familiar, but are beginning to percolate to the surface of our collective consciousness, such as the growing income gap between like the extremely rich and the other 99 percent of the population.

What’s harder to pinpoint is the connection between these seemingly random items that flit by our TV screens and via the occasional news article, and the underlying structural economic problems we, as a nation, face. And if we want to go forward, we not only need to face them, we need viable plans for reversing the direction in which we’re headed.

That’s where the Agenda for Shared Prosperity comes in.

The Agenda is a network of some 50 economists and policy makers who aren’t tied to the conventional thinking prevalent even among some of our more progressive Democratic lawmaker friends. Spearheaded by the nonprofit Economic Policy Institute (EPI), the group is releasing a series of papers over the course of the next few months, with the goal of creating a package of progressive economic proposals to ensure the 2008 presidential candidates understand what’s needed to make the American economy work for the middle class.

Addressing the growing gap between America’s promise and its problems means challenging lawmakers and corporate honchos who see no problem with sending U.S. jobs overseas under the guise of “free”–but not fair–trade and who support failed “stay-the-course” tax and foreign exchange policies. As EPI President Larry Mishel put it when the Agenda held its first event in January:

We challenge the pervasive conservative philosophy that Americans must rely solely on their own efforts.

Underlying many of the reports issued so far through the Agenda for Shared Prosperity is the recognition that achieving economic security means workers need a stronger voice at their workplaces through unionization. But current laws need to be changed to level the management-controlled process for forming unions, which is why we support passage of the Employee Free Choice Act now in the Senate (S. 1041). (Call your senators and urge them to vote for the bill.)

Virginia Democratic Sen. James Webb also spoke at the first Agenda gathering. Webb is one of the new “populist” progressives elected in 2006. One of Webb’s first acts after his election victory in November was authoring an op-ed in The Wall Street Journal in which he described the nation’s “ever-widening divide” between the extremely wealthy and those who work for them–and urged lawmakers to recognize the urgency of addressing the downside of globalization. Speaking at the agenda, Webb said:

As the economy continues to grow–hopefully–we want to be sure that those who are doing the work of this society receive an increasingly fair share of the growing economy.

Webb gets it. We in the union movement are working to make sure other lawmakers get it, too. The Agenda has held four gatherings since January, and will continue them throughout the year (check back at EPI for updates). Here are a few highlights from recent papers presented at the Agenda’s gatherings.

Health Care for America. Jacob Hacker, an economist at Yale, helped write legislation introduced last year in Congress to address the nation’s health care crisis. Hacker overviewed his plan for universal coverage–which he also outlined in his 2006 book, The Great Risk Shift–and detailed how the legislation would expand health coverage through Medicare. Key to the plan, Hacker says, is its political viability. In short, the chance for expanding health care coverage through an existing and successful program is far more likely to gain bipartisan congressional support.

Globalization That Works for Working Americans. Contrary to many conservative policy makers–and even Democrats such as those attached to the Hamilton Project, an economic think-tank headed by former Clinton Treasury Secretary Robert Rubin–EPI economist Jeff Faux asserts the global system of open trade has not brought substantial and widespread benefits to the U.S. economy.

Most Americans have rejected the radical claim that the elimination of worker, consumer and environmental protections in the U.S. domestic economy would be justified by a promise that an increase in overall economic growth might result. The argument for a global economy without a social contract is essentially that.
Globalization does generate some economic benefits. But they have been routinely exaggerated in an effort to justify rising inequality, job loss and other costs.

Among Faux’s recommendations:

•  Eliminate perverse tax incentives that allow corporations that invest overseas to delay tax payment.
•  Strategically expand federal funding for research and development by ensuring government policies increase the chances that research and development will be channeled to production in the United States and not sent overseas
•  Launch a national energy development program along the lines of the Apollo Alliance, a coalition of business, unions and environmental organizations which has proposed a $300 billion effort over 10 years to kick-start and nurture a major effort.

Do Workers Still Want Unions? More than Ever. In a paper analyzing polling and survey data, economist Richard Freeman from Harvard University further made the case for the need to change the nation’s labor laws that currently are tilted in favor of Big Business. Freeman concludes that:

In 2002 the proportion of workers who said they would vote for a union rose above the proportion that said they would vote against a union for the first time in any national survey: a majority of nonunion workers now desire union representation in their workplace.

America’s workers know that by joining unions, they can significantly improve their livelihoods, job security and future for their families.

A New Social Contract: Restoring Dignity and Balance to the Economy. Tom Kochan and Beth Shulman note that millions of America’s working families fail to the basics to make ends meet–and it looks no better for the next generation. In their report, they write:

In 2000, the average high-school educated workers age 25-29 started out earning about $5,000 less real income and could expect slower growth in earnings than those who entered the labor force in 1970. Workers with some college started about $3,500 behind their 1970 counterparts.

Kochan is co-director of the Institute for Work and Employment Research at the Massachusetts Institute of Technology and Shulman authored The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans and Their Families. They find the decline in middle-class living standards, the elimination of institutions that support a growing middle class and the dramatic increase in income equality experienced in recent years is not the result of some invisible hand.

Freeman, Kochan and Shulman all support passage of the Employee Free Choice Act as a critical step toward addressing the imbalance at the workplace.

In the first in a series of hearings on the economy by the House Ways and Means Committee, AFL-CIO Secretary-Treasurer Richard Trumka told the committee the implicit “social contract” that allowed Americans to grow together, and build the American middle class, in the early post-WWII decades, “rested on a rough balance of power between workers and their unions on one side and employers on the other.” But today,

this balance of power has eroded and the social contract with American workers is unraveling. America’s CEOs, who once viewed themselves as stewards of our country’s productive assets, today present themselves as agents of shareholders in whose name they aggressively shift good American jobs off-shore, reduce workers’ pay and walk away from their health care and retirement obligations

Trumka said workers’ stagnant wages can be traced to

a steadily growing imbalance of bargaining power between workers and their employers.

Bottom line: We need to change that imbalance.


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