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Obama's Job One: Middle-Class Employment Problems Loom Over Second Term

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WASHINGTON -- On election night in Chicago two months ago, President Barack Obama triumphantly pledged to fight for a middle class he'd appealed to relentlessly -- and successfully -- on the 2012 campaign trail.

"I believe we can build on the progress we've made and continue to fight for new jobs and new opportunity and new security for the middle class," Obama said. "I believe we can keep the promise of our founders, the idea that if you're willing to work hard ... you can make it here in America."

The central challenge of Obama's second term is whether he can keep that founder’s "promise" to working Americans. It won't be easy, and in an era of divided government and amid cries for austerity and budget cuts, it does not seem likely that the president will offer sweeping new proposals to do so. The administration has said that its top two priorities at the outset of its second term are immigration reform and gun control. Despite an ongoing jobs crisis, creating quality jobs seems to have fallen a few slots on the president's to-do list.

As Obama implicitly acknowledged, the American middle class has fallen on hard times, saddled with historic levels of debt, skyrocketing health care costs and flat wages. By most accounts, middle-class Americans are no better off than they were when the president took office in 2009, in the wake of an unprecedented financial crisis and in the midst of the Great Recession.

The arithmetic is stark. Median household income is lower than when Obama took office, according to Census Bureau data -- lower even than when President Bill Clinton left office in 2001. The middle 60 percent of households -- those earning between $20,262 and $101,582 -- captured a smaller share of aggregate income in 2011 than they did in 2009, while the top fifth, which already made more than the other groups combined, captured more. Surveys of public opinion reveal a middle class that is smaller, poorer and less optimistic than ever. And although the unemployment rate fitfully has fallen below 8 percent for the first time since Obama's 2009 inauguration, most new jobs are too low-paying to sustain middle-class families.

There is more to the plight of the American middle class than numbers can express -- and a greater threat to the country than economists can quantify.

Democracy, after all, can't thrive without a broad, strong, educated core of citizens. But today they find themselves buffeted by the remorseless dictates of global capital, the need for evermore education and training and the burdens of higher taxes to pay for social programs they need, such as health care.

Battling these global and cultural trends is difficult. In fact, it is unfair to ask any one person -- even a president, even Barack Obama -- to overcome them all. The president’s first responsibility in 2009 literally was to do his part to save the world’s frozen capital, banking and trade systems -- without which the American middle class would have had no prospects at all.

Most fair-minded observers would say that Obama did his part, and acquitted himself well under crushing circumstances. A workable and affordable health care system, the central legislative success of his first term, can (if he sets it up properly) be of great benefit to middle-class workers.

But now he must make good on his own promise -- not always central to his discourse or decision making -- to find more good-paying middle class jobs.

How?

On the stump this year, the president made manufacturing a centerpiece of his vision, arguing that a combination of tax reform, investment and education could help repatriate quality jobs to U.S. soil and stabilize the middle class. Perhaps sensing the political popularity of such an idea in Rust Belt states like Ohio and Michigan, the Obama campaign set the lofty but achievable goal of creating a million new manufacturing jobs during the president's second term.

In a recent interview on "Meet the Press," the president renewed his commitment to investing in infrastructure, which he called "broken," as another way to create good-paying jobs.

With the conversation in Washington focused not just on austerity but how much austerity to apply to a sputtering economy, it's hard to imagine what kind of rebooted jobs plan the president could propose for his next term while staying within the bounds of political reality.

"In the short term, we are in a pretty difficult spot," said John Schmitt, an economist with the left-leaning Center for Economic and Policy Research who studies economic inequality and unemployment. "Even if there was a serious commitment on the part of the administration towards a jobs program of some sort, it would run into a lot of trouble in the Congress."

Without a clear and politically viable policy objective for jobs -- unlike, say, banning high-capacity magazines to address mass shootings -- the administration is likely to continue the piecemeal approach to economic recovery that it took for most of the president's first term, observers say.

Obama's landmark 2009 stimulus bill pumped billions of dollars into the ailing economy, stemming the loss of hundreds of thousands of jobs each month. The bill addressed the short-term fallout in the private sector by cutting taxes and pouring money into infrastructure projects and expanded unemployment insurance benefits.

But since then, additional spending has been all but off the table. Obama has repeatedly proposed more infrastructure spending, but the White House has routinely given up such demands in negotiations with congressional Republicans.

The lack of stimulus since the initial package -- aside from the repeated extensions of long-term unemployment insurance -- has exasperated left-leaning and centrist economists.

"The answer is very clear: We need substantial additional stimulus to support the economy," said Heidi Shierholz, an economist at the Economic Policy Institute (EPI), a left-of-center think tank. "We are choosing, as a country and as a town [Washington], not to do it, with millions of jobless workers."

To address the decline in manufacturing jobs, the Obama administration has undertaken a number of modest initiatives, such as launching a manufacturing institute in Youngstown, Ohio, with $30 million in federal funding, a joint effort between industry and schools to train workers for tomorrow's manufacturing jobs. The Youngstown facility focuses on training workers for 3-D printing technology, the kind of modern manufacturing industry where observers see a lot of potential.

The facility is an acknowledgment that tomorrow's manufacturing jobs will be different from the ones of the past. Gone are the days when a new high school graduate could show up at the factory door, get trained on the shop floor and earn a good wage and a pension. Jobs like those in 3-D printing require more advanced training and a certain degree of computer literacy. The same goes for other areas where experts, as well as the White House, see promise, like industrial robotics or nanomanufacturing. Obama's own tech advisers have warned that the country's "historic leadership" in manufacturing technology is "at risk" if it can't cultivate the right talent for these fields.

In his 2013 budget proposal, Obama called for devoting $1 billion to create a national network of institutes like the one in Youngstown -- a recommendation that hasn't exactly become a priority for Congress. Neither have the loftier goals of his earlier manufacturing package, such as extending tax breaks to companies that return jobs to U.S. shores. They appear unlikely to move forward in a second term, even if the president chooses to champion them.

"The administration has done some things but could do a lot more to help manufacturing," said Scott Paul, director of the non-profit Alliance for American Manufacturing. What the White House has done so far is "not well-publicized or well-known. They will ultimately be helpful, but so much of the debate has become politicized, it's hard to make progress on some of the meaningful issues."

And in the end, the manufacturing plan still faces some cold mathematics. The U.S. lost more than 5 million manufacturing jobs in the first decade of this century, falling from 17 million to 12 million. Fewer than 9 percent of American workers have manufacturing jobs, compared with more than 20 percent in 1979. Creating a million new such jobs puts only a dent in that sector's -- and the middle class's -- long-term woes.

"It doesn't come close to restoring manufacturing employment to what it had been," Paul noted, adding that he still found the goal admirable.

Even setting aside the immediate joblessness crisis, Obama still faces the long-term problems of deteriorating wages and growing income inequality for the poor and middle class. Since 1979, the top 1 percent of American households captured more than 38 percent of income growth, while the bottom 90 percent received just shy of 37 percent, according to EPI.

The Great Recession technically ended halfway through 2009, but the economic recovery of the past few years is replacing office workers, real estate brokers and insurance claims adjusters with retail salespeople, restaurant workers and warehouse hands.

Mid-wage jobs -- ones with median hourly wages ranging from $13.84 to $21.13 -- accounted for 60 percent of the jobs lost during the recession, according to an analysis by the National Employment Law Project, a worker advocacy group. During the recovery since then, mid-wage jobs have represented just 22 percent of growth. Jobs earning less than $13.84 per hour made up 58 percent of recovery growth, according to the NELP.

The president pledged during his 2008 campaign that by 2011 he would have the minimum wage raised to $9.50 and pegged to inflation, a move that worker advocates have clamored for for years, claiming it would help raise the wage floor for the working poor and the middle class. But the federal minimum wage remains $7.25 per hour, well below a living wage in most areas.

Many of those same worker advocates tie the stagnation of real wages to the decline of collective bargaining in the workplace. The rate of unionization in the U.S. has fallen to a historic low, with just 7 percent of private-sector workers now belonging to a union. Labor leaders believe that labor law needs to be amended to make it easier for workers to join unions. Their best shot came and went under the president's watch, when Democrats failed to pass the Employee Free Choice Act when they controlled both chambers of Congress.

"I do feel disappointment," said Schmitt, the Center for Economic and Policy Research economist. "That said, we're also in a [political] context where it's extremely difficult to make any progress on the concerns of low- and middle-wage workers."

Despite those shortcomings, and despite the acrimony on Capitol Hill, liberals like Richard Trumka, president of the AFL-CIO federation of unions, are bullish on Obama's second term, given the focus on the middle class and jobs during the election.

"It all starts with the political will, or the national appetite, to again create jobs that are going to be family-supportive and middle-class producing, and I think that's underway right now," Trumka said. "People are talking about it. That's the difference between this election and the ones in the past. We actually had a debate about what's hollowing out the country and what isn't. And our side won, big time."

Now the president’s challenge is to turn that political victory into an economic one for the people who supported him.

This article is part of a series produced by The Huffington Post that closely examines the most pressing challenges facing President Obama in his second term. To read other posts in the series, click here.

This story appears in Issue 33 of our weekly iPad magazine, Huffington, in the iTunes App store, available Friday, Jan. 25.

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