Greening Workers' Wallets

Recent research by Ralph Whitehead at the University of Massachusetts goes a long way toward explaining why a significant portion of the electorate was so anxious for change on election day. For the 70 percent of working Americans who do not have a college education, prosperity has been disturbingly beyond reach for quite some time.

Many of these workers were not among Senator Obama's winning coalition - especially less educated white males. Nonetheless, as president he may need to address their depressed wages if he is to succeed in transforming this sow's ear of an economy into anything remotely resembling a silk purse.

Whitehead's work reveals that from 1973 to 2007, the median real wages of male earners without college educations have actually declined two dollars an hour, while those of female earners during the same period have increased only nominally. Long story short, the great majority of Americans' earnings have flat lined for nearly 35 years.

As a result, many families now find themselves trapped in a cycle of debt that virtually renders them the indentured servants of commercial banks that engage in a form of legalized usury. (What else can it be called when banks borrow from the Federal Reserve at low single digit rates and charge cardholders as much as 30 percent interest?)

Addressing the decades-long decline in real incomes, therefore, is essential if the incoming Obama administration is to resurrect the nation's consumer-driven economy, much less restore production as the nation's prevailing economic model. Even if president elect Obama were inclined toward forging an industrial policy that would bring about such a transformation, he faces a distracting set of Hobson's choices, among them coping with budget and trade deficits both rising astronomically.

Since cutting the budget is viewed universally at this point as doing great harm, the trade deficit is the only Hobson left standing. But here, too, there are no easy choices; for, radically changing trade policies amidst the current crisis portends as much economic pain as relief. Indeed, given the massive amounts of U.S. debt that China has stock piled, engaging in endless China bashing over its trade abuses runs the risk of offending America's de facto banker - never wise for a people strapped for cash.

An alternative approach recommended by Jeff Faux, former head of the Economic Policy Institute (EPI), is to call for a strategic pause in negotiating trade deals. A complimentary move would be for Obama to rally a nationwide citizens' campaign to reduce oil consumption, encouraging employers to move from five-day, eight hour work weeks to a staggered four-day, 10-hour work schedule. If successful, the campaign would drive down oil imports, the single largest drag on the current account balance.

President elect Obama's radio and YouTube address of December 6 suggests that the policy he will pursue is a job stimulus financed by investments in clean energy development and in revitalizing the nation's infrastructure. Chances are that these proposals will take the general shape of recommendations made by the Apollo Alliance, a coalition of business, environmental, labor and social justice organizations, and by the Center for American Progress, a progressive think tank headed by John Podesta, President Clinton's former chief of staff serving as co-chair of the Obama transition team.

While different in the term of investments they recommend, both proposals call for committing $50-billion-per year to renewable and clean energy development that focuses on domestic job growth. Indeed the President elect's latest Saturday radio address hints at even more significant annual investments of this sort.

Yet a robust investment strategy, laudable as it is, must ensure that the quality of jobs created is every bit as important as the quantity, if everyday workers' wages are to rise beyond the cost of living. Such an approach would require a more active role in planning by the federal government than has been in place (or politically palatable) since World War II.

More challenging will be ensuring that any policy that calls for investing taxpayers' money requires that the lion's share of jobs created are domestic, in value-added production, and pay a prevailing, if not a union wage. In addition, the Obama administration will need to give more than a nod to the Employee Free Choice Act in order for it to pass. The legislation would liberate workers to unionize and bargain for better wages without fear of employer intimidation and the threats of offshoring that have become the weapons of choice among employers and their anti-union consultants.

Such a worker-supportive, progressive agenda would increase the odds of raising workers' living standards, rather than settling for the neoliberal "logic" of continually expanding credit to bolster buying power because wages are being constrained by competition from repressed labor markets in the less developed world.

In short, the change America needs is an economy in which workers make enough money to save as well as consume, progress that would be considerably advanced if a few million more workers had the right to bargain collectively.

It's a change that Obama pledged to make time and again on the campaign trail, presumably rooted in the belief that it would create a rising tide of wages and restore the spirit of the National Labor Relations Act after eight years of egregious pro-employer bias under Bush.

Obama's pro-labor legislative record, coupled with his repeated pledge to pass Employee Free Choice give labor leaders the audacity to hope that he will keep his word, though the forces arrayed against the legislation promise to pit his convictions against political powers that have long prevailed in Washington.

The corporate sector, led by the U.S. Chamber of Commerce, has already pledged to spend more than $100 million to defeat Employee Free Choice. The Chamber even opposed the Chinese government's attempts to liberalize its repressive labor laws, evidence of just how unfailing its commitment is to suppressing workers' wages.

Ironically, the portion of the electorate that would gain the most from accelerated unionization is the less educated males with whom Obama did better than John Kerry, but still managed to lose to John McCain by 18 percentage points.

So, one of the first choices a President Obama will be compelled to make is to stand by his long-held convictions or betray millions of union activists who overwhelmingly supported him in the hope that he'd give millions more workers the chance to bargain their way into the middle class when many of them didn't even vote for him.

What Obama decides on this contentious issue will tell us much about both his political mettle and the depth of his commitment to reversing the fortunes of the nation's flat-lined wage earners.

Comments

[DuganS1]

Unions and workers being over-payed for un-skilled and semi-skilled labor is the key reason the US has been losing manufacturing jobs and why the goods trade deficit has exploded. The dramatic increase in trade from the mid-1970s until about 2002 worked well for Americans as the massive increase in consumer goods and services available, combined with high employment levels and very low inflation created a situation where even the lowest income Americans were flourishing and far better than ever before. This has been off-set this decade with the increase in commodity prices because of over-investment in the emerging markets and a reemergence of economic growth in Germany and Japan. The Bush administration tried to stop the job losses in manufacturing by weakening the dollar from early 2006 until mid-2008 and it worked well. Exports boomed and the great manufacturing job losses from early in the decade had been dramatically reduced. Now we are seeing the oil bubble burst and inflation has dramatically receded which is good particularly for lower income consumers. Now if we can stabilize the housing market, and getting down LIBOR is helping dramatically, and the job market, the stimulus will help dramatically, the consumer could become healthy again; and combine that with a weak dollar the export boom will continue and import competitors will fade away - especially as so many Chinese manufacturers have and are going out of business.

[WorkingClass]

America and the world are settling into a new dark age. Consumerism and debt money were the basis of the human economy at the end of the last epoch. Today we have a rapidly increasing human population and rapidly decreasing planetary resources. One third of people living on earth today will have to die for simple lack of food, water and shelter. After many years of wars, famines and forced migrations the remnant of the human race will not remember Bush or Obama and certainly not Taft-Hartley.

[Rayme]

I sincerely hope that the Employee Free Choice Act passes or we will spiral into a depression so fast without it. We need more than just socialist Bailouts. We need real reform to get America back on track.

[JBS]

Might want to consider repealing Taft-Hartley while you're at it.