Apr 272014

onaschoutsmall  by Bill Onasch

More Than Cash Poor
Perhaps feeling a bit endangered themselves, American liberals are again focusing on a rapidly fading myth of liberal creation–the Middle Class. Such academic experts as former Harvard professor, now Senator, Elizabeth Warren, and former Labor Secretary Robert Reich, today ensconced in a professor’s chair at UC Berkeley, have often written perceptive descriptions of the decline of those neither rich nor poor. Today’s trending keywords are “income inequality.”

Even if you just look at cash income, inequality seems an inadequate term to describe class stratification in America. A recent study shows the top One Percent accounted for more than twenty percent of income reported in 2012 (last year’s figures not yet available). This was the biggest slice since tracking of these numbers began with the establishment of the Federal income tax in 1913.

The spectacular growth of the One Percent’s income coincides with nearly fifteen years of at best stagnation for the once thriving Middle. This past week the New York Times ran a useful piece with a grabbing headline, The American Middle Class Is No Longer the World’s Richest.  David Leonhardt and Kevin Quealy open their analysis,

“The American middle class, long the most affluent in the world, has lost that distinction. While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades. After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.”

Our Canadian and European readers may be surprised to learn they are so prosperous but, as Einstein told us, it’s all relative. Workers are under attack throughout the world. But those in most other industrialized countries have been better equipped to fight back.

The power of American unions in the first thirty-five years of the post-World War II period generated a sea change in living standards for a big segment of the working class that became a showcase for the new Middle Class myth. Even many unskilled workers could afford to buy new suburban houses, cars, even send their kids to college. There was an expectation of steady improvement, that the best was yet to come.

This “Middle Class” never embraced more than a third of the real working class of which it was a part.  U.S. employers, claiming the need to compete with European and Japanese rivals, shook the Middle Class out of its American Dream beginning in the late Seventies. New technology decimated well paid jobs. Union plants were closed, their work transferred both to domestic regions where unions were weak, and later offshore. In a futile attempt to save jobs unions made major concessions in wages and benefits. And with the growth of globalization, foreign based corporations began to open “transplant” operations in the USA–and they mostly succeeded in resisting union organizing. 

The alarming collapse of American union density–the percentage of workers covered by collective bargaining–over the past thirty-five years has been a huge factor in frozen real median earnings after taxes, now standing at 18,700 a year. Union density is more than twice as great as our current eleven percent in Canada. It’s three times greater in Italy. Belgium has a fifty percent density, Sweden 67, Finland 69. Strong unions make a difference.

While cash income is important it is not the only factor that needs to be considered. Canadian and European workers live longer than Americans because their genuinely affordable health care programs, covering all, provide better health outcomes than the unconscionably exorbitant commodity care in the USA–still out of reach to millions. This benefit was achieved mostly through political action by mass working class parties. Even Canada has a mild mannered labor party, the NDP, currently the official opposition in Canada’s parliament and recognized as the force that won their single-payer health care system.

Health care is not the only benefit leading to better living standards in countries that once envied American prosperity. Many have free or low cost child care programs for working parents; free or low cost college or trade school education; adequate low cost mass transit. And in most, vacation time, paid sick leave, and retirement security at levels far better than ours are guaranteed by law to all workers. It’s not all rosy and it’s all under attack but it’s now the turn of us Yanks to look up instead of down to the accomplishments of worker movements in other lands.

These achievements abroad are seldom acknowledged by the liberals. They continue to treat as sacred the two-party system that right now is dedicated to destroying even the modest social gains won by past mass union and civil rights struggles. Running as a Democrat worked for Senator Warren and caucusing with the Democrats suits the independent, onetime  “socialist,” Senator Bernie Sanders. They see no need for the working class majority to have a party of our own.

The liberals, and even most moderates of both parties, do agree that a boost in the minimum wage is needed. Whether they will get anything through the normal channels of the present Congress, or the one emerging from the Fall elections, is problematic. Senators Warren and Sanders will abide by the decisions of the Democrat caucus, who will likely make a symbolic try for the 10.10 minimum supported by the President.

Professor Reich is more atune to the sentiment on the street and the big battles shaping up in local areas around the popular demand for a fifteen dollar minimum. He has been promoting an effort by the liberal Democracy for America group to counter balance the prominent role played by Kshama Sawant, the socialist city council member working to build an independent grass roots effort for 15 Now in Seattle.

Winning a national minimum wage of fifteen dollars, indexed to future inflation, would be the most significant reform in this country in the last forty years. It would lift millions out of poverty. If professor Reich and other liberals want to play a constructive role in this fight they should be welcomed. But any attempts to capture and divert this fledgling bottom up movement in to the mausoleum of mass movements known as the Democrats should be resisted.

While an important reform worth fighting for, Fifteen Now will not achieve income equality. Nor would it make a dent in a more telling measure–wealth distribution. Wealth includes the value of houses, cars, jewelry, art collections, yachts, savings, investments, farms and businesses. The top One Percent control forty percent of America’s wealth. Professor Reich estimates 95 percent of the economic gains in the recovery from the Great Recession went to the super-rich Top One.

The rest of the merely rich round out a top twenty percent owning 93 percent of the national wealth. Except for the odd athlete, entertainer, or PowerBall jackpot winner, this is the ruling class who gain their uber-wealth through control of the economy–and who also select those who run the government. They may have differences among themselves but they show remarkable class solidarity against the working class majority.

This wealth concentration has been building since the Industrial Revolution took off after the defeat of the competing slave owning class in the Civil War. But never has this class been so rapacious and mean-spirited as today at the pinnacle of their success. Companies with record profits demand–and get–take backs in wages and benefits. The average interest rate on credit card debt now stands at a usurious 21 percent. The price of higher education is today far beyond the means of the “Middle Class,” leading to student loan debt now exceeding car loan debt.

This same class uses their politicians of both parties to aggressively pursue austerity and privatization not only in such public services as schools, transit, and the Post Office but also those once considered untouchable like Social Security, Medicare, Medicaid, and Food Stamps.

But wait, there’s more. We can’t afford to forget that the Industrial Revolution did more than lead to accumulation of wealth at the top. It’s also produced accumulation of greenhouse gas emissions, from massive burning of coal, oil, and natural gas, in our upper atmosphere. This has resulted in global warming that has begun to alter our climate in ways harmful to most living things. Scientists urgently warn that if this is not soon remediated irreversible damage will make civilization as we know it unsustainable.

Clearly no satisfactory resolution of any of our class issues can be expected in such a bleak future. Global capitalism would be doomed as well. But powerful sections of the ruling class seek to discredit science and deny any crisis exists. More than that, they actively try to block and roll back the mildest responses to global warming. An article in the Saturday Washington Post opens,

“In state capitals across the country, legislators are debating proposals to roll back environmental rules, prodded by industry and advocacy groups eager to curtail regulations aimed at curbing greenhouse gases. The measures, which have been introduced in about 18 states, lie at the heart of an effort to expand to the state level the battle over fossil fuel and renewable energy. The new rules would trim or abolish climate mandates — including those that require utilities to use solar and wind energy, as well as proposed Environmental Protection Agency rules that would reduce carbon emissions from power plants.”

The working class needs to fight for higher income, better health care, quality free public education,  expanded transit, retirement security, and, of course, good jobs. But any victories in these issue struggles will remain temporary and tentative as long as the ruling class retains control at the top. And no accomplishments can survive the still present danger of nuclear war,  or the climate disaster already in early stages.

Our long running discussion of how we can successfully secure decent living standards in a peaceful, sustainable environment that can be left behind for future generations will continue in the next WIR–and more to come.

Much more news of interest was also posted on our companion Labor Advocate news blog.

That’s all for this week.
Free digital subscription to the Week In Review is available through RSS and Yahoo Group Mail.

Our sole source of income is reader contributions. If you can help please visit the KC Labor Donate page.

Bill Onasch is a paid up NWU member

Bill Onasch is a paid up NWU member

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>