The economy sounds good, but it feels bad. And it’s because the most common measures Americans use to monitor its health — the stock market and unemployment numbers — aren’t enough to tell us what’s deeply wrong with the country. With numbers like the ones we’re seeing, Americans should be optimistic about the future. Unemployment is at record lows, and the stock market is at record highs. But we’re not. Americans are broadly pessimistic about what’s coming next, the Pew Research Center found earlier this year. Increasingly, they believe that our political and economic systems work only for those with power.
This is because neither the stock market nor employment data captures what’s ailing most American families: rising costs for critical, necessary items. Meanwhile, despite wages eking up a little bit since the financial crisis, adjusted for inflation, Americans haven’t gotten a significant raise since 1999. This is why Americans are drowning in debt: We have $1.6 trillion in student debt; $1.4 trillion in auto-loan debt, now held by 35% of Americans, up from 20% in 1999; and a record $13.3 trillion in consumer debt as of the end of 2018.
As for the stock market, most people aren’t involved. Only a little over half of American families owned a single stock in 2018. So while it’s often a useful measure to understand what’s going on with corporates or specific industries, it’s not useful for understanding how much money is in America’s wallet. Employment numbers don’t tell you anything about that. Having a job doesn’t mean as much as it used to because wages simply don’t cover the same costs they used to. Meanwhile, since 1989 the share of wealth held by the top 1% of households has exploded, while for the bottom half things have frozen in time, according to the Federal Reserve.
Corporate profits are at record highs. Companies just got a massive tax cut, and instead of investing in equipment or higher wages, they have, for a variety of reasons — including uncertainty surrounding President Donald Trump’s trade war — bought back their own stock at a record rate. Low interest rates are allowing them to borrow for cheaper than ever too, so they’re awash with cash. The Trump administration may point to unemployment and the stock market to crow about this economy, but if you don’t feel like you’re sharing in the wealth, you’re not crazy. Things just aren’t working the same for everyone.
The good news is that no one has to put up with this. Numerous bad policy decisions, as well as lax enforcement around corporate power, led us to this moment. We can reverse course, but we have to start thinking about the economy the right way and paying attention to the right numbers to start heading in the right direction. When we talk about wages, we should talk about where they’ve gone since the 1970s, not the financial crisis. We should be working on increasing the number of Americans who make a living wage, not just any wage. Otherwise, you’re not seeing how this economy really works.
The American dream promises that anyone can make it if they work hard enough and play by the rules. Anyone can make it by pulling themselves up by their “bootstraps.” Baloney. The truth is: In America today, your life chances depend largely on how you started – where you grew up and how much your parents earned. Everything else – whether you attend college, your chances of landing a well-paying job, even your health – hinges on this start. So as inequality of income and wealth has widened – especially along the lines of race and gender – American children born into poverty have less chance of making it. While 90% of children born in 1940 grew up to earn more than their parents, today only half of all American adults earn more than their parents did. And children born to the top 10 percent of earners are typically on track to make three times more income as adults than the children of the bottom 10 percent. The phrase “pulling yourself up by the bootstraps” itself is rubbish. Its origins date back to an 18th-century fairy tale, and the phrase was originally intended as a metaphor for an impossible feat of strength.
Other countries understand that the family you’re born into as well as the social safety nets and social springboards you have access to play large roles. Children born poor in Canada, Denmark, or the United Kingdom – nations without America’s degree of inequality, nations which provide strong social safety nets and public investments – have a greater chance of economic success than children born poor in America. Individuals in those countries are blamed less for their personal failures and credited less for personal successes. So, why is America still perpetuating the fallacy of the self-made individual? Because those in power want you to believe it. If everyone thinks they’re on their own, it’s easier for the powerful to dismantle unions, unravel safety nets, and slash taxes for the wealthy. It’s in their interest to keep the American Dream deeply rooted in our psyche – the assumption that you determine your destiny. So we don’t demand reforms that are necessary – paid family and medical leave, for example, or early childhood education, accessible childcare, and policies that lift every family out of poverty. Let’s stop perpetuating this myth of the self-made individual. And let’s start rebuilding the American dream by creating opportunities for all, not just those who are already wealthy, privileged, and well-connected.
Instead of all those high-paying union jobs that once could support families, we’ve transitioned over to predominately low-paying service jobs: businessinsider.com/i-worked-
President Trump talks a good game about helping American workers but has pursued arguably the most anti-labor agenda of any modern president. Now he has doubled down by choosing for secretary of labor a corporate lawyer who has spent his career battling workers. This is a bit like nominating Typhoid Mary to be health secretary. The official mission of the Labor Department emphasizes the promotion of “the welfare of the wage earners,” but Trump’s mission has been to promote the exploitation of wage earners. So Eugene Scalia is a perfect fit. Scalia, a son of the late Supreme Court Justice Antonin Scalia who has fought unions on behalf of Walmart and other companies, is a talented and experienced litigator who upon assuming office will be in a position to disembowel labor. There’s a larger issue: The relentless assault on labor has gained ground partly because, over the last half-century, many Americans — me included — became too disdainful of unions. It was common to scorn union leaders as corrupt Luddites who used ridiculous work rules to block modernization and undermine America’s economic competitiveness.
There’s something to those critiques. Yet it’s now clear that the collapse of unions — the share of employees belonging to unions has plunged to 10 percent in 2018 from 35 percent in the mid-1950s — has been accompanied by a rise of unchecked corporate power, a surge in income inequality and a decline in the well-being of working Americans. For all their shortcomings, unions midwifed the birth of the middle class in the United States. The period of greatest union strength from the late 1940s through the 1950s was the time when economic growth was particularly robust and broadly shared. Most studies find that at least one-fifth of the rise in income inequality in the United States is attributable to the decline of labor unions. Unions were also a formidable political force, and it’s perhaps not a surprise that their enfeebling has been accompanied by a rise in far-right policies that subsidize the wealthy, punish the working poor and exacerbate the income gap.
“Labor unions, and their ability to create a powerful collective voice for workers, played a huge role in building the world’s largest, richest middle class,” notes Steven Greenhouse in his superb, important and eminently readable new book about the labor movement, “Beaten Down, Worked Up.” “Unions also played a crucial role,” Greenhouse adds, “in achieving many things that most Americans now take for granted: the eight-hour workday, employer-backed health coverage, paid vacations, paid sick days, safe workplaces. Indeed, unions were the major force in ending sweatshops, making coal mines safer, and eliminating many of the worst, most dangerous working conditions in the United States.” Greenhouse, who covered labor for 19 years for The Times, acknowledges all the ways in which labor unions were maddening and retrograde. But he notes that corporations run amok when no one is minding them. Union featherbedding and rigid work rules have been real problems. Yet without unions to check them, C.E.O.s engage in their own greedy featherbedding and underinvest in worker training, thus undermining America’s economic competitiveness.
The bigger picture is that America’s working class is in desperate shape. Average hourly wages are actually lower today, after inflation, than they were in 1973, and the bottom 90 percent of Americans have seen incomes grow more slowly than the overall economy over the last four decades. The reasons are complex, but one is the decline of unions — for unions benefit not only their own members but also raise wage levels for workers generally. So I’ve come to believe that we need stronger private-sector unions — yet the Trump administration continues to fight them. Greenhouse notes that nearly 20 percent of rank-and-file union activists are fired during organizing drives, because the penalties for doing so are so weak: A corporation may eventually be fined $5,000 or $10,000 for such a wrongful dismissal, but that is a negligible cost of doing business if it averts unionization. That’s why we need a secretary of labor who cares about laborers. Trump campaigned in 2016 as a voice for forgotten workers, but he consistently sides with large corporations against workers, and his nomination of Scalia would amplify the sad and damaging war on unions.
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