By John Leschak
Our economy is in trouble. According to the Federal Bureau of Labor Statistics, over 159,000 jobs were terminated in September. Despite the passage of the $700 billion bailout bill, economists are predicting that the number of layoffs will increase as the effects of emergency mergers, government takeovers and credit problems are more fully filtered into the economy.
Although the crisis has only recently gained major public attention, it has been going on for a substantial period of time. The U.S. economy has been losing hundreds of thousands of jobs over the last several years, which explains why 6.1 percent of the workforce (9.5 million people) are currently unemployed.
Even if the bailout plan works, its success will only be temporary because the current crisis is not a self-contained event. Rather, the crisis is a logical consequence of the restructuring of the entire American economy.
For several decades, America had a large middle class with well-paying jobs in industrial manufacturing. However, since the passage of the North American Free Trade Agreement (NAFTA) in 1996, most manufacturing jobs have been outsourced to countries with lower labor costs. Among the list of the top 50 declining industries-calculated by the Federal Office of Occupational Statistics and Employment Projections (OOSEP)-the top 10 are in manufacturing. From 2006 to 2016, the projected loss of employment at apparel, textile steel mills and several other types of manufacturing is between 33 and 58 percent!
While most of the jobs being lost are in manufacturing, those jobs being created are in the service sector. According to OOSEP’s list of the top 50 fastest-growing industries, employment in elder care, health care and education is expected to increase between 53 and 78 percent over the next several years, and employment in general merchandise services (for example, working at Wal-Mart) is expected to increase at least 27 percent. Unlike manufacturing, which has long been the heart of organized labor, few service-sector employers are unionized. Thus, the transition from a manufacturing economy to a service economy has contributed to a decline in union membership.
Unions have played an integral role in the prosperity of America’s middle class. Studies show that states with higher rates of unionization have lower rates of poverty and that a large union presence in an industry or region can raise wages for both union and non-union workers. Without the strength of unions, the middle class has fallen apart.
Over the past seven years, the national median income-the baseline of the middle class-has declined by almost $2,500, the personal savings rate dropped to zero for the first time since the Great Depression and millions of people fell below the federal poverty level!
The current economic crisis is inextricably bound in the declining conditions of America’s middle class. Congressman Dennis Kucinich (D – Ohio), who voted against the bailout bill, has said the reason we have a credit crisis right now is because most people are no longer making enough money to pay their debts.
Kucinich is right. The crisis had its origins in middle class people defaulting on their mortgages.
To fix the economy, we need to improve the situation of the middle and working classes, improve wages and help people pay their medical bills so they can pay their debts. We can accomplish this by implementing Senator Ted Kennedy’s (D – Mass.) Employee Free Choice Act (S. 1041) and Congressman John Conyer’s (D – Mich.) Universal Health-Care Act (HR 676).
We cannot undo the restructuring of the economy. Many of the manufacturing jobs that have been lost may never come back. However, we can improve wages in the service sector through unionization. The Employee Free Choice Act encourages unionization by making the union certification process easier and enforcing real penalties against anti-union employers.
The bailout bill will not end the economic crisis. The solution is giving more power to workers, like Franklin D. Roosevelt did during the Great Depression. While Americans in the 1930s got the New Deal, we have gotten a Raw Deal-$700 billion stolen from our generation (we are the ones stuck with this debt) and given to Wall Street without fixing what caused the problem in the first place.
John Leschak is a second-year law student. You may e-mail him at [email protected].
