Hollowing Out the Middle Class
By ANDY KROLL
Think of it as a parable for these grim economic times. On April 19th, McDonald's launched its first-ever national hiring day, signing up 62,000 new workers at stores throughout the country. For some context, that's more jobs created by one company in a single day than the net job creation of the entire U.S. economy in 2009. And if that boggles the mind, consider how many workers applied to local McDonald's franchises that day and left empty-handed: 938,000 of them. With a 6.2% acceptance rate in its spring hiring blitz, McDonald's was more selective than the Princeton, Stanford, or Yale University admission offices.
It shouldn't be surprising that a million souls flocked to McDonald's hoping for a steady paycheck, when nearly 14 million Americans are out of work and nearly a million more are too discouraged even to look for a job. At this point, it apparently made no difference to them that the fast-food industry pays some of the lowest wages around: on average, $8.89 an hour, or barely half the $15.95 hourly average across all American industries.
On an annual basis, the average fast-food worker takes home $20,800, less than half the national average of $43,400. McDonald's appears to pay even worse, at least with its newest hires. In the press release for its national hiring day, the multi-billion-dollar company said it would spend $518 million on the newest round of hires, or $8,354 a head. Hence the Oxford English Dictionary's definition of "McJob" as "a low-paying job that requires little skill and provides little opportunity for advancement."
Of course, if you read only the headlines, you might think that the jobs picture was improving. The economy added 1.3 million private-sector jobs between February 2010 and January 2011, and the headline unemployment rate edged downward, from 9.8% to 8.8%, between November of last year and March. It inched upward in April, to 9%, but tempering that increase was the news that the economy added 244,000 jobs last month (not including those 62,000 McJobs), beating economists' expectations.
Under this somewhat sunnier news, however, runs a far darker undercurrent. Yes, jobs are being created, but what kinds of jobs paying what kinds of wages? Can those jobs sustain a modest lifestyle and pay the bills? Or are we living through a McJobs recovery?
The Rise of the McWorker
The evidence points to the latter. According to a recent analysis by the National Employment Law Project (NELP), the biggest growth in private-sector job creation in the past year occurred in positions in the low-wage retail, administrative, and food service sectors of the economy. While 23% of the jobs lost in the Great Recession that followed the economic meltdown of 2008 were "low-wage" (those paying $9-$13 an hour), 49% of new jobs added in the sluggish "recovery" are in those same low-wage industries. On the other end of the spectrum, 40% of the jobs lost paid high wages ($19-$31 an hour), while a mere 14% of new jobs pay similarly high wages.
As a point of comparison, that's much worse than in the recession of 2001 after the high-tech bubble burst. Then, higher wage jobs made up almost a third of all new jobs in the first year after the crisis.
The hardest hit industries in terms of employment now are finance, manufacturing, and especially construction, which was decimated when the housing bubble burst in 2007 and has yet to recover. Meanwhile, NELP found that hiring for temporary administrative and waste-management jobs, health-care jobs, and of course those fast-food restaurants has surged.
Indeed in 2010, one in four jobs added by private employers was a temporary job, which usually provides workers with few benefits and even less job security. It's not surprising that employers would first rely on temporary hires as they regained their footing after a colossal financial crisis. But this time around, companies have taken on temp workers in far greater numbers than after previous downturns. Where 26% of hires in 2010 were temporary, the figure was 11% after the early-1990s recession and only 7% after the downturn of 2001.
As many labor economists have begun to point out, we're witnessing an increasing polarization of the U.S. economy over the past three decades. More and more, we're seeing labor growth largely at opposite ends of the skills-and-wages spectrum -- among, that is, the best and the worst kinds of jobs.
At one end of job growth, you have increasing numbers of people flipping burgers, answering telephones, engaged in child care, mopping hallways, and in other low-wage lines of work. At the other end, you have increasing numbers of engineers, doctors, lawyers, and people in high-wage "creative" careers. What's disappearing is the middle, the decent-paying jobs that helped expand the American middle class in the mid-twentieth century and that, if the present lopsided recovery is any indication, are now going the way of typewriters and landline telephones.
Because the shape of the workforce increasingly looks fat on both ends and thin in the middle, economists have begun to speak of "the barbell effect," which for those clinging to a middle-class existence in bad times means a nightmare life. For one thing, the shape of the workforce now hinders America's once vaunted upward mobility. It's the downhill slope that's largely available these days.
The barbell effect has also created staggering levels of income inequality of a sort not known since the decades before the Great Depression. From 1979 to 2007, for the middle class, average household income (after taxes) nudged upward from $44,100 to $55,300; by contrast, for the top 1%, average household income soared from $346,600 in 1979 to nearly $1.3 million in 2007. That is, super-rich families saw their earnings increase 11 times faster than middle-class families.
What's causing this polarization? An obvious culprit is technology. As MIT economist David Autor notes, the tasks of "organizing, storing, retrieving, and manipulating information" that humans once performed are now computerized. And when computers can't handle more basic clerical work, employers ship those jobs overseas where labor is cheaper and benefits nonexistent.
Another factor is education. In today's barbell economy, degrees and diplomas have never mattered more, which means that those with just a high school education increasingly find themselves locked into the low-wage end of the labor market with little hope for better. Worse yet, the pay gap between the well-educated and not-so-educated continues to widen: in 1979, the hourly wage of a typical college graduate was 1.5 times higher than that of a typical high-school graduate; by 2009, it was almost two times higher.
Considering, then, that the percentage of men ages 25 to 34 who have gone to college is actually decreasing, it's not surprising that wage inequality has gotten worse in the U.S. As Autor writes, advanced economies like ours "depend on their best-educated workers to develop and commercialize the innovative ideas that drive economic growth."
The distorting effects of the barbell economy aren't lost on ordinary Americans. In a recent Gallup poll, a majority of people agreed that the country was still in either a depression (29%) or a recession (26%). When sorted out by income, however, those making $75,000 or more a year are, not surprisingly, most likely to believe the economy is in neither a recession nor a depression, but growing. After all, they're the ones most likely to have benefited from a soaring stock market and the return to profitability of both corporate America and Wall Street. In Gallup's middle-income group, by contrast, 55% of respondents claim the economy is in trouble. They're still waiting for their recovery to arrive.
The Slow Fade of Big Labor
The big-picture economic changes described by Autor and others, however, don't tell the entire story. There's a significant political component to the hollowing out of the American labor force and the impoverishment of the middle class: the slow fade of organized labor. Since the 1950s, the clout of unions in the public and private sectors has waned, their membership has dwindled, and their political influence has weakened considerably. Long gone are the days when powerful union bosses -- the AFL-CIO's George Meany or the UAW's Walter Reuther -- had the ear of just about any president.
As Mother Jones' Kevin Drum has written, in the 1960s and 1970s a rift developed between big labor and the Democratic Party. Unions recoiled in disgust at what they perceived to be the "motley collection of shaggy kids, newly assertive women, and goo-goo academics" who had begun to supplant organized labor in the Party. In 1972, the influential AFL-CIO symbolically distanced itself from the Democrats by refusing to endorse their nominee for president, George McGovern.
All the while, big business was mobilizing, banding together to form massive advocacy groups such as the Business Roundtable and shaping the staid U.S. Chamber of Commerce into a ferocious lobbying machine. In the 1980s and 1990s, the Democratic Party drifted rightward and toward an increasingly powerful and financially focused business community, creating the Democratic Leadership Council, an olive branch of sorts to corporate America. "It's not that the working class [had] abandoned Democrats," Drum wrote. "It's just the opposite: The Democratic Party [had] largely abandoned the working class."
The GOP, of course, has a long history of battling organized labor, and nowhere has that been clearer than in the party's recent assault on workers' rights. Swept in by a tide of Republican support in 2010, new GOP majorities in state legislatures from Wisconsin to Tennessee to New Hampshire have introduced bills meant to roll back decades' worth of collective bargaining rights for public-sector unions, the last bastion of organized labor still standing (somewhat) strong.
The political calculus behind the war on public-sector unions is obvious: kneecap them and you knock out a major pillar of support for the Democratic Party. In the 2010 midterm elections, the American Federation of State, County, and Municipal Employees (AFSCME) spent nearly $90 million on TV ads, phone banking, mailings, and other support for Democratic candidates. The anti-union legislation being pushed by Republicans would inflict serious damage on AFSCME and other public-sector unions by making it harder for them to retain members and weakening their clout at the bargaining table.
And as shown by the latest state to join the anti-union fray, it's not just Republicans chipping away at workers' rights anymore. In Massachusetts, a staunchly liberal state, the Democratic-led State Assembly recently voted to curb collective bargaining rights on heath-care benefits for teachers, firefighters, and a host of other public-sector employees.
Bargaining-table clout is crucial for unions, since it directly affects the wages their members take home every month. According to data from the Bureau of Labor Statistics, union workers pocket on average $200 more per week than their non-union counterparts, a 28% percent difference. The benefits of union representation are even greater for women and people of color: women in unions make 34% more than their non-unionized counterparts, and Latino workers nearly 51% more.
In other words, at precisely the moment when middle-class workers need strong bargaining rights so they can fight to preserve a living wage in a barbell economy, unions around the country face the grim prospect of losing those rights.
All of which raises the questions: Is there any way to revive the American middle class and reshape income distribution in our barbell nation? Or will this warped recovery of ours pave the way for an even more warped McEconomy, with the have-nots at one end, the have-it-alls at the other end, and increasingly less of us in between?
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An Affirmation of Labor's Subordination to Capital
By GEOFFREY McDONALD
The crisis is now in its fourth year, and everyone agrees that it's all about one thing: jobs. First the politicians: Obama has declared that jobs will be his number one priority for the rest of his term. That is the decisive electoral issue; it's the standard according to which people should judge the government's performance. Economic experts of all stripes debate the effectiveness of the two stimulus packages in terms of job creation and offer various competing models for reducing unemployment. And then there are the main players in the economy, the businessmen who always complain about the difficulties they face in their efforts to create jobs: tight credit, tax burdens, overly regulated labor markets, and the new health care reform law, implying that their private interest in the use of wage labor is a service to the people. And finally the majority of the population for whom, of course, everything revolves around their only source of income: while most workers worry quietly about losing their jobs or about their prospects for finding one, others have gone out on the streets with signs reading, "save our jobs!" appealing to the government to do everything it can to save their employers.
In short, all sides seem to agree that employment is the yardstick for measuring the health of the economy and the well-being of the population. It is the overriding goal to which everyone is, or should be, dedicated. That is something everyone takes for granted, even (and perhaps especially) the left, who criticize government, business, and the overall spirit of "neoliberalism" for the failure and/or lack of efforts to create jobs. As if jobs are not what they really are: a means of profit for the capitalists, a place of exploitation and therefore drudgery for the workers.
That's why I want to step back for a moment and question this seemingly self-evident truism. I will argue that what critics of capitalism need to point out today is that the cry for jobs is not at all self-evident, but absurd and brutal. And that is not only true when workers say "American jobs for American workers!" and other xenophobic slogans. It is more fundamental than that: a society in which work is the ultimate need and desire of workers is one that is hostile to workers. All too many Marxists chime in with this call for work. As Marx once wrote, "to be a productive labourer [in capitalism] is ... not a piece of luck, but a misfortune." This basic insight is crucial, and it is irreconcilable with a cry for jobs. So I am going to develop this insight a bit more, and hope it will be taken more seriously.
First point: Work is not a human need
"The American people need work." That is a phrase that everybody takes for granted, especially in times of high unemployment. In fact, it doesn't get any more absurd. Nobody needs work. What people need are the products of work. Work is necessary toil for producing useful things. Work is a means to an end and not an end in itself. So if the necessities are produced in less time and there is less work to be done, then everyone is happy, not worried.
But in capitalism, things are apparently not that simple. Here, there is a shortage of work – not of goods. Nobody is concerned about or claims that there is a shortage of goods. And yet people are poor and getting poorer because of a shortage of work to produce more goods. That is the first, best and most simple proof that in capitalism the purpose of work is not to satisfy people's needs. Apparently, it serves a different purpose – and everybody, especially those here in this audience, knows what that purpose is: profit.
For profit there can never be enough work. The more the better. Could there be a better indicator of the antagonism between the purpose of work and those who have to do that work? And yet, because profit is the purpose of work, any work that is not useful for profit doesn't get done. So the livelihoods of those whose work isn't useful for profit are superfluous. This is yet another indicator of how little work in this society is a means for the people.
The truth is that people depend on work because they need the wages work pays. Otherwise, they remain excluded from the goods that exist in abundance, but that are the private property of those that have these goods produced for the sake of their profit.
So the brutality of this society does not begin when people need work and can't find any; it begins when they have this need for work in the first place. All the problems they have finding work are a guaranteed result of this absurd need for work — and always more work.
Second point: Workers can't create any jobs
Workers might be able to work, they might say they want to work, and in capitalism they certainly have to work — but they are unable to work on their own power, on the basis of their own need for goods. After all, the means of production are the private property of someone else. Workers are mere labor power, a mere possibility of employment. They are completely powerless to turn this possibility into a reality. They can't just decide they will work and then go do it — that's why they demand work, because they are dependent on somebody else giving it to them. Clearly, work isn't their means; it's not something they can control. In order to perform the work they need to do for their own livelihood, they have to prove useful for a different interest, that of the capitalist.
The capitalist, as the owner of the means of production, has the freedom to decide whether work is done, and thus whether workers who need work can earn a livelihood. So the only thing the workers can do is to demand, or better, plead for work. In short, people can live only if their labor is useful for profit. The reason for this perverse "need" to find work is their subordination to the interests of capital and its accumulation. Marx's explanation of class society, his condemnation of capitalism, can be summed up in this strange need: Workers are excluded from the means of production, which exist as private property, and thus find themselves in the dire predicament of needing work, needing to sell the only thing they own in order to survive: their own labor power.
Third point: It is harmful to cry for jobs!
If anyone still needs more proof of how little work is the means of the workers, then take a look at how the work that is done is organized and the criterion according to which that work gets paid. Not only are most people dependent on their labor-power being useful for profit in order to live, the usefulness of their labor-power for profit consists in their working as much as possible and earning as little as possible. That's because their work is the source of profit, and because their pay is a deduction from profit. When a business wants work, it wants as much of it as possible and it wants to pay as little as possible for it so that its interest, the difference between cost and profit, is as large as possible. Because it is about profit, workers are costs — an entry on the balance sheet no different than other costs, like energy or machines, so they are squeezed for as much work as possible. So a worker can never say, "now I have a job, I'm ok" — he ruins himself at work and still has a hard time making ends meet.
So a job is an inadequate means of subsistence — to say the least! And it is not only an inadequate means for a livelihood, but when people have a job it restricts them and harms them. The very way they earn a livelihood is a threat to their health and well-being. The need for jobs expresses an ugly truth about capitalism: people need exploitation in order to live; they are compelled to be interested in making themselves useful for economic interests that succeed at their expense. To say people need jobs is to show how dependent they are. This is an indictment of capitalism — the subordinate position that people are forced into and the role they play in it.
So the call for jobs is never addressed to workers. How could it be? Workers don't have any control over jobs; jobs are not their means. So it is appropriate that the call for jobs is always addressed to business and the state. After all, they are the activists and profiteers of work in this society. Which brings me to my fourth point:
Fourth point: Jobs are in the interest of the state and business
On the one hand, when politicians say that job creation is their number one priority, and when businesses talk about their desire to create jobs and the difficulties they have doing so, they are being dishonest. Jobs are not the goal, profit is their goal. On the other hand, politicians and businessmen might be dishonest, but they have a good reason to call for jobs. That's precisely what their interest is in jobs: other people's labor is the source of capitalists' enrichment, and the source of the growth that the state is interested in. In that sense, they really are interested in creating jobs. They say it is difficult to create jobs, but what they really mean is that it is difficult to create the conditions for profitable jobs. That is the measure of whether capitalists are producing wealth that counts.
So how do governments and businesses go about improving the conditions for more jobs? Logically, they do this by improving conditions for business. And that involves, above all, increasing the profitability of labor. There are plenty of methods for doing so, but essentially it comes down to having people work longer hours for less pay and with greater flexibility and insecurity. That also demonstrates how jobs aren't a means for people's livelihoods, but the means by which capital enriches itself at the cost of those who perform labor.
So for politicians and capitalists, it makes sense to call for jobs because jobs are the source of their wealth and power. But leftists should not join this call, because (again) jobs means being extorted. If leftists call for jobs, they are not addressing workers; after all, that is not something that workers can decide on. All they can do is make their exploitation more attractive. And even then, they are still powerless to create any jobs. Who they do address, whether they like it or not, is business and the state – those who benefit from other people's exploited labor and also create unemployment in the pursuit of their interest in profit.
Fifth point: Leftist wishful thinking
Of course, when those on the left call for job creation, they don't have in mind the profits of capital and the power of the state. They don't say "get rid of unions" and "no taxes," but "prevent outsourcing" and "tax the rich and use the money for schools and health care." Green Jobs initiatives are particularly popular right now. But here it is noticeable that in capitalism even socially desirable things are not produced if there is no prospect of profit. And these projects are realized only and insofar as the state considers them necessary for capitalist society and they are financed by the society as a whole. This is something that needs to be criticized instead of asking whether the state could or should do something different than what it always does. Leftists have to explain the interests and systemic purposes at work and how subordinate the workers' interests are to those of capital and the state, rather than seeking to reconcile these interests. This never works in capitalism, because this society's purpose is the accumulation of capital rather than taking care of people's needs. And if the state has to step in to create new industries, like with a Green Jobs initiative, it is naïve to think things will turn out any different, because what the state will be fostering is new fields of business opportunities, and nobody should be surprised by what this will look like for workers — it will mean low wages, long hours and bad conditions.
So back to the core of my topic:
What is so harmful about the call for jobs is that by calling for jobs, leftists affirm the dependency of the workers on, and their subordination to, the profits of capital. And this affirmation isn't just an implicit theoretical act; it's not just the premise of the call for jobs. Thats why, when it comes to practice, one solution is prominent and the call for jobs always ends up in disappointment and the complaint that exploitation increases and the workers are worse off. That's something that unions and especially their members have been experiencing all over the world. In capitalism, the only way to fight for jobs is to accept and offer sacrifices on the part of those who need jobs, on the part of the workers.
In summary: It is a mistake to think that a job is something good because losing a job is something bad. Workers end up offering themselves at reduced, cheaper prices, and begging for jobs undermines the very reason they go to work in the first place — to get a paycheck. Instead, not only should workers "take a serious look" at their position in this system of exploitation, but a proper critique of capitalism involves telling them about that position instead of affirming it in the call for jobs.
