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Lee Sustar


Inside the pressure cooker

(Spring 1998)

From International Socialist Review, Issue 4, Spring 1998.
Downloaded with thanks from the ISR Archive Website.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The State of Working America 1996–1997
Lawrence Mishel, Jared Bernstein and John Schmitt
Economic Policy Institute, M.E. Sharpe, 1997, 467 pages $24.95

AFTER MONTHS of media hype about the “miracle economy” – the Chicago Tribune last May declared it a “workers’ paradise” – the United Parcel Service (UPS) strike stunned the employers by winning 55 percent popular support. The State of Working America does much to explain why. By using an enormous range of statistics to debunk the employers’ propaganda and point fingers at the causes of the decline in workers’ living standards, Mishel, Bernstein and Schmitt show why millions of workers readily identified with the International Brotherhood of Teamsters’ battle against corporate greed.

As researchers at the Economic Policy Institute (EPI), the unofficial think tank of John Sweeney’s AFL-CIO, the authors take pains to be objective without pretending to be neutral, arguing that “the changes in the economy have been ‘all pain, no gain’ ... the factors causing the pain of greater dislocation, economic vulnerability, and falling wages do not seem to be making a better economy or generating a ‘payoff’ that could potentially be redistributed to help the losers.”

This argument, well summarized in an introductory section, is backed by vast statistical studies broken down to highlight the dynamics of change. A good deal of the material will be slow going for those unfamiliar with statistical methods, and the details obscure some important insights. Nevertheless, the book is an indispensable resource for understanding the conditions of workers since the employers’ offensive began after 1973.

The authors demolish the stereotype of the U.S. worker as a white, blue-collar male who maintains a high standard of living at the expense of women, Blacks and other minorities. While this was never true, such views are ludicrous today. So while Black workers continue to suffer much higher rates of unemployment and on average lower wages than white workers, wages and conditions have declined for all workers.

Biggest wage decreases

For example, while the gap between women’s and men’s earnings narrowed by 10.3 percent from 1979 to 1989, to reach 73.1 percent, this had more to do with the decline in men’s wages than an increase in women’s. If men’s earnings hadn’t declined, the gap would have only narrowed by 3.6 percent. In fact, male blue-collar workers suffered the biggest wage decreases over the last 25 years, losing 16.8 percent in hourly wages from 1973 to 1995. The proportion of white men living in poverty has increased from 10.7 percent in 1973 to 18.7 percent over the same period. Meanwhile, female blue-collar workers’ wages were basically flat; female white-collar workers have not seen significant pay increases since the 1970s.

Such statistics are seldom mentioned when the government reports gains in the median family income. It took until 1995 – the fourth year of economic recovery – for this measure to start rising since the early 1990s recession. Since the publication of The State of Working America, the government reported a second consecutive increase in median family income for 1996 – 1.2 percent. According to the authors, the decline in husbands’ earnings has been offset almost entirely by wives’ increase in hours and earnings. But the long-term trend is toward decline. Where median family income grew 2.6 percent from 1967 to 73, it dropped 0.6 percent from 1989–95. Even the increases in the last two years leave the figure at $35,492, still below the inflation-adjusted pre-recession peak of $36,575 in 1989.

The fall in wages and income has been steady for all but the highest-paid skilled white-collar workers over two decades. But they have been punctuated by mass layoffs which have suddenly and drastically cut living standards for millions. From 1981 to 1993, 15 percent of men and 10 percent of women experienced at least one involuntary job loss – and, for the first time in history, this rate continued well into the economic recovery of the 1990s. Full-time workers laid off from 1991 to 1993 saw their wages drop 14.8 percent. Anywhere from 25 to 40 percent of them still had no health insurance in their new jobs up to three years later. These trends have strangled the “American dream” of steadily improving living standards for workers over 35 today. Young workers will never have a chance at the dream: a new family in 1997 has income that, in real terms, is $6,148 per year less than its counterpart in 1967.

The employers have trotted out a series of explanations for these trends. And the authors knock them down one by one. They take on, for example, the idea that an increase in benefits is compensating for the decline in real wages. The employers have forced workers to bear much of the increase in health insurance costs. The same is true of the allegedly “overstated” inflation rates. Even the economists who want to magically raise income by revising inflation downward cannot erase the trend towards greater inequality that will continue to show up in the statistics.

For all of their success at disproving false explanations of workers’ declining living standards, the authors are far less effective in assigning responsibility for the attacks on workers. “Employer militancy” gets blamed, quite rightly. But so too does globalization, on the grounds that manufacturing jobs have been lost to imports. Yet the overwhelming evidence of The State of Working America is that of a general decline in wages and living standards across the working class, led by low-wage service-sector jobs which are far less subject to replacement from foreign competition. Not surprisingly, the statistical evidence marshaled to explain globalization is thin compared to the extensive evidence presented on other issues.

Failure to criticize Clinton

The book’s biggest weakness is its failure to criticize the Clinton administration. After crediting the 1993 tax increase for the rich and the Earned Income Tax Credit for helping to reduce inequality, the authors don’t discuss welfare repeal which is devastating the lives of the most vulnerable in society. This omission is all the more noticeable, given that the authors show in detail how the last 25 years have made those who were already poor far worse off. Ironically, the “market” poverty rate in the U.S. – before taxes and government benefit programs – is actually among the lowest of the rich European countries – 25.9 percent in 1995, compared to 25.4 percent for France. But once government social spending is factored in, the U.S. poverty rate is by far the highest – 21.5 percent, compared to 6.5 percent for France. By eliminating welfare, Clinton has ensured that U.S. poverty rates will remain the highest in the industrialized world. The authors’ failure to criticize him may be due to the EPI’s ties to the Democratic Party – former Labor Secretary Robert Reich was an EPI founder.

Crucially, the authors highlight the best hope for workers to reverse the employers’ attacks: the “union differential.” They found that wages are on average 25 percent higher for union workers, and overall compensation (wages and benefits) 37.8 percent higher. The advantage is clearest among blue-collar workers: unionized manual workers earn 50 percent more in wages than their non-union counterparts, have 148.9 percent more in insurance and 322.6 percent more in pensions. Thus even with the long-term decline in unionized workers’ wages, organized labor is still far better off than the 85 percent of workers who are not in unions.

And, as the UPS strike showed, organized labor has the muscle to defend its gains and fight for more – if it uses that muscle. The State of Working America shows just how much has been stolen from workers over the last 25 years and is a valuable tool for those who want to take it back.

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