The misery economy

May 18, 2011

The goal of U.S. business is a permanent lowering of working-class living standards.

CALL IT the "new normal."

The Obama administration is celebrating the government's report on jobs in April, which showed the largest monthly increase in U.S. employment in five years. This, we're told, proves the economy is finally starting to turn around for everybody.

But look below the surface, and the picture looks grim for millions and millions of those "everybodys."

Like the 6 million people who have been out of work for at least six months, according to official figures. Like all of the jobless, 14 million of them, searching for work in an economy where there's only one job opening for every four of them. Like the high school and college seniors graduating this spring who will face what the Economic Policy Institute (EPI) called "the worst job market for young workers on record."

If the U.S. economy is emerging from the Great Recession--and that's still an "if" following statistics showing slower rates of overall growth so far this year--it's into a new world in which the living standards of all but a tiny few in American society have been drastically reduced. Unlike past expansions following recession--even the weak ones--working people can't expect any rebound that returns their income to pre-recession levels, much less improves it.

Job seekers wait in an endless line for a chance at work
Job seekers wait in an endless line for a chance at work

That's the "new normal"--and opinion polls show that most people don't buy the happy talk about recovery, from Barack Obama or anyone else. Instead, there is a brewing anger about a system in which a tiny elite grows richer while ordinary people struggle to get by--and a radicalization about the nature of capitalism itself, expressed in many different ways.

This anger has also been expressed in action--most spectacularly, with the mass protests in Wisconsin against Gov. Scott Walker's union-busting law, but also many smaller struggles, often local and disconnected from one another, around a wide range of issues, as regular readers of will know.

Given the scale of the assault and the importance that the ruling class places on driving through the austerity agenda, no one should expect all of these struggles to win. On the contrary, history teaches us that in the initial stages of any radicalization, a majority of struggles will be lost, even the biggest among them--and that for every step forward in building a new resistance, there will be setbacks when the other side has a success.

This is why patience and perspective are necessary, even when the need for change feels so urgent--so that those prepared to build the resistance don't lose sight of the important successes for our side, and remain able to take advantage of every opportunity to bring together the people and groups that will lead the struggles of the future.

THE BUREAU of Labor Statistics (BLS) reported that the U.S. economy added 244,000 jobs in April. An EPI analysis points out that this is the best showing for employment statistics in five years--but it's notable that this is the first time that jobs have increased at a monthly rate characteristic of past recoveries. Yet even so, with 14 million unemployed, it would take more than five years of similar job gains to get back to the pre-recession unemployment rate.

Then there's the contradictory statistics also released this month. For example, the BLS reported that the unemployment rate for April, which is based on a survey of households, actually rose to 9 percent.

And at the beginning of May, the Labor Department said that new applications for unemployment benefits hit the highest level in eight months, for an increase of 23 percent over the preceding four weeks. "The trend is clearly upward, so that's disconcerting," financial analyst Kurt Karl told the Associated Press. "When you get three or four weeks in a row of special factors, they're no longer so special."

These figures come in the wake of the Commerce Department's report at the end of April that the growth rate of the overall economy--celebrated as a sign that the recovery was kicking in--was cut nearly in half in the first three months of 2011.

Even setting aside the conflicting statistics, the strong showing for job creation in April dims considerably when set beside the evidence of an ongoing crisis at recession, if not depression, levels--especially for the people hit hardest by the previous years of crisis.

Young workers aged 16 to 24 had an official unemployment rate of 18.4 percent in 2010, the worst level recorded in the 60 years that this data has been collected. As always, the jobless rate for African Americans, currently at 16.1 percent, remains nearly twice as high as for the population as a whole.

One major reason for the drop in the overall unemployment rate since its November peak of 10.2 percent is that so many people have dropped out of the workforce altogether because of the dim prospects of finding work.

According to the BLS, the percentage of working-age people officially counted as employed or looking for work was just 64.2 percent in April, the lowest point since the beginning of the recession. "If the labor force participation rate had held steady over the last year, there would be roughly 2.3 million more workers in the labor force right now...[and] the unemployment rate would be 10.3 percent right now instead of 9.0 percent," the EPI reported.

For those still looking, it's as much a desert for finding work as it was last year or the year before. Government statistics show there are 4.4 unemployed workers for every job opening--a far worse gap than even the worst month of the recession in the early 2000s.

U.S. business is simply not hiring at anywhere near the pace needed to make up for the big job cuts during the recession. As a result, those looking for work have to consider anything they can find. Nearly 25 million people are classified by the government as "underemployed," which includes not only the unemployed, but those who have given up looking for work, as well as people who want full-time jobs, but had to settle for part-time.

Another sign of the times: One in four of the jobs added by private employers during 2010 was a temporary job. This is a much larger proportion of the jobs being created today compared to previous periods of economic recovery--the corresponding figure for the early 2000s recession, for example, was just 7 percent.

HOW BAD is it? Journalist Andy Kroll captured the scope of the misery economy with this example, in an article written for TomDispatch:

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 percent acceptance rate in its spring hiring blitz, McDonald's was more selective than the Princeton, Stanford or Yale University admissions offices.

It's worth pointing out that the 1 million people who lined up for work at McDonald's were hoping for a job that doesn't even pay a living wage. As Kroll noted, the average hourly wage in the fast food industry is $8.89, barely half the average of $15.95 across all industries.

Kroll's article dramatically illustrates how the feeble job creation since the Great Recession has been overwhelmingly concentrated in low-wage sectors:

According to a recent analysis by the National Employment Law Project, 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 percent 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 percent of new jobs added in the sluggish "recovery" are in those same low-wage industries. On the other end of the spectrum, 40 percent of the jobs lost paid high wages ($19-$31 an hour), while a mere 14 percent of new jobs pay similarly high wages.

This shows in a stark way how American business has used the Great Recession to impose a sharp and permanent lowering of living standards for working-class people.

Of course, the U.S. ruling class hasn't required the same sacrifices from its own ranks. The latest example of outrageous excess: CEOs at the nation's largest companies were paid more in 2010 than in 2007, the height of the last economic expansion. As the Associated Press reported, "In the boardroom, it's as if the Great Recession never happened...The typical pay package for the head of a company in the Standard & Poor's 500 was $9 million in 2010...That was 24 percent higher than a year earlier."

What we're living through isn't just the down cycle of an up-and-down economy that will eventually return to the "good old days." The program of the U.S. ruling class--whether carried out in the private sector by maintaining a "reserve army of labor" to push down the wages of all workers, or in the public sector with layoffs and drastic cuts in spending on social programs--has been to redistribute wealth from workers to the rich.

OBAMA AND his administration are betting their future on the belief that the U.S. economy will show enough improvement by November 2012 for the president to win reelection.

As measured by gross domestic product or the Dow Jones average, they may have a case. But from the point of view of U.S. workers, these are still hard times--which is why a Gallup poll at the end of April found that more than half of people in the U.S. believed the economy was still in either a recession or depression.

Worse, the idea that the economic recovery is well underway has been the justification for political leaders--Democrats and Republicans alike--to reject all proposals for government jobs programs, and focus instead on slashing the deficit. The relentless drive for austerity has had a stifling effect on an already weak economy. As the EPI reports, "Over the last six months, state and local governments have shed an average of 24,000 jobs per month, and since their employment peak in August 2008, state and local governments have shed nearly half a million jobs."

The deficit obsession in Washington is increasing the gap between what passes for mainstream political debate and what working people actually want.

The deep dissatisfaction with the status quo--and now the liberal face for that status quo provided by Barack Obama--has taken many forms, and not just in terms of public opinion or election trends.

This year's revolutions and revolts in the Middle East, for example, are first of all about democracy and human rights, but another integral aspect is the rejection of neoliberalism and the desire for economic justice. This same combination of grievances was given mass expression in the protests against Scott Walker's one-party regime in Wisconsin, but also on a lesser scale in other states, whether Republicans are in charge or Democrats.

While the battle in Wisconsin and the other fights have shown the alternative after years when the level of struggle remained low, there have also been defeats and disappointments. Similar battles in other Midwestern states never took on the same dimensions--and in Wisconsin itself, unions and liberal organizations have shifted the focus from mass mobilizations into negotiations and electoral activity. Attempts to build up working-class and political organization at the grassroots to provide an alternative strategy are still in their initial stages.

But no one should lose sight of what the struggle so far has given us--a glimpse of the possibilities when working people respond to the challenge of the ruling-class offensive and say: Enough.

Every period of radicalization has its high and low points, its ups and downs. For the socialists and activists who are determined to carry on the fight over the long term, this lesson must be remembered: In every situation, there is an opportunity to engage with groups of people, whether bigger or smaller, to prepare for the struggles ahead.

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