Exploiting the unemployed

September 6, 2011

The worst unemployment crisis since the Great Depression is having a far-reaching effect on the whole of the U.S. working class--while Corporate America returns to record profits. In the second article in a two-part series, Alan Maass looks at who's been hurt and who's been helped by the jobs crisis--with additional reporting by Gary Lapon, Leela Yellesetty and Christine Darosa.

EVERYONE KNOWS the old saying that "the rich get richer and the poor get poorer." But the Great Recession and its aftermath have given a whole new meaning to that phrase. Sections of the working class that were already hurting in the weak economy of the 2000s have been hit harder than anyone by the jobs crisis today.

For example, African Americans had a jobless rate twice that of whites when the recession started, and the gap remains--official unemployment for Blacks actually edged upwards in recent months to 16.2 percent. Add in the epidemic of foreclosures following the sub-prime mortgage disaster that disproportionately hit the Black community, and it's easy to see why many African Americans look around them and see an economic depression, not a recovery.

One of the most powerful recent symbols of the unemployment crisis was a mid-August jobs fair in Atlanta sponsored by the Congressional Black Caucus (CBC). Thousands upon thousands of African Americans turned out at the Atlanta Technical College--a number arriving before dawn in the hopes of being near the front of the line--despite the sweltering summer heat. Some 20 people had to be treated for heat exhaustion over the course of the day, according to news reports.

There are almost 4.5 times as many unemployed people as jobs

"The people are desperate for work," said Rep. Hank Johnson, a CBC member who represents part of the Atlanta area. "Today, the urgency of the crisis was on vivid display."

Among Blacks, youth have been hit especially hard--the official unemployment rate for African Americans aged 16 to 24 is 31 percent, and like in every other category, large numbers don't get counted in that statistic.

High youth unemployment is an international phenomenon, feeding recent social and political struggles around the world. To the predominantly young occupiers of public squares in Spain and Greece--known as the "indignados"--today's world of crisis and poverty offers little reason to expect that the system will deliver a better future.

The picture is no more promising in the U.S. Unemployment for the 16-to-24 age range was at 18.1 percent in July, according to the Labor Department--only a small drop from a record high the previous July.

And that's despite the fact that youth have dropped out of the labor force at a faster rate than any previous recession. If all the young workers who gave up on employment since the start of the recession were counted as unemployed, the jobless rate for youth would have peaked at 23.9 percent.

As always, youth with only a high school diploma or less have a tougher situation, but college graduates, too, are facing bleak prospects.

Michael (not his real name) graduated from a well-known West Coast university in the spring of 2010, with a nearly perfect grade point average that qualified him as summa cum laude and other academic awards.

But like so many others, his job search was a frustrating ordeal. With nothing available, he took a job over the summer after graduation as a housekeeper at the university where he got his diploma, working in the residence halls rented out as rooms for the season. When that came to an end, he was on unemployment, with food stamps to help him get by.

Over the winter and spring, Michael applied to "dozens and dozens of entry-level jobs," he says, "but didn't get so much as a phone call back for a single one." So when May rolled around, Michael went back to housekeeping. "Again, the job is only temporary," he says, "so as things stand, I'll be back on unemployment in the fall, facing the same sluggish job market, and with no new marketable skills to speak of."

Michael's college degree--once thought to be the key to, if not a fortune, then at least a career and lifelong job opportunities--hasn't been much help. "Instead of studying all the time," he jokes, "I should have focused on fostering connections with the political elite of this country. At least then I might have gotten a golden parachute or a bailout."

The dire conditions facing young people were aptly summarized in the title of an Economic Policy Institute report last year: "The Kids Aren't Alright." But, of course, it's not like older workers are doing well at the expense of younger ones.

Mary is in her early 60s. Fearing that New Hampshire's high cost of living might land them in foreclosure, she and her husband sold their home and moved to Florida. They found a cheaper place in a retirement community. But finding a job--especially at their age--is another story. "There are hundreds and hundreds of people going for every available job," Mary said.

"My neighbor Susan is in her late 50s and is unemployed," she continued. "She recently found out that they hired two people to do her old job, at less money than they paid her--that's why they got rid of her. That's what we're up against, the 50- and 60-year-olds--they're all hiring the young ones because they can get them for cheap."

Compare that to Kate, the college graduate in New York state a few years ago who said she never got as far as an interview because, she was told, there were plenty of people with years of work experience who applied for the same positions.

So younger workers are encouraged to blame older workers, and older workers feel like the competition from younger workers is taking their jobs.

Guess who benefits from that set-up?

ON THE other side of the rich-richer-poor-poorer divide, it's back to business as usual at the top.

In 2009, while the worst of the jobs crisis was still to come, profits for Corporate America started soaring--and they haven't stopped. Between the official start of the recovery in early 2009 and the end of 2010, corporate profits shot up by nearly 40 percent.

Meanwhile, average hourly earnings for all employees, adjusted for inflation, fell by 1.1 percent over roughly the same time-frame--from June 2009 through May 2011--according to Bureau of Labor Statistics figures cited in the New York Times.

Liberal economist Robert Reich, who served as labor secretary under Bill Clinton in the 1990s, says Commerce Department data proves that private-sector wage gains during the 2000s through today have lagged behind even the Great Depression--4 percent over the last 10 years, adjusted for inflation, Reich says, compared to 5 percent from 1929 to 1939.

The undeniable fact is that businesses and the rich sucked in almost all the rewards in the period since the recession officially ended. An analysis by four Northeastern University economists found that pre-tax corporate profits accounted for 88 percent of the growth in U.S. national income from the start of the recovery to the end of 2010. By contrast, real wages and salaries amounted to only 0.1 percent of income growth.

Unemployment is a hugely important factor in that skewed distribution. Corporate executives know they can hold down wages and benefits, and even ask for concessions, by pointing at the swollen ranks of the unemployed, desperate for a shot at any job. That was the case nakedly stated by management at telecommunications giant Verizon for why union workers at a company that made $10 billion last year should accept a contract that would extract an average of $20,000 in concessions from each one of them.

The same pattern is clear--of big business using unemployment to push down working-class living standards--in the economy as whole, and nowhere more so than among the long-term unemployed who finally find work again.

Take Maria, an autoworker for more than 20 years at the Fremont, Calif., factory that hosted a joint venture between General Motors and Toyota. When the plant closed in April 2010, Maria was out of work for five months. She told a Wall Street Journal reporter that she considered opening a business or going back to school--but even with months of advance warning that the factory was closing, the cut in income to a $450-a-week unemployment check made those options unaffordable.

Maria counts herself lucky to have found a job before the year was out--and a decent one, too, at a start-up energy technology firm. But the position pays 20 percent less than her auto plant job--and she doesn't expect to make up the difference any time soon.

The government statistics show that Maria is no exception--the long-term unemployed often suffer a steep and lasting drop in wages when they go back to work. According to Labor Department data, among workers who had three or more years at a job that they lost in 2007, 2008 or 2009, those who were working full-time again were making less in their new positions on average--and over one-third of those workers had taken a pay cut of 20 percent, like Maria.

"Right now, I view this as an employer's market," Rick Hayduk, an executive at South Seas Island Resort in Florida, told the Wall Street Journal. Hayduk said the resort was hiring again--and finding plenty of experienced workers willing to take a cut in pay. "The past 24 months have taken a toll on a lot of individuals," Hayduk said. "I think they abandoned their hopes to receive compensation similar to what they did when they lost their jobs. We have been able to reevaluate some of our starting wages."

TWO CONCLUSIONS flow from all this. First, unemployment doesn't just affect workers without jobs. The jobs crisis is being used against the entire U.S. working class--young and old, Black and white, private-sector and public--while the money flows to the richest corporations and individuals.

Second, if there doesn't seem to be any urgency among U.S. political leaders to come up with significant measures to tackle the jobs crisis, maybe that's because unemployment is so useful to the business interests that both mainstream parties--Republican and Democratic alike--cater to.

With the nightmarish consequences of this summer's debt-ceiling agreement starting to set in, some politicians are talking about jobs again--but it's hard to take them seriously after the U.S. government just committed itself to trillions of dollars in spending reductions.

President Barack Obama will speak to a joint session of Congress this week on the jobs crisis, and he's certain to talk about the need for action on proposals to bring down unemployment.

But it's an open secret that the Obama White House doesn't expect any substantial economic measures to pass--and maybe not even previously uncontroversial ones, like a temporary cut in the payroll tax--because the Republicans will say no. Behind the scenes, Democratic operatives admit that Obama's stern words about jobs are mostly designed to make the Republicans look bad so he can bring up the issue when he runs for reelection next year.

If the Republicans are confident enough to defy both Obama and the overwhelming public sentiment, expressed in opinion polls, in favor of government action on jobs, it's because the Democrats have caved on every question since the 2010 election gave the GOP control of the House of Representatives. In fact, in the debt-ceiling agreement, Obama brought the biggest cuts of anyone to the negotiating table--a "grand bargain" that only failed because Republicans walked away from it.

According to Washington Post columnist E.J. Dionne, the "White House now sounds liberated" and "the competitive Obama is re-emerging" on the issue of jobs. But it's too little and way too late after the president agreed to unprecedented spending reductions in the debt-ceiling deal. The Republicans have the weapon they need--with Barack Obama's signature on it--to claim that any jobs program will break the agreement on cutting the deficit.

Of course, it's not like there's no clue about how to create jobs--and how to pay for the programs that would do so.

Liberal Democratic Rep. Jan Schakowsky recently introduced proposed legislation that would launch such programs as a School Improvement Corps and Park Improvement Corps to create 2.2 million jobs and decrease unemployment by 1.3 percent. The price tag of $227 billion over two years could be easily paid for by increasing taxes on households with incomes over $1 million, closing tax loopholes for corporations and ending subsidies for oil companies.

But if Schakowsky is honest, she'll admit that there's no hope of passing such a proposal in the current climate of mainstream politics--and that those standing in the way with their complaints about the size of the federal deficit include not only Republicans, but members of her own party, Barack Obama among them.

"DEPRESSION. ANGER. Anxiety." These are the feelings that plague Tom as he tries to navigate the left-out and left-behind economy.

Tom lives in Seattle, where he graduated from college in the early 1990s. After a dozen or so years at various jobs he mostly hated--and which weren't related to what he studied anyway--he decided to go back to college and get a master's degree in architecture.

"My purpose for going back to school was to have a job that I liked, and that would bring some financial security," he says. "Now I've finished school at the time of another recession or worse, I'm strapped with $60,000 in student loans, and I have no prospects of a job at all. I now have two university diplomas that aren't worth the paper they're printed on."

Just getting by from week to week is a battle, he says. "My wife and I struggle to stay in the black every month with the student loan payments, an additional $400 a month to have me placed on my wife's insurance, mortgage payments, etc.," Tom says. "And my wife works in the public schools, so she just had to take another pay cut, which won't help. At our age, we should be saving for retirement, but we have no savings at all."

The details are different, but the story is the same for millions and millions of working people today. They aren't just the victims of a tough few years before things return to "normal." The jobs crisis in the U.S. today is the sharp edge of a ruling-class offensive that will permanently redistribute wealth from workers to the rich.

Unless there's resistance.

No one can expect any help from inside the Washington political system--not unless the pressure from Corporate America to impose austerity and cater to business interests is countered by pressure from struggle and protest from below. The possibility of an alternative lies with rebuilding a working-class movement--one that unites employed and unemployed workers in a fight that demands their interests be put ahead of corporate greed.

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