Empty heads make empty pockets

 

Denis Drew

 

 

 

If we predicted to Americans of 1968 that, 35 years later, 25% of the workforce would earn less than the federal minimum wage of that day ($8.70/hour), they would have conjured up visions of another great depression or a nuclear exchange or crazies closing off mid-east oil fields – not of economic output grown 80% per person.  What happened was the great disappearance of labor unions from both the collective bargaining table and the political forum.

 

Several liberal bright lights recently debated in Harper’s magazine what road the Democratic Party should take to revive its fortunes. Ralph Nader stressed 25% of American workers earn less than $8.70 an hour (I almost jumped out of my chair: somebody up there had got the word) only to be shot down by Kevin Phillips countering the issue would appeal mostly to lower income workers who don’t vote proportionately.  Ralph let it drop (both, apparently, unawake to the deeper implications).

 

One comprehensive look at today’s middle class tight spot comes in a new book, “The Two-Income Trap”, which predicts one in six families with children will declare bankruptcy before the decade is out (starting 2003) – and depicts many more who might be better off if they did.  Most families seem one financial emergency from going under – whence credit card debt becomes their temporary savior – which too often leads to paying more in interest than in principle -- until the next crisis makes the lawyer the only way out. 

 

Before I read this book I never fully fathomed how wide-spread the American wage depression is (I think the phrase “wage depression” spells out the broad nature of the issue better than “wage inequality” which in the everyday political lexicon can be suggestive of a suffering minority).

 

But even the “Two-Income Trap” authors do not to focus on de-unionization as the underlying the predatory interest rates sucking down the struggling and perpetuating the big city crime which forces middle class families to bid up suburban real estate. 

 

I have mucho (not macho) observations to tell me what underlies individual, non-psycho crime (hysterical alienation in delinquent boys up to 18 ½ who literally do not care about themselves because they perceive, correctly or not, that nobody cares about them and cannot be deterred and I-don’t-want-to-work-aholism in adult criminals who spent too many years missing school and work).  The Crips and the Bloods would be wiped out by an honest paying Ronald McDonald ($10-$12/hour – 4% added cost of GDP output for the latter) – and they would be the first to tell you so. 

 

Once more stop on our true-depth-of-disaster tour: The Washington Post recently posted a chart purporting family income to rise, by quintile: 30%, 25%, 30%, 50% and 75% (WP).  As usual the Census family survey was presented without disclosing that top coding above one million dollars a family omitted enough income to make up the gap between every quintile and the 100% per capita income gain reported over the same years on the same Census web site (higher than even the highest quintile!) – what must the top fifth of family gains really have been: 125%?

 

The bad guys know how to work the figures for full effect.  The Bureau of Labor Standards is of late coming up with a more optimistic, lower inflation gauge called C-CPI-U.  For a long time the Census has used a lower inflation rate of its own (CPI-U-RS) which knocks roughly a point a year off inflation compared with the most commonly consulted, older BLS version (CPI-U) – the difference between the latter two being over a single controversial study of housing costs. 

 

A new BLS inflation version also knocks off about a point a year – via a completely different methodology -- adjusting for substitution of cheaper items when prices rise or for just buying less (gas) and for technological deflation.  If both methodologies are right, then, “plain” CPI-U has been too high by maybe two points all along! 

 

The folks at AARP are already passing out on the floor at the thought of applying the new C-CPI-U to COLAs.  When will the bad guys work up the nerve to apply both rationales to low ball COLAs right out of existence?: when labor gets weaker and even less organized.  (Just for everyday practical use: an inflation measure which hides the literal rise in prices offers nothing of use to me.)

 

American labor was once weighted more towards aggressive, heavy duty laborers with a greater urge to confront.  Today’s single parents supporting children on Wal-Mart wages are not a position to turn pushy – which turns into ratchet down, all around for everybody else – ask new-entry supermarket employees in California who look to a future of lower wages and weakening benefits thanks to the latest Wal-Mart forced contract.

 

The growing futility of even already organized labor suggests the utility of simply legally mandating collective bargaining for all.  This may have become an absolute necessity in an era when management has mastered the art of eradicating unions.  Australian union membership crashed from 40% to 25% since 1985 (see 20 year attack).  American unions, now down to 13% (below 9% in the private employment) may be too far gone to mount a successful employer by employer organizing comeback.

 

I like German style mandatory, sector-wide labor agreements wherein everybody doing the same kind of job within the same geographic area works under the same union contract even for different companies (sometimes called “de-facto minimum wages”). 

 

In Germany, which has the most systematic version of mandatory unionization (surprise), nobody has to join the union, so there is freedom (about half join).  Mandatory legislation only gives people power – nobody forces anybody to use it; if workers wish to take whatever the boss hands out they are free to do so; majority rules, of course.  Funny thing; in mandatory contract country, nobody doesn’t negotiate. 

 

 “Who will tell the people?”  If even our best politicians and pundits don’t recognize the depth of the “wage depression” and if those who do spend their lives building that comprehensive picture don’t recognize the singular remedy is to rebuild unions (giving due consideration to the “easy” and perhaps only plausible path: legal mandate) how will the great wage depression ever end?

 

Denis Drew

Chicago

ddrew2u@comcast.net