Working Americans were in trouble before COVID

Before anyone had heard the term “COVID-19,” working America was already in a crisis.

Despite a growing economy in the years preceding COVID-19 — with expanding corporate profit margins, soaring capital markets, record-low unemployment, rising levels of educational attainment and (intermittently) rising productivity – real wages for many hard-working Americans had largely been flat for a generation.  Over this same time period, prices for housing, health care, and higher education grew multiples faster than incomes.

Pre-COVID, 43% of American workers earned $15 an hour or less, the median middle-class family had only $4,000 in liquid net assets, 39% of Americans would have had a difficult time affording a one-time emergency expense of $400, only 29% of Americans were financially healthy, and according to one recent survey of American adults, only one third could pay all of their bills on time and save more than $100 in the most recent month.  Over 10% of Americans had no health insurance, and tens of millions were under-insured.  Nearly half of Americans had no retirement savings and among those who did, the median account balance was a mere $60,000. Households in the top 1% had gained $21 trillion in wealth since 1989, while households in the bottom 50% had lost $900 billion.  All in all, the share of the economy going to the bottom 90% has dropped by 13% since 1975. The incomes of the bottom 90% amounted to about 1/3 of the economy in 1975; by 2018, those incomes only made up about 1/5 of the economy.   America’s middle class – once the largest in the world, became the 32nd-largest per capita among OECD nations.  This was the reality in the “good,” pre-COVID economy.

The current crisis

The current crisis has exposed not only weak public health infrastructure and an inability to manufacture swabs, vials, and medical glass in the world’s largest economy, but also an astounding level of financial precarity facing hard working Americans.  This is especially true among so-called “essential workers,” more than one-third of whom make less than $15 per hour, and many of whom – such as home care aides and food delivery drivers, are frequently excluded from unemployment, industrial insurance, and other labor protections originally designed for an industrial economy.   Of course, at least “essential workers” still have jobs, unlike 20% of the workforce and growing.

Whether the Corona-recession evolves into a Corona-depression or merely into a long, slow, unequal recovery, it could not have come at a worse time for hard-working Americans, the majority of whom entered the crisis without the financial security needed to survive it and emerge on the other side as full participants in the economy.

How we got here

The financial precarity of hard-working Americans is the result of a nearly half-century policy framework – embraced by administrations of both political parties, and economic and political elites broadly – that has valued efficient markets, rational allocation of capital, and short-term shareholder value maximization above what Senator Marco Rubio recently referred to as “resiliency, solidarity, and the common good.”

Under this neoliberal (or, if you prefer, “market fundamentalist”) framework, both government and mediating civil society institutions were inimical to progress unless they accelerated the prevailing doctrine of deregulation, detaxation, globalization, privatization, de-unionization, and financialization.

Workers paid enough to support a family and save for the future, and to have time and resources to be good citizens, parents, customers and taxpayers?   Companies investing for the long-term on infrastructure and workforce?  Government action to promote American jobs and productive capacity, family financial stability, strong communities, and retirement security?   According to a market fundamentalist view, these are at best sentimental inefficiencies to be tolerated, and at worst obstacles to proper market functioning to be eliminated.

The economy Americans want

If given the chance, few Americans would have voted for the “you’re on your own” economy of the last decades, and yet it was a series of human choices to embrace market fundamentalism that brought us to where we are: choices made at every level of government as well as in corporate boardrooms, and embraced by elites in the media and the academy.

The question isn’t whether to have a market economy versus something else.   It’s what kind of market economy, and ultimately what kind of democracy, we want, if any.   After all, Saudi Arabia and Norway are both market economies with similar gross domestic products, and even the same major export.  But few people I know would want to live in Riyadh, while few would mind at least a long-term stay in Oslo.

The vast majority of Americans of all political stripes broadly agree that men and women who work hard should be able to support a family and live a good life.  Americans believe that valuing work, being loyal to employees, supporting families, and helping younger generations succeed are fundamental American values.  That working families are the engines of our economy, providing labor to employers and customers to businesses. And that investing in the middle class isn’t only the right thing to do for middle-class families, but the smart thing to do for the economy in the long run.  They believe, especially, that public officials and public policy should serve the interests of America’s hard-working majority.

While right-of-center and left-of-center perspectives may diverge on how to best achieve these outcomes and embrace these values, they are the outcomes and values that unite overwhelming supermajorities of Americans across every other partisan, ideological, geographic and tribal divide.

So why isn’t the entirety of American economic policy aligned with achieving them?

The decline of worker power

In a word, power.  Power is the currency of change, or what Dr. Martin Luther King Jr. described to striking sanitation workers in Memphis as “the ability to achieve purpose.”

Policy, on the other hand, is only frozen power.

But power is one thing that working families in the United States have had less and less of for the last five decades, due largely to government enacting a market fundamentalist agenda pursued by a newly-politized business sector.   Worker economic power eroded due to the government-abetted mobility of capital abroad, combined with government-abetted corporate consolidation and loose labor markets at home.  Worker bargaining power eroded with the decline of unions, shrinking the middle class with it.  And without unions or any alternative, worker political power eroded, so both political parties increasingly aligned their economic programs with the tenets of market fundamentalism, constructing electoral coalitions around other voter factions and identities.

To imagine an economy and a politics aligned around Senator Rubio’s “Resiliency + Solidarity + Common Good” framework (or Oren Cass’s similar “Security + Resilience + Pluralism + Justice”), it is necessary to re-imagine and rebuild the power of hard-working Americans.

Rebooting worker power

21st-century worker power need not – and could not in any event– look like my great grandfather’s distillery workers’ union of the 1930s, my grandfather’s auto workers union of the 1950s or my mother’s teacher’s union of the 1980s.  As Eli Lehrer and I have written, we may need new models, even multiple competing models, of what worker- and working-class power would look like in the 21st century.

A reboot of worker power in the U.S. might look far more like the sectoral bargaining models of northern and central Europe, models of industrial relations that are generally more collaborative, more inclusive, and more stable than the enterprise-based model assigned to the labor movement by congress in 1935 (and by an occupying American general to Japan’s in 1945).  Notably, these labor law models have been embraced by conservative, progressive, and coalition governments alike throughout much of Europe.  (Michael Lind suggests a tripartite variant on this model for some U.S industries).

A reboot of worker power could also imagine unions as the private, civil-society providers of benefits like unemployment insurance, industrial insurance, training, health and retirement benefits. Similar models exist in the “Benelux” countries and in more limited instances in the U.S.

Or it could look something like an “AARP for workers” or an “NRA for wages,” – an open-source, voluntary, national advocacy and service organization that puts family financial security at the center of its agenda and holds politicians of both parties accountable to the idea that a thriving middle class is good for America.   Curiously, in a nation where 75% of adults belong or financially contribute to at least one membership non-profit organization, there is no national membership organization that fits that description, a giant ecosystemic gap (and mission-philanthropy market opportunity) if there ever was one.

Whatever the future of worker power may look like in the U.S., it is hard to imagine a true reboot of the American project without workers having a seat at every table – from the bargaining table to the board room to city hall to congress.   Building an economy and a democracy that serves “resiliency, solidarity, and the common good” depends on America’s hardworking majority being at the center of the conversation.

David Rolf
David Rolf is founder and President Emeritus of SEIU 775 and a former International Vice President of SEIU. He is the author of The Fight for Fifteen: The Right Wage for a Working America and A Roadmap for Rebuilding Worker Power.
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