We’ve lost our “equalizing force in the labor market”

Posted in Around The Nation, Around The State, Commentary, Had Enough Yet?, jobs, Money In Politics, Take Action, Taxes, The Budget, The Economy, Uncategorized, Unemployment at 12:06 pm by wcnews

For a rundown of exactly how bad the “debt deal” to solve the phony deficit crisis will be Jon Perr has a great rundown, The Real Losers in the Debt Deal.

The ink isn’t yet dry (or even written) on the 11th hour debt deal, but the media are already doing their usual body count of the victors and vanquished. In the Washington Post, conventional wisdom regurgitation machine Chris Cillizza produced the predictable winners and losers list. While the Wall Street Journal and right-wing columnists proclaim “a Tea Party Triumph,” Paul Krugman,Jonathan Cohn and Greg Sargent lamented the dire political and economic consequences ofPresident Obama’s latest surrender to his Republican captors.

But largely overlooked in these post-mortems are the real losers in the one-way debt ceiling compromise: the American people. The new spending cuts didn’t merely ensure that a sluggish economy and stubbornly high-unemployment will not only be made worse; Washington tied its own hands when it comes to doing anything about it. And without raising new revenue at a time of historically low taxes, the next round of reductions promises to make the already leaky American social safety net even more porous.

And that isn’t even the worst of it. There’s is much pain coming to states and local governments because of this.

The economic carnage will be especially severe for cash-strapped states and local governments. While not nearly as painful as a default by the federal government, which provides 1 in 3 dollars spent by the states, the DC debt deal is bad enough. As Suzy Khimm explained in the Washington Post:

But what’s been largely ignored is how the very solution to the debt-ceiling crisis could also squeeze state and local governments that are already strapped for cash. Among the biggest items on the chopping block in Congress are education and Medicaid spending — federal dollars that make up the largest parts of most states’ budgets. Nearly every state government has already set its budget for the next year — some for the next two years — under the assumption that federal spending would remain more or less consistent. If such money is abruptly pulled, states won’t suddenly be able to change their spending obligations or raise taxes. [Emphasis added]

Which is exactly right. After all, state and local governments which shed almost 500,000 jobs since 2009 lost 39,000 more in June and are forecast to hemorrhage 110,000 more in the third quarter. With tax revenues only now beginning to approach pre-recession levels and federal stimulus funding evaporating, 42 states face budget shortfalls totaling $175 billion over the next two and a half years. They have been, and continue to be, the anti-stimulus.

(Does that bold part above remind anyone of Texas? It should!) Of course much of the problem we face is because of the fact that for the last 40 years or so there’s been a war on workers and the middle class by the rich and corporations - and only one side has been fighting for much of it.

As this recently released study shows, Union Decline Accounts for Much of the Rise in Wage Inequality (Tip to Think Progress, Study: Deunionization A Leading Factor Behind Increasing Income Inequality).

“Our study underscores the role of unions as an equalizing force in the labor market,” said study author Bruce Western, a professor of sociology at Harvard University. “Most researchers studying wage inequality have focused on the effects of educational stratification—pay differences based on level of education—and have generally under-emphasized the impact of unions.” [Emphasis added]

From 1973 to 2007, wage inequality in the private sector increased by more than 40 percent among men, and by about 50 percent among women. In their study, Western and co-author Jake Rosenfeld, a professor of sociology at the University of Washington, examine the effects of union decline on both between-group inequality and within-group inequality. Between-group compares people from different demographics and industries, while within-group looks at people from the same demographics and industries.


In terms of policy implications, Western and Rosenfeld think their study could help reignite the dialogue on labor unions, which they believe has disappeared from economic debates in recent years.

“In the early 1970s, unions were important for delivering middle class incomes to working class families, and they enlivened politics by speaking out against inequality,” said Western. “These days, there just aren’t big institutional actors who are making the case for greater economic equality in America.”

This post on the study, Major Study Links Decline of Unions to Rising of Income Inequality, summarizes the three biggest effects of deunionization.

1) The threat of unionization caused non-unionized employers to raise wages; that threat disappered along with unions.
2) Unions occupied a bully pulpit; knocking them off left the moral case for equality vulnerable to attack. (What do you mean Viacom’s CEO isn’t worth $85 million?)
3) Workers lost their Washington lobbyists, and with them, any hope of winning political battles for better wages and benefits.

Anyone who isn’t a corporate bought politician, meaning most Americans, knows that the best way to fix our economic problems is to put people back to work. The best way to do that is by having the rich and corporations to stop being so greedy. As David Cay Johnston points out there’s a simple fix for our economic problems, Fact-free fiscal farce.

Had America stuck by the tax-and-restrained-spending policies of President Clinton, and his budget projections proved reliable, the government today would have no debt. Instead it would have a surplus of $2.1 trillion, or nearly $7,000 per American.

All of the policy “changes” that have occurred since the “great recession” started have been to protect those with much at the expense of those with less. And there’s isn’t anyone in power advocating for those with less. Because the way our political system is currently operating doesn’t allow for them to have access to power. But more importantly because access and, as SCOTUS ruled in Citizens United, speech in our political system requires money, and lots of it. Until we all stand up and fight for an equalizing force, the inequality will continue.

Further Reading:
Local GOP infighting begins, as primary season nears

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