This Labor Day should remind all of us of what we have lost as American citizens since the 1980s to the politics of selfishness.
The absence of a coherent industrial policy has remained largely unremarked upon by the pundits and political class, while the fragmented power centers of this country's federal government have not hesitated to endorse policies which enable businesses to out-source, the wealthy to buy trophy homes and stash money in off-shore accounts, and agri-businesses to swallow up small family farms while receiving massive taxpayer subsidies. The political and economic policies pursued during the last three decades of the twentieth century and the first ten years of the twenty-first century neglected and de-funded public goods and infrastructure from railroads to bridges, to economic training programs for the unemployed, to educational grants and programs to improve the quality of education and to increase the number of university graduates.
Whether the Obama administration will be willing to squander political capital in an effort to address this problem in a serious way remains problematic, given its caution and the financial and political power of entrenched interests and their lobbyists. In addition, the limitations of a federal government in which power is divided and exercised by so many disparate power centers militates against the likelihood of success in any such endeavor.
By contrast, the European Union countries have had no such aversion to thinking and planning on the macro-economic level. The member states have announced ambitious plans to develop a hydrogen-based economy by 2050 and the union has invested billions of dollars in the development and improvement of infrastructure educational programs, and scientific and technological research and development.
Another significant reason for the increasing economic inequality among Americans is directly related to the demise of a viable labor movement in the United States. Throughout the nineteenth century, given their classical liberal ethos, most state courts treated labor unions and strikes as illegal conspiracies in restraint of trade.Slowly, the tide began to turn. As the effects of the Great Depression became pronounced, industrial unionism, organized under the auspices of the Congress of Industrial Organizations (CIO), emerged.
With the enactment of the National Labor Relations Act in 1935, the right of all workers "to organize and bargain collectively through representatives of their own choosing" was pronounced for the first time to be national public policy. Other New Deal legislation included the Walsh-Healey Government Contracts Act, which required the payment of prevailing wages on government contracts in excess of $10,000; the Railroad Retirement Act; and the Fair Labor Standards Act of 1938 which provided for the first time, with certain exceptions, a nationwide minimum wage floor and maximum workweek of 40 hours per week within three years of its enactment date.
Since the 1940s, however, the American labor movement has been forced into retreat. After the death of Franklin Roosevelt and the election of a Republican Congress in 1946, the right-wing in the United States became resurgent. The first great success of New Deal critics was achieved with the enactment of the Taft-Hartley Act in 1947, which was passed over President Truman's veto. The effect of this legislation was to outlaw "closed shops" and to permit individual states to allow "open shops" - i.e. shops in which elected unions could not require all of the employees to belong to the unions, irrespective of whether the non-union employees also received and enjoyed the benefits of collective bargaining.
As a result of that legislation, corporations began an inevitable migration to the South where welcoming state legislatures hastily enacted "right-to-work" laws. The migration of these manufacturing companies away from the unionized urban centers of the Midwest and North left hundreds of mill towns impoverished and desolate, and the union movement was effectively eviscerated.
It did not take long for the owners of corporations to discover that, once they had escaped from the threat of unionization, they could escape almost all government regulation by moving their business and manufacturing operations out of the United States to Third World countries. In an article that appeared in the Nation magazine,[ "Mill Hill Populism: Meet The New Face of Populism in Post-NAFTA North Carolina," May 12, 2008] , Bob Moser noted that "North Carolina, first in the South for its share of jobs in manufacturing, long benefited from out-sourcing. Decades ago Northern manufacturers shifted jobs to low-wage, Southern states with severe restrictions on organized labor. Now the 'old economy' parts of all these states were reeling from post-NAFTA version of out-sourcing. Since 1993, North Carolina has bled more than 200,000 manufacturing jobs...The pace of closures isn't slacking, either. Last year, 10% of the state's textile jobs were lost...."
Even among the few unionized workers still employed in manufacturing, a two-tier pay system was imposed by management to which unions were forced to acquiesce because of downward economic pressures: younger workers now make substantially less per hour than more senior employees who perform the same work. The effect of this two-tier system denies younger workers upward mobility and divides workers based solely upon dates of hire: "The changing job market is undercutting entry-level wages for those who do not go to college. 'In the 1960s and 1970s, you saw high school graduates getting good jobs at Ford and AT&T, jobs that in inflation-adjusted terms were paying $20 or $25 in today's wages," said Sheldon Danziger, a professor of public policy at the University of Michigan. "Nowadays most kids with just high school degrees will work in service-sector jobs for $10 or less..."
Perhaps as worrisome are the long-term trends which suggest that, absent substantive structural reform, unemployment will remain even more intractable long after the economic meltdown which began in 2008. Between 1975 and 2005, entry-level wages for male high school graduates who did not graduate from college declined 19% after adjustment for inflation while the incomes of their female counterparts fell 9%. Lastly, men who were in their thirties in 2004 are reported to have had a median income of 12% less, after adjusting for inflation, than did their fathers' generation when the latter were in their thirties.
The effect of this continuing economic trend has been to show, once again, that the practice of liberal individualism produces results quite different from its theory: In an world of unrestrained competition, only the few, the wealthier, the more powerful, the more resourceful, the better educated, the more mobile, will be able to maximize their opportunities; everyone else gets left behind.
Thus, according to the U.S. Department of Labor [Union Member Summary, January 22, 2010], as of 2010, only 12.3 per cent of employed wage and salary workers were union members. Not surprisingly, many of the same non-union employees did not seem to understand that their ability to influence working conditions and wages, as solitary individuals who lacked comparable bargaining power with managers and owners of business, was virtually nil. Apparently, however, the myth of the autonomous, self-made individual who can receive recognition, remuneration and advancement solely by dint of one's own hard work continues to resonate in the workplace to the present, notwithstanding all of the evidence to the contrary.
The absence of a coherent industrial policy has remained largely unremarked upon by the pundits and political class, while the fragmented power centers of this country's federal government have not hesitated to endorse policies which enable businesses to out-source, the wealthy to buy trophy homes and stash money in off-shore accounts, and agri-businesses to swallow up small family farms while receiving massive taxpayer subsidies. The political and economic policies pursued during the last three decades of the twentieth century and the first ten years of the twenty-first century neglected and de-funded public goods and infrastructure from railroads to bridges, to economic training programs for the unemployed, to educational grants and programs to improve the quality of education and to increase the number of university graduates.
Whether the Obama administration will be willing to squander political capital in an effort to address this problem in a serious way remains problematic, given its caution and the financial and political power of entrenched interests and their lobbyists. In addition, the limitations of a federal government in which power is divided and exercised by so many disparate power centers militates against the likelihood of success in any such endeavor.
By contrast, the European Union countries have had no such aversion to thinking and planning on the macro-economic level. The member states have announced ambitious plans to develop a hydrogen-based economy by 2050 and the union has invested billions of dollars in the development and improvement of infrastructure educational programs, and scientific and technological research and development.
Another significant reason for the increasing economic inequality among Americans is directly related to the demise of a viable labor movement in the United States. Throughout the nineteenth century, given their classical liberal ethos, most state courts treated labor unions and strikes as illegal conspiracies in restraint of trade.Slowly, the tide began to turn. As the effects of the Great Depression became pronounced, industrial unionism, organized under the auspices of the Congress of Industrial Organizations (CIO), emerged.
With the enactment of the National Labor Relations Act in 1935, the right of all workers "to organize and bargain collectively through representatives of their own choosing" was pronounced for the first time to be national public policy. Other New Deal legislation included the Walsh-Healey Government Contracts Act, which required the payment of prevailing wages on government contracts in excess of $10,000; the Railroad Retirement Act; and the Fair Labor Standards Act of 1938 which provided for the first time, with certain exceptions, a nationwide minimum wage floor and maximum workweek of 40 hours per week within three years of its enactment date.
Since the 1940s, however, the American labor movement has been forced into retreat. After the death of Franklin Roosevelt and the election of a Republican Congress in 1946, the right-wing in the United States became resurgent. The first great success of New Deal critics was achieved with the enactment of the Taft-Hartley Act in 1947, which was passed over President Truman's veto. The effect of this legislation was to outlaw "closed shops" and to permit individual states to allow "open shops" - i.e. shops in which elected unions could not require all of the employees to belong to the unions, irrespective of whether the non-union employees also received and enjoyed the benefits of collective bargaining.
As a result of that legislation, corporations began an inevitable migration to the South where welcoming state legislatures hastily enacted "right-to-work" laws. The migration of these manufacturing companies away from the unionized urban centers of the Midwest and North left hundreds of mill towns impoverished and desolate, and the union movement was effectively eviscerated.
It did not take long for the owners of corporations to discover that, once they had escaped from the threat of unionization, they could escape almost all government regulation by moving their business and manufacturing operations out of the United States to Third World countries. In an article that appeared in the Nation magazine,[ "Mill Hill Populism: Meet The New Face of Populism in Post-NAFTA North Carolina," May 12, 2008] , Bob Moser noted that "North Carolina, first in the South for its share of jobs in manufacturing, long benefited from out-sourcing. Decades ago Northern manufacturers shifted jobs to low-wage, Southern states with severe restrictions on organized labor. Now the 'old economy' parts of all these states were reeling from post-NAFTA version of out-sourcing. Since 1993, North Carolina has bled more than 200,000 manufacturing jobs...The pace of closures isn't slacking, either. Last year, 10% of the state's textile jobs were lost...."
Even among the few unionized workers still employed in manufacturing, a two-tier pay system was imposed by management to which unions were forced to acquiesce because of downward economic pressures: younger workers now make substantially less per hour than more senior employees who perform the same work. The effect of this two-tier system denies younger workers upward mobility and divides workers based solely upon dates of hire: "The changing job market is undercutting entry-level wages for those who do not go to college. 'In the 1960s and 1970s, you saw high school graduates getting good jobs at Ford and AT&T, jobs that in inflation-adjusted terms were paying $20 or $25 in today's wages," said Sheldon Danziger, a professor of public policy at the University of Michigan. "Nowadays most kids with just high school degrees will work in service-sector jobs for $10 or less..."
Perhaps as worrisome are the long-term trends which suggest that, absent substantive structural reform, unemployment will remain even more intractable long after the economic meltdown which began in 2008. Between 1975 and 2005, entry-level wages for male high school graduates who did not graduate from college declined 19% after adjustment for inflation while the incomes of their female counterparts fell 9%. Lastly, men who were in their thirties in 2004 are reported to have had a median income of 12% less, after adjusting for inflation, than did their fathers' generation when the latter were in their thirties.
The effect of this continuing economic trend has been to show, once again, that the practice of liberal individualism produces results quite different from its theory: In an world of unrestrained competition, only the few, the wealthier, the more powerful, the more resourceful, the better educated, the more mobile, will be able to maximize their opportunities; everyone else gets left behind.
Thus, according to the U.S. Department of Labor [Union Member Summary, January 22, 2010], as of 2010, only 12.3 per cent of employed wage and salary workers were union members. Not surprisingly, many of the same non-union employees did not seem to understand that their ability to influence working conditions and wages, as solitary individuals who lacked comparable bargaining power with managers and owners of business, was virtually nil. Apparently, however, the myth of the autonomous, self-made individual who can receive recognition, remuneration and advancement solely by dint of one's own hard work continues to resonate in the workplace to the present, notwithstanding all of the evidence to the contrary.
You have very insightful commentary, Mr. Nevins. I look forward to reading more of your book.