I wasn't exactly shocked by Monday's headline that four of five Americans will face economic insecurity -- defined as "a year or more of periodic unemployment, relying on government assistance such as food stamps, or making an income below 150 percent of the poverty line" -- during their lives. But it's pretty damned depressing.
It all fits in pretty well with what has been keeping me so damned busy the last couple of weeks -- trying to help clients scramble to maintain decent wages and benefits in badly shattered labor markets while also trying to help salvage pension plans that were crushed by the market crashes of 200-02 and 2008 and the subsequent collapse of the commercial construction market. The markets have recovered somewhat, but the wreckage remains. I have my doubts about whether vast swaths of the construction labor market will again be capable of sustaining the kind of secure middle-class lifestyle that building trades unions were once able to assure their members.
And that is of a piece with these broader economic statistics. There was once a multitude of paths to middle class status and security in the United States -- work in manufacturing, construction, and government service, among others, all sustained decent wages, pensions, and medical benefits. Now, economic insecurity is a feature not a bug of American capitalism.
All of this has been a long time in coming. The policies of the Reagan Administration -- the promotion of unfettered markets, the tacit encouragement of union busting, and the undermining of the social safety net and the industrial economy have all been leading to this point. The Clinton Administration did little to arrest these trends, while the second Bush Administration embraced them with a vengance.
Still, it took a long time for the bottom to completely fall out --for social mobility to grind to a halt and for grotesque inequality to become a way of life. I attribute that to a few things that cushioned the middle class from the stagnating or declining wages that have characterized much of the economy for the last thirty years: one, the widespread growth of two-earner families; two, a lengthy period of declining interest rates coupled with constantly expanding forms of credit; three, the rapidly rising residential real estate markets in much of the country during the 1980s and 2000s; and four, the wealth affect associated with the tremendous bull market in stocks from 1985-99. (There was also the cold war Keynesianism of the 1980s, which was actually a saving grace for some industrial unions that would have otherwise been completely eviscerated.)
The Great Recession exposed the degree to which this new economy was built on an illusory foundation. Now, as the anemic recovery drags on, we get a glimpse of what the future looks like and it just isn't pretty: a capitalism committed to paying the lowest possible wages while extracing maximum profits for CEOs and shareholders, a country in which the poor stay poor, where private sector unions are all but eradicated, and where those who aren't well to do face the constant threat of poverty, where careers are extraordinarily difficult to nurture, and where part time and low wage work become a way of life for all too many. I see few paths out of this box in the current political environment and I see little hope for meaningful change in that enviroment for many years -- probably at least until redistricting occurs in 2022.
As the parent of a 20-year old, I wish I felt more hopeful about the economic future. At the moment though I see nothing to suggest that good times are looming.
(Now you probably all wish I had continued to refrain from posting.)
Share your thoughts, tell me why I'm wrong. Please.
Hey sorry about comments -- not sure what is happening. I am trying to figure out a solution. Cursed Typepad.