The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

United States:
Making American Workers Poorer Again

Oct 13, 2018

Donald Trump campaigned for president as a champion of workers, denouncing the horrible conditions workers faced. Today, after not quite two years in office, Trump claims the situation for working people has improved markedly. For example:

On the economy: “We’ve accomplished an economic turnaround of historic proportions.”

On job creation: “Every day, we are lifting our forgotten Americans off the sidelines ... and back into the workforce.” and “We are in the midst of the longest positive job growth in history.”

On wage increases:“After years of wage stagnation, we are finally seeing rising wages.”

It’s not only bombast; it’s nothing but one lie after another. The situation for workers is not getting better. It has been bad, and it is getting worse.

Unemployment Continues to Be a Disaster

Trump refers to the official “headline” jobless rate, while every economist admits that this one hides reality, rather than shining a spotlight on it. But let’s shine a spotlight, using another statistic that Trump might have looked at, if he wanted to get a more accurate picture: there are still 38 million jobless prime-age workers, or 19.2 per cent of this part of the workforce. In the age range between 25 and 54, most have finished school and few have retired. They should be working. But they’re not. This rate remains 2.5 per cent higher than it was a decade ago. Not by the wildest imagination of anyone but Trump could this be called an “economic turnaround of historic proportions.” Certainly not by the 38 million prime-age workers still without a job.

Obviously, since the worst period of the “historic” crash of 2007 and 2008, more people got jobs. This was true under Obama, and it’s true under Trump. But that hasn’t produced a solid job situation for the whole working class. After nine years of so-called recovery, unemployment is still an enormous problem. And every worker knows it.

Millions of workers lost their jobs during the deep recession of 10-11 years ago. But companies weren’t interested in bringing a lot of them back: they’re too old, or too unhealthy, or too likely to resist the pressure to work faster. Added to that, there are millions of young workers who have been shut out of the labor market altogether. Some are homeless; others have disappeared into the underground economy.

This is not a “historic turnaround.” This is simply capitalism working the usual way it always works, with its regular ups and downs, and with workers losing out more in the downturns than they gain back when the economy turns back up.

What Kind of Employment?

Yes, there are new jobs. Employers have been hiring. They were under Obama, they are under Trump.

But what kind of jobs are they?

Most are not regular jobs with regular hours. Instead, employers are hiring part-timers, temps and independent contractors, the “just-in-time” workforce. These jobs are not secure in any way. Workers don’t have fixed hours. One week, they are scheduled for 35 hours. The next week, they don’t get any hours. The “just-in-time” workforce is expected to be on call on their days off, with the risk that they will lose their job if they don’t pick up the phone. And, of course, favoritism is part of the bargain in this kind of situation.

Capitalism is creating a disposable workforce. Companies depend on it to reduce wages, depriving workers of health insurance, retirement pension benefits, paid vacations, sick days.

No, the economy is NOT growing, not in any way that benefits workers. Rather, the workplace is being transformed. This ongoing transformation threatens workers who still have full-time jobs. Look at what just happened at Verizon, the highly profitable telecommunications giant. In early October, the company announced that it was cutting 44,000 jobs, one-quarter of its workforce. Most of those jobs weren’t disappearing. Verizon was just transferring some thousands of those jobs to outsourcing companies, which will pay workers much less than what workers would have made at Verizon, under conditions that are more unstable. Verizon’s announcement didn’t prevent Trump from claiming how “great” things were the very next day.

What’s happening at Verizon is happening all across the economy, including in the manufacturing sector. We keep hearing that manufacturing is disappearing. No, it’s not. Companies are simply transforming the workplace in this country – exactly like Verizon is doing. Look at Ford. Today, many of the workers in a Ford factory are not employed by Ford. Their work has been farmed out to different companies, lowering the workers’ pay and atomizing the workforce. The same work is often even being performed in the same factory as before – but the company name on the paycheck is different. And the wage rate is lower. All manufacturing companies do this.

All the talk about the manufacturing sector disappearing, about “de-industrialization,” about jobs going overseas, is just that, talk – scare talk. By many important measures, manufacturing has the largest footprint in the U.S. economy, far larger than any of the other big sectors, including the government sector or big parts of the service economy. And it’s highly connected with most other sectors, such as transportation, retail, mining, utilities and business services. But all these industries are being “transformed” – i.e., chopped up – in ways that make it easier for companies to lower wages and drive production.

Moreover, all the workers, no matter which company pays their check, are being pushed to put out more work in less time. And this is made worse by the regular rhythm of recessions and recovery. During recessions, jobs are cut faster than the drop in production. During recoveries, hiring is slower than the increase in production. Companies take advantage of the business cycle to impose productivity increases through speed-up and by lengthening the work day, through more overtime and the elimination of time off.

Manufacturing is not disappearing. What’s disappearing is the standard of living of the workforce that does all the work.

The Wages of Poverty

Workers today are making less than workers did 45 years ago. Real wages for blue collar workers are almost 13 per cent lower today than they were in 1973. Two generations of workers are living worse than did their parents or even their grandparents.

Trump may say this is not his fault. It’s true this decline started before Trump took office. In fact, it began with Carter, then continued under Reagan, then Bush I, then Clinton, then Bush II and then Obama. Trump simply continues down the same path. The issue is not the name of the president, but the economic crisis that began in the 1970s, and continues up to this day. The capitalists have protected their class by increasing the exploitation of the working class. And Trump is not only a defender of that class, he is a member who has a long record of viciously exploiting those who for work him.

In 2018, 42 million laborers – about a third of the U.S. workforce – earn less than 12 dollars an hour, including at Trump’s own hotels. Some of the biggest and most profitable companies in the world, such as WalMart, McDonald’s and Amazon, whose major stockholders are multi-billionaires, are famous for pushing their low-wage workforce onto different forms of public assistance, like food stamps and Medicaid.

With wages so low, no wonder so many workers have taken out a much greater amount of personal debt, especially for automobiles and education, that is, basic necessities someone needs to get and then to keep a job, and therefore survive.

Today, a big part of the working class lives in poverty. Officially, in 2017, “only” 13 per cent of the population, or about 40 million people, were living below the poverty line. In fact, even that number is a lot. But 40 million is only the tip of the iceberg. The Congressional Research Service admits that the official poverty numbers are a whitewash: “The poverty line reflects a measure of economic need based on living standards that prevailed in the mid-1950s. .... If the same basic methodology developed in the early 1960s was applied today, the poverty thresholds would be over three times higher than the current thresholds.

The reality is that almost half of the U.S. population is either living in poverty or close to it, when taking into account medical, commuting and other living costs, according to a 2011 survey by the Bureau of the Census. That amounts to about 147 million people and includes 57 per cent of all children.

There’s a big difference between 147 million people living in poverty and the “feel good” number of 40 million cited by government officials. Even 40 million is horrible, but it makes it seem like poverty is limited to pockets of the population. The reality is that much of the population – a large part of the working class – faces impoverishment, to one degree or another.

In some areas, poverty is so severe that millions lack all the essentials of a healthy life, including water that is safe to drink, an adequate amount of food that is safe to eat, decent sanitation, and some sort of medical care. These include a million households, with roughly three million children, that survive on cash incomes of no more than two dollars per person per day in any given month. There are places in the U.S. – from the Mississippi Delta and much of Appalachia to the worst slums and homeless encampments of the big cities – where life expectancy is lower than in Bangladesh and Vietnam.

To have a quick snapshot of what has happened, look at the rapid decline in life expectancy of white workers over the last 20 years. Life expectancy of black workers is still lower, because historically capitalism has concentrated joblessness and impoverishment in the black population. But over the last decades, public health officials began to discover that middle aged white workers were also dying in record numbers from alcoholism, drug overdoses, and suicide. It took those officials a long time to admit the underlying cause: chronic joblessness and severe poverty is bringing about pain, distress and social dysfunction. Actual life expectancy dropped precipitously. It’s something that has few precedents in modern times, outside of a time of war, or the collapse of the Soviet Union.

But it is a time of war. The white workers dying young, just like the black workers before them, are the casualties of a violent class war that the capitalist class is waging against the working class. It has led to the collapse of their living conditions.

Poverty for Profits

Impoverishment is the price that the working class has paid so that the capitalist class could continue and even increase amassing its wealth. There is a direct immediate relationship between the falling standard of living of the working class and the growing wealth of a small, parasitic class that sits on top of this capitalist society.

Corporate net profits broke the two trillion dollar mark for the first time when Trump took office in January 2017. By April of 2018, they had reached 2.2 trillion dollars, with companies continuing to cut jobs, to lower wages, and to worsen working conditions. When Trump bragged that this 2.2 trillion dollars of profit was another new record, in reality he was simply saying that the impoverishment of the working class was reaching new records.

Profits don’t just sit in the bank accounts of companies – they are distributed to the whole capitalist class that lives like a parasite off the labor of working people. In 2017, corporations doled out 1.2 trillion dollars in dividends to their big shareholders, or more than half their profits. Companies also spent more than half a trillion dollars buying back shares in their own companies, in most cases handing the stockholders a tidy profit, as well as boosting the price of the stock the wealthy continued to hang onto. The growth of these profits, distributed to the whole capitalist class, helps explain the growing gap between the very wealthy and the rest of the population.

The wealth the bourgeoisie accumulates doesn’t come only from the direct exploitation of the working class. The bourgeoisie also depends on the state, which, in a variety of ways, shovels more wealth into the greedy hands of this parasitic class. Handing public money over to private capitalist interests has had drastic consequences for the working class – and not only in the fact that most working people are now carrying a greater tax burden to make up for it. But the range of public services that any society needs to function – education, roads, public transit and other infrastructure, etc. – have been cut, then cut again, then cut again. That’s why working class children often can’t do math today, among other things.

Trump simply continues what his predecessors started. In December 2017, his administration partnered with the Republican Congress to pass a massive tax cut that will hand two trillion dollars to the corporations and the wealthy who own them over the next 10 years. The result is that in 2018, corporations are paying one-third less in taxes, compared to the previous year. Despite the discredited trickle-down claims made for this gross giveaway, the money didn’t go to expand production and put people to work. No, the companies immediately recycled their extra profits into the hands of their stockholders, increasing the amount of money slated for stock buybacks. This year, companies are on track to repurchase more than 770 billion dollars in their own stock, according to estimates from Goldman Sachs.

Even before those tax cuts were enacted, the government debt was exploding, doubling in 10 years, largely because of all the subsidies and tax breaks that had been bestowed on the bourgeoisie by previous administrations. The federal debt, at over 20 trillion dollars, has grown to be bigger than the entire U.S. economy. And interest payments on that debt, which were 330 billion dollars last year, were already the fastest growing part of the federal budget. The U.S. government projects that the cost of interest payments will zoom up to a trillion dollars by the year 2025.

This explosion of government debt will be the excuse government officials use to impose devastating new cuts to vital programs that workers and the rest of society depend on: the big entitlement programs, especially Social Security, Medicare and Medicaid – that is, retirement pensions and health care – as well as education, clean water, roads, public transit, etc.

Trump is no champion of the working class, no more than any previous president has been. If the working class is to raise itself up, it will have to be by its own struggles, its own champions. The problems we face are not complicated, nor are the answers to them. Everyone needs a job, everyone needs a wage that lets them live decently, every child needs an education. The wealth that has been accumulated in this society by a parasitic class could begin to answer our problems – but only if the workers engage themselves in a struggle to put their hands on that wealth, that is, to take it away from the capitalist class.