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That New Gilded Age Economy

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The unemployment rate is a pretty bad way to evaluate the state of the economy.

Corporate profits have rarely swept up a bigger share of the nation’s wealth, and workers have rarely shared a smaller one.

The lopsided split is especially pronounced given how low the official unemployment rate has sunk. Throughout the recession and much of its aftermath, when many Americans were grateful to receive a paycheck instead of a pink slip, jobs and raises were in short supply. Now, complaints of labor shortages are as common as tweets. For the first time in a long while, workers have some leverage to push for more.

Yet many are far from making up all the lost ground. Hourly earnings have moved forward at a crawl, with higher prices giving workers less buying power than they had last summer. Last-minute scheduling, no-poaching and noncompete clauses, and the use of independent contractors are popular tactics that put workers at a disadvantage. Threats to move operations overseas, where labor is cheaper, continue to loom.

And in the background, the nation’s central bankers stand poised to raise interest rates and deliberately rein in growth if wages climb too rapidly.

Workers, understandably, are asking whether they are getting a raw deal.

“Sure, you can get a job slinging hamburgers somewhere or working in a warehouse,” said Christina Jones, 53, of Mobile, Ala. Ms. Jones spent eight months searching for a job with living wages and benefits, after being laid off from a paper company where she had worked for nearly 13 years. Dozens of interviews later, she landed work last month at a concrete crushing company as an accounts payable clerk for $14 an hour — two-thirds her previous salary.

“You hear, ‘Oh, the unemployment rate is as low as it’s ever been,’” Ms. Jones said, but “it was discouraging.”

This spring, when I published my New York Times op-ed on the federal job guarantee and when leading Democrats endorsed the idea, some people refuted the idea by pointing to the unemployment rate. That completely misses the point. The point is that we need to give workers power to improve their lives. A federal job guarantee does that by providing options for all workers. Right now, most people have jobs, but most people have terrible, low-paying jobs. A federal job guarantee at a living wage–say $15 an hour–would provide millions of workers a chance to leave their bad job and get one that at least pays better. That places pressure on private employers to improve their wages and creates a race to the top. Of course, this is not the only barrier to improving workers’ lives. The never-ending influence of 1970s inflation over our economic policy means that bankers will strike back with higher interest rates if wages grow. The attack on unions means that the only way workers can band together for better wages is now largely not a possibility, or a highly weakened one. The federal job guarantee–or Universal Basic Income for that matter, so long as it is not paid for by slashing the existing safety net–is a way to grant workers greater power to control their own lives. That’s the point. Right now, in this New Gilded Age economy, workers lack that power.

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