Week In Review
A Weekly Column by Bill Onasch
June 4, 2012
With the New Normal
During my early-Sixties brief fling at higher education, at the now defunct Kansas City Junior College, I took Economics 101. We were taught that American Free Enterprise flourishes on a normal unemployment rate of about five percent. Higher than that leads to reduced consumer demand and recession. Lower than five means labor shortages will push up wages, leading to inflation. Early intervention by the Federal Reserve and other government agencies can restore the norm and thus assure we will never again see a crisis such as the Great Depression.
This orthodoxy emerging at the end of World War II remained pretty much unchallenged for decades. There were cyclical recessions and bursts of inflation, but there was always, sooner or later, the promised recovery to Normal. This began to change in the late Seventies during the Carter administration.
Since then there has been a profound, ongoing restructuring of the American economy along three major lines:
* Deregulation of the airline, trucking, utility and telecommunication industries, led to big shake-ups in their once stable, highly unionized workforces.
* New technology that greatly increased output while needing far fewer workers was introduced in steel, coal, rail, longshore, manufacturing--and many clerical and technical units too.
* The process that became known as Globalization, beginning with the rise of the maquiladora sweat shops on the Mexican border, followed by NAFTA, and later the China trade deal, led to off-shoring of work formerly done in the USA–and became a credible threat in most private sector union negotiations. This was complimented by domestic relocation of work sites as well, especially to the Sun Belt and rural Midwest.
Popular songs were sung about the millions who once held well-paying jobs thought to be secure, now forced to accept much lower wages, often changing vocations, as the shift was made to a mis-named “service economy.” Only big growth in the public sector and health care, along with an explosion of new jobs in computer/Internet technology, delayed a new unemployment rate “norm.”
Today huge chunks of “service” jobs, including much computer/Internet-related professional work, have been offshored along with the earlier blue collar jobs. For the first time in living memory there have been massive job eliminations in all levels of the public sector–and many more, such as the US Postal Service, are on the way. It’s now been five years since the USA last had a “normal” unemployment rate.
The May BLS jobs report was bad news for American workers and a threat to the reelection of labor’s “friend” in the White House. After a few much-hyped months of modest progress, the official rate ticked back up to 8.2 percent..
The U-6 measure of real unemployment–including those marginally attached to the workforce, and those working part-time because they can’t find full-time work, along with the official rate of active job-seekers, is at a seasonably adjusted 14.8 percent. That’s up from 14.5 in April.
The average work week declined 0.1 to 34.4 hours. Average hourly earnings of private-sector production and nonsupervisory employees edged down by 1 cent to 19.70. That puts the average employed worker on track to earn a bit over 35,000 a year. Another report also released last week found that now only 55 percent of employed workers receive employer-provided health insurance.
These measures of “recovery” remain far removed from even the first seven years of the hated Bush administration. NBC news anchor Lester Holt asked an expert colleague from CNBC Friday evening if we should be prepared to accept a new norm. Since the responder is a trained economist he naturally avoided a straight-forward answer. But he acknowledged a return to five percent unemployed was not likely in the foreseeable future–regardless of who wins the November election.
Bosses are neither inherently job creators or job destroyers. Sometimes they are simultaneously both–usually with gifts from tax-payers, companies frequently shift work sites from one state to another, creating “new jobs” in one community while leaving behind jobless in another. And then there are companies like Harley-Davidson who negotiated long-term contracts with the Machinists and Steelworkers that allowed them to permanently replace regular employees with new on-call workers who toil as needed for a sub-tier wage, have no guarantees of hours, and next to no benefits.
General Motors is showing a split personae in Canada. They got eight billion dollars in bailout money from the Federal and Ontario governments, and further concessions from the CAW, in coordination with the Obama administration’s “saving the American auto industry.” Busy and profitable once more, GM has announced changes to its biggest operations in Ontario. The CBC reports,
“The Canadian Auto Workers union says General Motors is going ahead with plans to close its consolidated plant in Oshawa, Ont. The union says it's been told the facility — the older part of the Oshawa car plant — will close by June 2013 and says that could mean 2,000 layoffs. “
But it’s not all bad news. It appears GM may create 500 new jobs to build Chevrolet Impalas in what remains in Ontario. If so, this will be at the expense of GM's Detroit-Hamtramck assembly plant.
Always solely driven by the need to expand profits, private sector decisions to create, destroy, or move jobs, along with the selection of purported winners and losers among working class communities, will be little influenced by the platforms of either Romney or Obama. In fact, not that much separates the rival candidates.
The President has even gone to great lengths to not condemn his opponent’s success in vulture capitalism. He merely says the occupant of the White House has to represent far wider interests than investors in Bain. Labor’s “friend” has met nearly all business demands to delay or scrap what they call “job-killing” safety and environmental regulations. The current administration has frozen wages of Federal workers, reduced their numbers through attrition, and is preparing to eliminate postal service as we know it. The si se puede President has privatized the space program and champions privatization of education. And, he remains committed to mortally weakening Social Security, Medicare, and Medicaid.
When you get to the heart of the matter, the main differences between Romney and Obama are their different styles in pursuing the ruling class agenda. Romney and the Tea Party crowd have shown they are better at stirring dissension than getting things done. Obama offers the corporate masters the ability to neutralize those who could cause them grief–unions, women’s and civil rights groups, environmentalists, students, etc. For that reason most of the bosses and bankers still prefer the same friend so loyally supported by union officials.
None of this is new. But, just as climate change is producing new seasonal norms, the unrelenting, mostly unanswered attacks on workers are creating new norms for joblessness, declining wages, growing debt, and pauperized retirement.
The continuing acceptance of partnership with bosses and one of the boss parties by movement leaders amounts to de facto acceptance of these devastating new norms. It’s like saying no se puede. As Monty Python would say so eloquently, it’s now “time for something completely different.”
¶ As Donna Dewitt retires as president of the South Carolina AFL-CIO she is succeeded by vice-president Ken Riley for the balance of her term that runs until September, 2013. Riley is the long time president of the militant Charleston Longshore Local and, like Dewitt, an early stalwart of the Labor Party.
¶ After the government quickly pulled out of talks with student strikers in Quebec mass protests resumed. The CBC reports this morning, “Threats of student protests have forced organizers of the Canadian Grand Prix [in Montreal] to cancel the free opening day of the event.”
¶ From an AP dispatch, “The world's air has reached what scientists call a troubling new milestone for carbon dioxide, the main global warming pollutant. Monitoring stations across the Arctic this spring are measuring more than 400 parts per million of the heat-trapping gas in the atmosphere....Years ago, it passed the 350ppm mark that many scientists say is the highest safe level.”
¶ A Los Angeles Times article highlights one major difference between 401(k) plans and Social Security and defined benefit pensions, “The average American couple could pay nearly $155,000 in fees for their 401(k) plans over their careers, reducing their eventual nest eggs by more than 30%, according to a new report. Rather than the hypothetical $510,000 that a dual-earner couple could have at retirement with no fees, they would be left with only $355,000. The fees include explicit charges and indirect expenses, such as the cost that mutual funds incur to trade stocks.”
¶ From the New York Times about that “bailout of Greece” we keep hearing about, “Its membership in the euro currency union hanging in the balance, Greece continues to receive billions of euros in emergency assistance from a so-called troika of lenders overseeing its bailout. But almost none of the money is going to the Greek government to pay for vital public services. Instead, it is flowing directly back into the troika’s pockets....As they pay themselves, though, the troika members are also withholding other funds intended to keep the Greek government in operation.”
¶ Thanks to a much warmer winter, Kansas is recording the earliest ever wheat harvest–more than a month ahead of the old normal..
That’s all for this week.
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