Workers and the Economy
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When he speaks of his domestic agenda, President George W. Bush says to the American people, “It’s your money.” But President Bush seems to be ignoring what “our money” actually means beyond the political rhetoric. He doesn’t seem to understand what the economy for average everyday workers is actually like, and he fails to propose solutions to the pocketbook problems working people face.
The economy isn’t recovering for the large majority of Americans—there is less money in the pocketbook of middle class workers due to fewer good jobs, escalating health care and gas cuts, insecure paychecks, decreased benefits, threatened privatization of Social Security, and declining retirement benefits.
Many are wondering: Why are working Americans doing so badly in a rich nation that keeps getting richer? The answer is that the economic benefits resulting from increased worker productivity are going almost exclusively into the pockets of corporations and wealthy Americans.
The Wage-Productivity Mismatch
For the past century, wages and productivity—key measures of the economy’s efficiency – have risen together. Worker productivity rose 16.6% from 2000 to 2005. The current period has recently been described as “the golden era of profitability.” Yet, while corporate profits have climbed to their highest share since the 1960s, the median hourly wage for American workers has declined 2% since 2003 after factoring in inflation. The value of workers’ benefits has also failed to keep up with the rate of inflation. The buying power of the minimum wage is at a 50-year low. Those who point to an increase in nominal wages—the actual amount earned not in terms of purchasing power—are failing to take into account the spike in oil costs and soaring health care costs that have eaten up any gains.
Health Care
Fewer and fewer workers can afford what once was the best bet for generous health insurance: the benefits offered by the country’s biggest employers. The decline of employer benefits began in the Reagan years. Despite a temporary improvement during the Clinton-era boom, the most crucial benefit—employment based health insurance—has been in rapid decline since 2000. The health care crisis is back. Medical costs are rising rapidly as big, highly profitable employers offer minimal benefits. Companies have been increasing the premiums, deductibles and co-pays that employees must contribute under their health insurance programs, leading many workers to forgo their employers’ insurance.
Insecure Pension Plans and Retirement
About a quarter of all workers are unhappy with the retirement plan offered by their employer (28% completely or mostly dissatisfied). Meanwhile Most Americans feel that if you work hard and play by the rules, then the promises made by their employers will be fulfilled. But benefits and pension coverage for retirees are being reduced, as many companies aren’t even offering pension plans anymore, but are opting for plans largely dependent on worker contributions. Such programs such as 401k plans place the financial burden of retirement primarily on the employee. Millions more Americans are left out and have little or no other retirement savings, relying entirely on Social Security.
The Future of Social Security
Social Security—one of the most successful, effective, and popular of government programs—remains in danger. Social security provides a universal benefit that is progressive and lifts millions of people out of poverty. It also provides extremely valuable social insurance, providing payments to those who need them most — including workers who become disabled, families whose breadwinner dies, dependent spouses, and retirees who live to a very old age and outlive their assets. All of the major proposals to replace a portion of Social Security with private accounts would require large increases in federal borrowing for many decades. The increased borrowing would be needed to finance the creation of the private accounts, which by themselves would not do anything to restore solvency, and under some circumstances would worsen solvency. The President’s plan would create $17.7 trillion in additional debt by 2050
Fewer Good Jobs
Economists have confirmed that many jobs that once paid decent wages now provide an impoverished lifestyle. Too many American businesses embrace Wal-Mart’s irresponsible business practices, poverty-level wages and inadequate health care benefits. It is now often standard practice to hire temps and part-timers, suppress workers who want to form unions, dismantle internal career ladders, and outsource to lower paying contractors at home and abroad. Over the past two decades millions of jobs have been created that pay less than a poverty-line wage. As a result, more than a quarter of the labor force, about 34 million workers, are trapped in low-wage, often dead end jobs. The social costs are shifted to taxpayers and responsible employers.
America’s Working Poor
Ironically, poverty may well be the richest country's most serious social problem. The one truly continuous trend over the past 25 years has been towards greater concentration of income at the very top. American families are finding it increasingly more difficult to make ends meet with low-paying employment. Census Bureau findings show almost one in four children and 37 million Americans remain mired in poverty. This means despite four years of economic growth, there is no progress in reducing poverty. 37 states have low-income (below 125 percent of poverty) rates of 15 percent or more, with Mississippihaving the greatest rate of 27.6 percent. It is tougher for families living in poverty to get access to good health care, food, child care, safe and secure housing, and transportation to work—making it even harder to get out of poverty to make a better life.
Unite for Change
The best hope for workers is to join a union. The union movement created the middle class—as well as eliminated U.S.sweatshops, exploitive child labor practices, and brought about the five day workweek, among other major labor gains. As the gap between the rich and poor grow, the need for good wages, benefits, and overall economic security becomes even more important. No movements to create economic security have been more successful than labor unions.
Over 57 million U.S. workers would for a union tomorrow if given the chance. The increased benefits, pay, and collective voice as a member of a union enable workers to live a better life for the hard day’s work they give their employers.
Read about the challenges facing working Americans on issues such as the economy, family income, wages, taxes, employment, poverty and the distribution of wealth.
- Employers Cut Jobs in August
- More In A Day Than In A Year
- Study Says Key Solution to Reduce Poverty is to Make it Easier for Workers to Join Unions
- When Even a Sponge Feels the Squeeze
- Income Gap Between Men and Women Decreased
- The Undeclared War on America's Middle Class
- A Willing Worker Can't Afford a Job She Loves
- More Health Insurance Costs Shifting To Workers
- Wages, Wealth, and Politics
- Anxiety Rises as Paychecks Trail Inflation
- Fewer American Workers Accepting Health Insurance from Employers
- Corporate Greed is Reason for Wage Decline, Not Health Care Costs
- The Fading American Dream: Opportunity Eludes Many
- Union Advantage Reaches New Highs
- Low-Wage Economy Destroys The American Dream
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