Friday, August 31, 2007

Thoughts on Labor Day 2007

Ah, Labor Day. The last chance for families like mine to grab the last bites of summer.

But, maybe for the first time in years, more people might be thinking about the Labor in Labor Day.

That’s because nearly a decade in, the rules of the 21st century economy are disturbing. Those at the very top of the economic pyramid with capital to invest are making billions—and I’m talking about single people, like private equity leaders Stephen Schwartzman of the Blackstone Group and Henry Kravis who are worth more than $2 billion each. Yes, the world is flat. Corporations can reap great profits by moving money and labor around the globe—but it’s increasingly clear that these gains are not reaching average Americans.

The rest of us are stuck with stagnant incomes and ever seeming increasing costs for the goods that bring a quality life like health care and education. To be exact, a recent report from the Economic Policy Institute shows that the average worker's wages have been stagnant for seven years. Hard working Americans are being tossed from good jobs in factories and computer rooms by the global economic regime. The fastest growing occupations are at the bottom of the service sector, where living wages and job security are hard to find.

This gilded age may be reaching a tipping point. Average Americans, and even some leading economists, are no longer buying the conventional wisdom that the invisible hand of capitalism can be trusted to guard the nation’s promise of economic opportunity.

The last time in American history when incomes grew so far apart was the 1920s—a period whose collapse spurred sweeping legislation like the Fair Labor Standards Act (which established the minimum wage), the Social Security Act and the National Labor Relations Act which set up structures that gave working people a chance a shot at sharing the wealth of the nation. Will today’s inequality lead to a similar see change for policies addressing the conditions of working people?

Both in States and in Congress, we are seeing the first signs of a new wave of policies that can deliver opportunity to Americans in today’s workforce.

We are getting serious about policies that improve the quality of jobs, like increases to the federal minimum wage and even better standards in some states. What’s more heartening is states are taking action in key sectors of the economy. According to the Department of Labor, the single fastest growing occupation in the next ten years is projected to be home health aides, but the average home health aid makes less than $9 per hour and don’t have the right to overtime pay under federal law. But in Iowa, California and Illinois, changes in employment law have given these workers the right to join a union and aides in these states are making progress towards living wages and benefits.

Moreover, Congress is seriously considering legislation that would give laid off workers a serious chance to return to the middle class. Key proposals would transform the limited Trade Adjustment Assistance program (started in 1974) into a new powerful program of assistance that allows far greater numbers of workers impacted by globalization to maintain their health benefits and income while they retrain for new careers, and provides federal new economic aid to communities and firms suffering as a result of trade losses. Another similar bill would modernize the unemployment benefit program, which currently only covers a third of the jobless.

Ten years ago, such policy changes might have been derided as caves to unions or special interests. But today, they might be just what are needed to save the economy.


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