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Workers and the economy

Oak Alley Plantation, LA

Image by faungg via Flickr

While the country faces a real crisis in terms of the debt and the budget deficit (slow progress is being made at the federal level in agreeing on $4 Trillion in spending cuts over 10-12 years), Republican state governors have declared war on unions and workers.

The war continues apace in Wisconsin, New Hampshire and Missouri, with measures to strip collective bargaining rights and stifle the formation of unions at the top of the GOP agenda.

Unfortunately, these measures do little to nothing to solve the economic problems of states and the federal government.

They make them problems worse.

Robert Reich posted a good analysis of what these type of measures mean for the economy on his blog Tuesday.

In looking back at what he calls “The Great Prosperity”, Reich outlines how unions were essential to creating the middle class and a stable economy. He goes further to look at a current example of how labor is buoying at least one European economy:

Germany is growing much faster than the United States. Its unemployment rate is now only 6.1 percent (we’re now at 9.1 percent).

What’s Germany’s secret? In sharp contrast to the decades of stagnant wages in America, real average hourly pay has risen almost 30 percent there since 1985. Germany has been investing substantially in education and infrastructure.

How did German workers do it? A big part of the story is German labor unions are still powerful enough to insist that German workers get their fair share of the economy’s gains.

That’s why pay at the top in Germany hasn’t risen any faster than pay in the middle. As David Leonhardt reported in the New York Times recently, the top 1 percent of German households earns about 11 percent of all income – a percent that hasn’t changed in four decades.

In the US, the top 1 percent take home over 20 percent of the nation’s income.

Unless we invest in infrastructure (broadband, smart electrical grid, roads, bridges, etc.) and education, we are really doing little more than bailing water out of the front of the boat into the back.

Coupled with the above, shrinking union representation in the workplace has seen wages that have been in stasis since the early 1980’s.

The wound of wage stagnation creates a cycle that keeps prosperity out of reach of most Americans. How is a worker supposed to purchase the products and services that fuel the economy if they aren’t paid a decent wage? An economy needs consumers. Where are they supposed to come from?

Either our goal as a nation is to raise all boats through good wages and a strong middle class, or it’s to purposely create wealth disparity favoring an increasingly tiny wealthy elite.

This system bears a strong resemblance to what southerners were defending in the Civil War — A plantation economy with the vast majority occupying the lowest rung (low paid workers and slaves) and the miniscule landed gentry reaping all the benefits.

In this type of economy, most of the rungs in the middle are empty or missing.

Such a system is in direct opposition to the generally shared conception of the American Dream — that perseverance and hard work leads to upwards mobility and prosperity.

This certainly is not my vision of America, and I don’t think it’s what a majority of Americans – blue or red – want for the nation.

I couldn’t put it better than Reich:

The current Republican assault on workers’ rights continues a thirty-year war on American workers’ wages. That long-term war has finally taken its toll on the American economy.

It’s time to fight back.

-Chris

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June 15, 2011 - Posted by | Economics, History, International, Politics, Republicans | , , ,

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