Severe economic inequality has persisted for decades in the U.S., but the current crisis is bringing things into focus. Unfortunately, while Wall Street excess and the corporate jet-setting of Detroit executives have dominated headlines and garnered plenty of justified outrage, the other side of the inequality coin has been largely neglected. As Katrina vanden Heuvel explains in The Nation, the routine exploitation of day laborers and domestic workers has grown even more pervasive since the recession began. Workers who managed to survive by laboring for predatory wages under abusive conditions now see those wages stolen with increasing regularity, as contractors simply refuse to pay up when the work is done. Huge portions of domestic workers are not only living below the poverty line, but subject to verbal and physical abuse. And as jobs have grown increasingly scarce, vanden Heuvel writes, speaking out against employer mistreatment has become a thoroughly daunting prospect for workers with no savings to help them endure unemployment. For the millions undocumented workers who are not protected by U.S. labor laws, an abusive work situation leaves them without any legal recourse.
Our labor laws desperately need to be revamped. Currently, Capitol Hill’s biggest battle for workers rights is the Employee Free Choice Act (EFCA), which would make it easier for workers to form a union without fear of employer reprisals or intimidation. The corporate executive class is lobbying hard against EFCA by claiming it revokes workers’ rights to a secret ballot in union elections, but the bill would do no such thing. As the law currently stands, employers can force workers who want to unionize to hold an election in order to actually establish a union. EFCA would require that a union be legally recognized as soon as a majority of workers sign cards saying they want to unionize. Union leaders are still elected by a secret ballot, but the election is permitted to take place later on, preventing employers from using the election period to bully their workers out of unionizing at all.
Writing for In These Times, David Moberg illustrates the commonplace peril of employer intimidation under the current organizing process:
“In 2005 [electrician Dan Luevano] and most of his fellow workers at Ries Electric near Denver asked their boss to recognize the Electrical Workers as their union to help resolve problems. The boss called everyone in and threatened to fire them if they voted for a union. Luevano said he would, and the next workday he was fired. Though the National Labor Relations Board reinstated him, his boss isolated him and cut his hours while continuing to violate labor laws by fighting the union.”
Workers and unions have pushed for EFCA for years, but when it comes to the economy, the federal government reacts fastest to problems on Wall Street. In Salon, Andy Kroll outlines the generous subsidies the government has paid to companies that drove themselves into the ground, effectively rewarding the economically destructive behaviors that caused the current crisis, while neglecting the workers whose hours and wages have been slashed as business credit tightens ups.
The bailout isn’t just unfair—it seriously risks delaying economic recovery. If the government refuses to take over failed institutions, wipe out their shareholders and fire their executives, the U.S. economy will likely be burdened with a constantly faltering financial sector for years. The Wall Street CEOs who caused the problem have every incentive to cover up for their mistakes and resort to complex accounting tricks to hide losses. But until those bank losses are recognized, the government will not be able to fill the hole and get credit flowing again. As Robert Kuttner argues in a column for The American Prospect, “We still face a prolonged Great Stagnation, one that could be far worse than necessary because of the administration’s circuitous, Wall Street–friendly approach to reviving the banks.”
Just as bad, whenever the economy actually recovers, executives at the surviving banks will have learned that they can score huge bonuses virtually risk-free by gorging themselves on risky loans and letting taxpayers clean up after them. This sets the stage for another catastrophe. So far, Obama’s decision to extend the bank bailout plan enacted under George W. Bush is the single greatest single blunder of his presidency, and as Kuttner argues, it’s a mistake that jeopardizes both the economy and the political sustainability of progressive ideas.
Beyond Wall Street, the administration has also faltered with it’s handling of General Motors, which finally filed for bankruptcy Monday morning after steadily disintegrating since the 1980s. After pouring in money to keep the ailing car manufacturer afloat, the government watched the company lay off tens of thousands of workers without overhauling its failed business model. Under the bankruptcy arrangement, U.S. taxpayers will emerge with a 60% stake in the company, but rehabilitating the company remains an enormous task. GM’s primary business is making cars that people do not want to buy. Without GM, the U.S. manufacturing sector would all but disappear, but turning the company around will require a huge long-term investment. So far, the government has settled for keeping the company on life support. Kevin Drum puts it succinctly for Mother Jones: “This whole deal just keeps getting worse and worse.”
The U.S. economy broke down for a reason: It was heavily dependent on a booming financial sector and failed to adequately protect or reward the workers who actually built the economy up. Both Congress and Obama have the power to give workers families the same economic leverage that corporate executives currently enjoy. It’s up to progressives to convince them to take action.
This post features links to the best independent, progressive reporting about the economy.