Big trouble for workers as crisis hits world’s largest economy

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Forget the glitzy façade and look at the United States from an average person’s


Setbacks, catastrophe, and ruin are hitting working people from every direction. The

economy has been worsening since 2001, but the first half of 2008 brought enormous

price increases, accelerated loss of homes, floods, massive layoffs, and spiking


The government’s response has been a predictable smoke-and-mirrors effort to hide

the widening cracks in the system, and deflect workers’ unrest with yet another tiny,

temporary fix.

Lena Rodriguez, 80, works at a Burger King Restaurant

in Florida. Photo by Jim Reed, The Tampa Tribune.

A diversion, not a solution. In February, President Bush signed a $152 billion

“Economic Stimulus Act” passed by Congress. Tax rebate checks of $300 to $1,200 will

go to low- and middle-income individuals and families, who will receive extra money if

there are children.

As is typical for any measure advertised as relief for everyday people, this legislation

includes tax benefits for business. Companies will be able to write off twice as much

capital spending as before, which will shrink tax income to state and federal treasuries

and restrict money available for vital services.

The final “growth package” did not include funds proposed by some in Congress to

extend unemployment benefits and to repair the nation’s aging infrastructure, for example

bridges and schools, which also would have created jobs.

Workers certainly welcome the rebate checks, but they aren’t rushing out to buy new

consumer goods. The majority of people this writer interviewed in Seattle, for instance,

plan to pay bills and buy only essentials.

Said a hospital clerk, 62, “My son lost his job and his family moved in with us. I’m

using the money to buy the kids some clothes — and food. Those kids eat up a storm.” A

bookstore clerk, 27, reported, “My husband and I work fulltime but we don’t have health

insurance. We still owe $6,900 on a medical bill and that’s where the money will go.” A

nursing assistant, 29: “What else? Food, gas, food, gas.”

The current state of the States. As is true everywhere around the world, new burdens

continue to pile up in the U.S. on the backs of those least able to bear them.

Poverty and hunger. According to the latest government figures (for 2006), about 10%

of U.S. residents live below the poverty level. But the rate for single-parent households

headed by women is 28% — more than one out of four. In some inner cities and

depressed rural areas, 30% or more of the people are impoverished.

The Department of Agriculture estimates that 17% of U.S. children don’t have enough

to eat. Food banks — volunteer hunger-relief organizations — are swamped. And, of the

25 million people they serve, more than two out of three live in households where at least

one person is employed.

“The working poor increasingly have to choose between rent, electricity, medicine and

groceries,” said a food bank spokesperson in late May.

A record 28 million people — one in 11 — now survive on government food stamps,

exchangeable in stores for groceries. The program is supposed to supplement a food

budget, but many families rely entirely on the stamp “income” — which averages about

$1 per person per meal.

In the first three months of this year alone, food prices jumped by 5.3%. Advocates have

pressured Congress to pass a mid-year boost in stamp benefits and revise the formula for

setting the monthly allowances.

These are emergency measures worth fighting for, especially given economists’

projection that U.S. food prices will increase by 9% in each of the coming years. But how

can a solution for domestic hunger be expected without at the same time vanquishing the

worldwide crisis of food prices?

Home foreclosures. The aggressive peddling of sub-prime mortgages by lenders

created a real-estate bubble that drove home prices up 35-53% in recent years. These

price-inflated homes were heavily marketed to the poor, people of color, and buyers with

bad or no credit. No down payment was required, and buyers got a low interest rate for

two years followed by a floating interest rate. When these rates jumped to double digits,

mortgage defaults and foreclosures began ripping through the country.

Since April 2007, foreclosure filings have increased by 65% — affecting at least one out

of every 519 households. Neighborhoods where foreclosures proliferate suffer a double

blow, because when people lose their homes and move away, local businesses lay off

employees or close their doors.

The U.S. government responded to the mortgage crisis with $220 billion for major

failing banks and brokerages. Financial help for defaulting homeowners remains under


Medical jeopardy and bankruptcy. Between 2000 and 2005, individual bankruptcies

rose 68%. Little wonder, with total consumer credit debt at $12.8 trillion!

Medical bills account for half of personal bankruptcy filings; 48 million people in the

U.S. have no health insurance. The majority of those who do have insurance are vastly

underinsured for major illnesses and accidents.

Nearly half of all private-sector workers — including 75% of low-wage earners — do not

get a single day of paid sick leave.

Vanishing income, receding retirement. Real wages — wages adjusted for inflation

— are falling. And they’re falling unequally. Median incomes for white families fell by

$745 between 2000 and 2006; for African Americans, by $2,766.

Then, during the first quarter of 2008, precipitous drops in the value of homes and stocks

emptied U.S. households of $1.7 trillion of their combined wealth.

This hurts a broad swathe of the population, but has a special sting for the “baby

boomers,” the largest demographic clump in U.S. history. As their retirement beckons,

sources of post-employment income are drying up, with pension funds down nearly 5%

and stocks and mutual funds down 9%. And plunging real-estate prices threaten the plans

of retirees who hoped to live on money generated by selling their homes.

Fewer jobs, worse conditions. The current official unemployment rate is 5.5%, about

8.5 million people. This figure is wildly inaccurate: it counts only those currently

receiving unemployment payments, and not the multitudes who no longer get benefit

checks but remain chronically unemployed.

Between 2000 and 2006, over 3 million manufacturing jobs were lost. So far this year,

high fuel prices and recession have caused an 8% drop in auto sales, which means that

auto companies are laying off increasing numbers of workers. Overall, tens of thousands

are being let go each month.

For those fortunate enough to have jobs, wages, hours, and working conditions are

worsening. This is largely because of the decline in unions, which now represent only

12% of the workforce. Laid-off workers often have to settle for new jobs paying half or

less of what they formerly earned.

The road to working class resurgence. The U.S. working class has a long tradition of

innovation and militancy. The hardships of the Depression stimulated irrepressible labor

battles that won sweeping reforms.

To create such a movement today is beyond the imagination of union leaders remote from

their members and wholly invested in the Democratic Party — which has proved time

and again that it is simply the “other” party of CEOs and bankers. When change comes, it

will come instead from the initiative of the workers inside and outside of the unions who

need it most: women and immigrants, people of color and diverse sexualities, the young

who are struggling to find their first jobs and the old who are anxious about retirement.

Their actions on their own behalf, and on behalf of the whole working class, cannot come

soon enough!

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