=======================Electronic Edition========================
RACHEL’S ENVIRONMENT & HEALTH WEEKLY #421
—December 22, 1994—
News and resources for environmental justice.
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BIG-PICTURE ORGANIZING, PART 3:
RESPONSE TO THE REPUBLICAN CONTRACT
[Labor Secretary Robert Reich and the Democratic Leadership
Council (a group of moderate-to-conservative Democrats) have
proposed an alternative to the Republicans’ “Contract With
America.” [1] Because environmental programs will be affected as
the economic debate develops, we are giving space to Mr. Reich’s
views, taken from 3 speeches he delivered during the past 4
months.]
America was built on an unspoken bargain between employers and
workers: the implicit promise that if you worked hard and played
by the rules, you would be rewarded with a steady job, rising pay
and gradually-improving benefits. For generations, Americans
believed in that bargain, guided their lives by it, passed it on
to their children. The conviction that you earn your own fate
forms the bedrock for the American ethic of individual worth and
accountability. [2, pg. 2]
About 15 years ago, the promise began to fade, and today the
disintegration is accelerating. The old “middle class” has now
split into 3 classes: [3, pg. 2]
** The overclass who are positioned to profitably ride the waves
of change, and who increasingly question their connection to the
rest of American society, often living in elite suburbs, behind
gates, sometimes even providing their own services such as road
repair and police. They have long provided their own educational
system for their children.
** The underclass largely trapped in center cities, quarantined
in surroundings that are unspeakably bleak, and often violent,
increasingly isolated from the core of the economy;
** The anxious class, worried not only about sustaining their
incomes but also about keeping their jobs and their health
insurance. They fear for their children’s future. These are the
old “middle class” who now are doing everything possible to hang
on to the promise: spouses have gone to work; both parents are
working longer hours or have taken second and even third jobs;
they are having fewer children and having them later in life; and
they have drawn down their savings. The anxious class is trapped
too, not only by houses and apartments that are too small for
raising a family, but also by the frenzy of effort that it takes
to earn the two or three paychecks needed to preserve their
standing. [4, pg. 4]
What has caused the decline? In a nutshell: hard work is not
enough anymore because emerging forces have rewritten the rules.
Mr. Reich points to four key forces: [2, pg. 3]
** The first is technology, largely computer-based, that has
eradicated or devalued every routine job that can be done by a
software program, and simultaneously has enriched every job
utilizing the problem-solving skills of the human brain.
** The second force is global competition, which has reinforced
the same trends, imperiling the jobs of those who must compete
with low-wage workers elsewhere on the planet, while enriching
those better-equipped to take advantage of new markets for
American insights and skills.
** Third is the decline of labor unions. Their decline accounts
for as much as 20 percent of the wage inequality among American
men, the Secretary said. Today, only eleven percent of the
private-sector workforce is represented by a union. Let there be
no doubt, Mr. Reich said: A revitalization of the labor movement
would help reverse the erosion of the middle class. [3, pg. 3]
** Fourth, and more difficult to quantify but probably no less
important: The breaching of the postwar bargain between companies
and their employees. It used to be that as companies became more
productive and more profitable, employees who worked hard and
proved their loyalty could count on steady jobs and rising pay
and better benefits. No more. [2, pg. 3]
For example, corporate profits soared 45% in the last quarter,
and productivity grew at an annual rate of 2.7 percent. But wage
growth hasn’t matched this pace. Rising interest rates are
hitting middle class families with higher payments on cars,
mortgages, and credit cards, while those earning over $100,000 a
year –who own 60 percent of the nation’s bonds and almost
one-third of all other interest-bearing assets –have much to
gain from the rising rates. [2, pg. 1]
Mr. Reich said: If American business continues to pursue
short-term profits at the price of insecurity and falling living
standards for a large portion of our society, it will sooner or
later reap the bitter harvest of popular rage. The American
public is pro-business. But that support rests on an implicit
bargain. And business betrays that bargain every time it fires
an older worker in order to hire a younger one at a lower wage,
provides gold-plated health insurance to top executives while
denying its workers health coverage, labels employees independent
contractors in order to avoid paying them full-time wages and
benefits, or discards its workers rather than invest in them when
profits are booming. [2, pgs. 5-6]
Workers must be viewed as an asset to be developed, not a cost to
be cut, Mr. Reich said. Other elements of a business can be
replicated by competitors –machines, processes, raw materials,
access to cheap labor around the world. But a skilled, flexible
workforce that can create value in ways that matter in the
marketplace can offer enduring competitive advantage. [4, pg. 5]
What divides the over, the under, and the anxious classes is both
the quality of their formal education and their capacity and
opportunity to learn throughout their working lives. [4, pg. 2]
As increasingly capable machines join ever more Americans at the
workplace –join them both as co-workers and as competitors –the
payoff to education and training has soared, and the penalty for
lacking skills has stiffened. [3, pg. 3]
As recently as 1979, a male college graduate earned 49 percent
more than a similar man with only a high school diploma –a
sizable difference, to be sure, but not too large for the two to
share the label “middle class.” By 1992, however, the average
male college graduate was earning 83 percent more than his
high-school graduate counterpart, and the notion of common
prospects had faded considerably. [3, pg. 2]
There is a similar divergence in employee benefits.
Employer-sponsored health coverage for workers with college
degrees has declined slightly, from 79% in 1979 to 76% in 1993.
But rates for high school graduates have fallen from 68% to 60%
during the same period, and for high-school dropouts, the 1979
rate –already low at 52% –has plummeted to 36%. Similar
divisions apply to employer-sponsored pension coverage. Nearly
two-thirds of workers with college degrees are included in
pension plans at work, but fewer than a quarter of high-school
dropouts. [3, pg. 2]
In sum, most Americans are on a downward slide not because of
some genetic deficiencies, but because they lack the learnable
skills to prosper in an economy convulsing with change, the
Secretary said. [2, pg. 5]
Especially hard-hit are African-Americans. In recent months, the
national unemployment rate for African-Americans has been 11
percent, about twice the rate for European-Americans. The median
income for black males working full-time in 1992 was $22,400,
just 72% of the median income for comparable white males. [3, pg. 4]
Although the Secretary did not say it, these facts would seem
to result from racial bias in the distribution of opportunity in
our society.
What is to be done? The Democratic Leadership Council (DLC) has
proposed a package of reforms that would reduce federal taxes for
the anxious class; provide Americans with increased educational
opportunities, starting with early-childhood nutrition and care;
start to rebuild the nation’s infrastructure (emphasizing
highways because, they say, 37% of the interstate highway system
is in “fair or poor” condition); and reduce the national debt.
Interest on the debt (which, under Republican leadership, grew
from $908 billion in 1980 to $3.2 trillion in 1990) [3, pg. 1] now
amounts to $162 billion each year and takes 28 cents of every
federal tax dollar paid by individuals. [2, pg. 4]
The DLC’s programs would require that the government invest $50
billion each year and would be aimed at upgrading the skills and
knowledge of the workforce, so they can compete in a high-tech,
global economy. (Turning our backs on technology, and closing our
borders to trade are not viable answers to the middle class’s
economic problems, the DLC and Mr. Reich believe, because each of
these solutions would reduce the economy’s opportunities to grow.
Growth of the economy is what will save us all, the DLC and Mr.
Reich both preach. Neither the DLC nor Mr. Reich ever mention
the environmental costs of growth.)
Where would that money come from? From reducing tax give-aways
and subsidies to large corporations, from ending some of the
“corporate welfare” programs that presently total over $100
billion per year –“annual spending and tax subsidies that serve
no national economic or social purpose,” to quote Robert J.
Shapiro, a leading Democratic economist. [5] What kinds of
subsidies are Mr. Reich and Mr. Shapiro describing? Subsidies to
the mining companies; the timber companies; agribusiness;
airlines; wealthy ranchers who graze on public lands; oil and gas
companies; the aerospace industry, and on and on. For decades,
corporate insiders in Washington have persuaded Congress to give
corporations special favors exceeding by far the largest welfare
programs for the poor. [5] For example, annually the nation’s
food stamp program costs $25 billion, and Aid to Families With
Dependent Children costs $15 billion. In contrast, federal tax
subsidies to corporations amounted to $53.3 billion in 1994;
direct subsidies to corporations cost the taxpayers another $51
billion, according to the Office of Management and Budget and the
Joint Committee on Taxation. [6] Total corporate welfare: $104.3
billion.
“If we’re asking middle-class America to work smarter and welfare
mothers to play by the rules, it seems important to ask corporate
America to get off welfare and play by the rules as well,” Mr.
Reich says. [7]
                
                
                
                
    
–Peter Montague
===============
[1] Democratic Leadership Council (DLC), 518 C Street, N.E.,
Washington, DC 20002; phone (202) 546-0007. The
January/February issue of the DLC’s magazine, THE NEW DEMOCRAT,
offers a ten-point alternative to the Republicans’ “Contract With
America.”
[6] Quoted in James P. Donahue, “The Fat Cat Freeloaders,”
WASHINGTON POST March 6, 1994, pg. C1.
Descriptor terms: robert reich; democratic party; democratic
leadership council; dlc; over class; under class; middle class;
anxious class; computers; jobs; u.s. economy; labor unions;
employee benefits; wages; salaries; education; african-americans;
blacks; european-americans; taxation; infrastructure; highways;
transportation; national debt; interest payments; growth;