Repub policies causing huge risk shifts
Sun Oct 10, 2004 at 09:42:47 AM PDT
There's a great
article in the L.A. Times today about how
families have been shouldering more and more of the burden of their own economic security since the 1970s. It's one of the best I've seen at explaining exactly what has been happening to our society since the late 70s (crystallized by Reagan of course).
(unfortunately, registration required at LAT)
The gist:
Starting in the late 1970s, the nation's leaders sought to break a corrosive cycle of rising inflation and stagnating output by remaking the U.S. economy in the image of its frontier predecessor -- deregulating industries, shrinking social programs and promoting a free-market ideal in which everyone must forge his or her own path, free to rise or fall on merit or luck. On the whole, their effort to transform the economy has succeeded.
But the economy's makeover has come at a large and largely unnoticed price: a measurable increase in the risks that Americans must bear as they provide for their families, pay for their houses, save for their retirements and grab for the good life.
Great Graphic
In a nutshell: because of cutbacks in government-funded safety nets -- from unemployment to welfare and beyond -- and decisions by corporations to cut back on employee benefits such as pensions and to abandon their commitment, at one time deeply-felt, to providing job security for their employees, Americans have found their incomes wildly fluctuating and their economic security almost non-existent.
Item:
Government used to provide substantial help in coping with joblessness. In the mid-1970s, jobless workers could collect up to 15 months of unemployment compensation. By last December, Congress had pared the program to just six months. Additionally, federal legislation in 1978 and 1986 effectively reduced the value of benefits by making them taxable. And state eligibility restrictions imposed in the late 1970s and early '80s shrank the fraction of the workforce entitled to collect benefits from about one-half to a little more than one-third. Of the 8 million people who were unemployed last month, only 2.9 million were collecting benefits.
Item:
The minimum wage was once the government's chief means of ensuring that "work pays" -- that those willing to head to a job each day would make enough to live on. For decades, Democratic and Republican administrations alike maintained the minimum wage at about half of average hourly earnings in the U.S. But starting in the early 1980s, the minimum wage was allowed to slip. At $5.15, it is now only one-third of average hourly earnings, its lowest level in 50 years.
Item:
Washington once sought to help people adjust to global competition, industrial restructuring and technological change by offering job training. Twenty-five years ago, the federal government spent $27.3 billion annually (in 2003 dollars) through the Comprehensive Employment and Training Act, or CETA. Even if one doesn't count CETA's "public service" jobs, which were widely criticized as boondoggles, it was still spending $17.1 billion. By contrast, the government now spends about $4.4 billion on CETA's successor, the Workforce Investment Act. "It's largely a place holder," said Anthony P. Carnevale, an authority on education and training who was appointed to major commissions by presidents Reagan and Clinton. "It gives politicians something to point to but doesn't do much good."
One of the biggest changes is in how companies see their role.
Then:
For most of the post-World War II era, Washington had a partner in helping to shield working families from risk: corporate America.
Businesses considered themselves duty-bound to provide stable jobs and strong ties to employees, cushioning workers against the vicissitudes of the economy.
Now:
Twenty-five years ago, almost 40% of the nation's private full-time workforce was covered by traditional
pensions, under which the employer bears the risks and pays the benefits. That number has fallen to 20%.
[...]
As recently as 1987, employers provided health coverage for 70% of the nation's working-age population, according to the Employee Benefit Research Institute in Washington. By last year, that had dropped to 63%. The change translates into nearly 18 million people who would have been covered under the old system scrambling to make their own arrangements.
[...]
When it comes to job security, employers have largely broken the bond they had with workers. A late 1980s study by the Conference Board, a business research group, found that 56% of major corporations surveyed agreed that "employees who are loyal to the company and further its business goals deserve an assurance of continued employment." A decade later, that number dropped to just 6%
There's too much to summarize in this article, but I hope Kerry can somehow fit this issue into the next debate. As the article says:
Under the banner of the "Ownership Society," the president has proposed a series of new, tax-break-heavy accounts to let families pay for their own retirements, healthcare and job training. He also has called for partially replacing the biggest of the government's protective programs -- Social Security -- with privately held stock and bond accounts.
Kerry should hit the "ownership society" hard -- this sounds great on the surface but exposes people to huge new risks.
I mean, I think some trimming of the government safety nets may have been necessary in the 70s, but the pendulum has clearly swung too far. This article makes it clear why people are not feeling better even though by some measures the economy is improving.
I hope the Democrats can hit hard on this issue -- there has NOT been a real discussion of exactly what the "ownership society" means for working people!
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