In the most coherent and cogent explanation I've seen of the financial crisis, AFL-CIO Associate General Counsel Damon Silvers lays out how the decline in unionization which began in the mid-Seventies led to the burst of the sub-prime bubble, and ultimately to today's recession. And he wrote it way back in April.
But the real roots of the crisis do not lie on Wall Street. The cause of the crisis can be found in the long-term weakening of the real American economy in an era of globalization—in closed factories, outsourced high tech jobs and low wage jobs with no benefits, and in the unsustainable effort to maintain middle class living standards through borrowing. It is to be found in the reality of lives like that of Kimberly Somsel of Westland Michigan, a member of the AFL-CIO’s community affiliate Working America, an unemployed single mother of two battling breast cancer and facing foreclosure due to a ballooning "2 and 28" loan payment. She is selling the family car and her furniture just to get by. Five houses on her block are threatened with foreclosure.
Powerful voices in our country say that public resources should be there for Bear Stearns, but not for Kimberly Somsel, to keep the champagne flowing on Wall Street, but not to build a future for Michigan. But there is another way — a return to a high wage economy driven by productive investment in the United States. This way requires not that we retreat from the global economy, but that we insist that the globalized economy have real rules that work for working people. At the center of these rules must be labor market regulation, and in particular, regulation that empowers workers to speak for themselves by acting together. But rules are no enough. The United States must pursue a real national economic strategy in a globalized world economy.
For thirty years, America’s economic elites and their political allies have pursued a combination of economic and social policies designed to produce a low wage economy. These policies—our labor laws and our broader system of labor market regulation, our tax policies and our approach to globalization, have yielded decades of stagnant wages and rising economic inequality.
But at the same time, policymakers of both parties have sought, with some success, to maintain high levels of consumer spending. The pursuit of the contradiction of a low wage, high spending economy has systematically destroyed the various ways we individually and collectively save and invest. Instead of an income driven economy, we have become an economy driven by asset bubbles fueled by cheap debt. The ultimate unsustainability of this strategy has brought us to our current economic crisis.
You really need to read the whole speech. It's the summary of how we got here that I wish I had written, and it's just another powerful reminder of how critical passage of the Employee Free Choice Act is to economic recovery. Without a real opportunity to join unions and build bargaining power, American workers will continue to experience stagnant wages. And as Silvers eloquently explains, stagnant wages lead to unsustainable debt and a a downward economic spiral. The Employee Free Choice Act isn't just about fairness in the workplace -- it's a tool for engineering stimulus. And it won't cost the government a dime.