Dispatches from the Class War (On You)

by on February 9, 2015 · 0 comments

in American Empire, Civil Rights, Economy, Politics, Under the Perfect Sun

class-warfare-fight-backBy Jim Miller

Last July, after the Harris v. Quinn decision took the first step toward gutting the power of public sector unions in America I noted that case “pretty much guarantees that we’ll see more cases brought to the high court aiming to send American labor into a death spiral.”

As legal observers commented at the time, this Supreme Court usually moves in a two-step process, starting with a narrow decision that then sets the precedent for a broader and more extreme move to the right in a subsequent decision.

Well, the case that will provide the pretext for that radical step has made its way up the food chain and will likely be heard by America’s highest court.

As In These Times reported last week:

Friedrichs v. California Teachers Association aims to overturn a nearly 40-year precedent which allows the use of “fair share” fees for public sector unions, wherein all union members must pay for the costs associated with collective bargaining and contract administration. Since all workers in unionized workplaces share the benefits of unionization—and since unions are legally compelled to represent all of those workers, which requires use of unions’ financial resources—unions say that workers who choose not to become members of unions must at least pay these fees in order to not become “free riders,” gaining benefits from union representation without paying for them.

From its beginnings, the case has been specially crafted for the Supreme Court, and if successful would affect tens of thousands of union contracts and would force millions of public employees into a right-to-work model . . . [I]t could represent the most radical shift in labor law in decades. Public sector unions, which represent one of the last bastions of strong unionism in the U.S., could lose millions of dollars through free riders, untold thousands of members and a significant portion of their already diminished institutional power.

Of course, as we have seen in Wisconsin, Michigan and elsewhere across the United States, the political motivation for attacking the power of public sector unions is clear: to drain the coffers of what (even in its weakened state) represents one of the best funding sources and mobilization machines for the Democratic Party.

So the class war against the American union movement is not just out to devastate public sector workers’ power, but to crush the entire labor movement and hurt the Democratic Party.

Thus, while there may be some corporate Democrats who would be perfectly happy to see labor thrust into the dustbin of history, more politically savvy folks who hope for the possibility of even a center-left political governing coalition in the United States should be concerned about this drive toward right-wing plutocracy.

But even more importantly, the vast majority of Americans should care about the push to crush labor because the war on unions is a war on shared prosperity, a stable middle class, and basic dignity for all workers. As the Economic Policy Institute (EPI) recently reported, “union membership density fell as the share of income going to the top 10 percent escalated.”

And this is very bad economic news for ALL workers as EPI again observes:

[T]he bottom line is clear: There is a demonstrable wage premium for union workers. In addition, this wage premium is more pronounced for lesser skilled workers, and even spills over and benefits non-union workers. The wage effect alone underestimates the union contribution to shared prosperity. Unions at midcentury also exerted considerable political clout, sustaining other political and economic choices (minimum wage, job-based health benefits, Social Security, high marginal tax rates, etc.) that dampened inequality.

In that way, the war on public sector workers is really the last front in an on-going war on the American middle class.

Bringing It All Back Home

Here in California, Capitol and Main is doing a multiple part series on the continued costs of economic inequality on our lives. This work is centrally important because it shows how, despite the modest improvement in unemployment numbers that some are rushing to celebrate, the iceberg of inequality is still out there threatening to sink our collective ship. In sum, the “recovery” has not been much of one for millions of Americans and the mainstream media discussion of economics, driven by elite concerns, does little to tell this story.

What the story of inequality in California tells us is that things in our state are far from golden. We are on the cutting edge of a broken economy that rewards the rich and punishes the rest of us, and we are still moving in the wrong direction:

Piketty’s detailed research shocked some: As he noted, the United States today is characterized by “a record level of inequality of income from labor (probably higher than in any other society at any time in the past, anywhere in the world).” But it was not necessarily a big surprise to those of us in California: As with demographics, the Golden State seems to have foreshadowed national trends.

California, for example, is the home to more super rich than anywhere else in the country – and it also exhibits the highest poverty rate in the nation, when cost of living is taken into account. Income disparities in the state of California are among the highest in the nation, outpacing such places as Georgia and Mississippi in terms of the Gini coefficient, a standard measure of inequality.

But it’s not just the extremes – with wages falling and insecurity rising, the middle class is also squeezed. And, as it turns out, none of this is good for economic growth: A new wave of research, including from the Federal Reserve Bank of Cleveland, has been finding that high levels of inequality and racial and class segregation are actually associated with slower and less sustainable growth, providing at least one explanation for the state’s subpar economic performance.

So we aren’t going to “grow” our way out of inequality because that very inequality is hindering our growth. Indeed, the explosion of inequality, both here in California and in the nation at large began with the Reagan revolution which brought with it the union-busting, tax-cutting, and corporate give-away “pro-growth” policies that those on the right still cling to like religious dogma even as their efficacy in serving the greater good has been soundly disproven.

As Manuel Pastor and Dan Braun outline in their part of the Capitol and Main series, the history is clear:

Beginning in the 1980s, the rich began to pull away from the rest. Between 1979 and 2012, California’s Top One Percent nearly doubled their incomes, increasing by 189.5 percent, while incomes for the other 99 percent actually fell by 6.3 percent.

The stakes are high and the solutions are emergent. Some reasonably point to reining in excess wealth – after all, as the California Budget Project has noted, in 2010, the incomes of California’s 41,000 millionaires added up to nearly $144 billion, seven times the income needed to lift every Californian out of poverty.

The widening gap has many causes. As California, through Silicon Valley, led the world into the digital age, productivity rose to unprecedented levels. But virtually all of the economic benefits went to those at the top, partly because of the spectacular wealth created by the tech sector. In just the last 10 years, California tech companies added at least 23 billionaires to the list of richest Americans – Twitter alone boasted of creating 1,600 millionaires overnight when it went public 15 months ago. The state now has 111 billionaires; if we were a separate country that would put us behind only the U.S. and China, and tie us with Russia.

Of course, increasing inequality of income and wealth might be less objectionable if it was associated with mobility – that is, if those on the bottom had a good chance of making it to the middle or the top. But while there are surely individual success stories to be celebrated, these stories are the exception in an economy where it is harder and harder for most people to get ahead. Despite America’s reputation as a land of opportunity, intergenerational earnings elasticity (a measure of how likely you are to be stuck in the income group in which you were raised) is higher in the U.S. than in Canada, France, Germany and the Scandinavian countries, and just a bit better than in the United Kingdom or Italy.

Thus with inequality soaring, the middle class shrinking, and economic mobility thoroughly stunted America is becoming precisely the kind of oligarchical society that Thomas Piketty warns we are headed for, and California is leading the way with median income falling 16% from 2005 to 2012, a big drop in the number of middle class households of the last several decades, and six of the seven least affordable cities in the United States.

And if you really want to rub some salt in the wound, consider the fact that families of color have disproportionately suffered the consequences of these trends. To make it plain, Capitol and Main outline this all in a great series of charts and graphics illustrating these grim facts.

Rethinking Austerity

What is to be done? At the national level, it’s clear that the newly ascendant right is chomping at the bit not just to kill the union movement but also to force more austerity, reduce Social Security, cut taxes on corporations and the rich, and generally put the move toward unbridled plutocracy into hyper-drive.

This, of course, will only bring more of the same results in terms of widening economic inequality, racial disparity, political dysfunction, and a wide range of social problems that come with the erosion of most people’s standard of living.

In Piketty’s Capital in the Twenty-First Century, he notes that there is no natural mechanism in capitalist economies that will inhibit, no less reverse the inevitable concentration of wealth at the top. Only things like war, depression, and/or political intervention like unionization or progressive taxation can change this dynamic.

Hence most Americans, union and non-union alike, should do what they can to bolster the besieged labor movement that has been the only significant tool American workers have ever had to make the economy more fair and give themselves a voice in our politics.

And they should also rethink the knee-jerk aversion to all taxes and government that came with the Reagan revolution and did so much to help shift the burden of paying for the commons from the rich to the rest of us.

On that note, we may be seeing a ray of hope with a recent PPIC poll showing the majority of Californians in favor of both extending Proposition 30 and implementing a split roll on Proposition 13 that would leave individual homeowners alone but reassess commercial property at current rates bringing in billions of dollars of revenue and giving us the means to do some of the heavy lifting necessary to fund the future educational, infrastructural, and social needs that could start to lift us all up.

That would be the kind of trendsetting that Californians could be proud of.

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