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30 Years Later, the Times Discovers “The New Poor”

February 22, 2010
By

“Millions of Unemployed Face Years Without Jobs,” the New York Times noticed on Saturday in a story about people it dubbed “the new poor.”

The story is a good reminder to the ruling class. One should never forget that millions of rich douchebags pretend to have no idea how the majority of us live. So that’s a service.

But “the new poor” are mostly middle-aged, and that’s why this piece could—and should—have been written at any time during the past 25 years. Actually, it should have been published every month, in some version, in every newspaper in the land. The piece itself acknowledges the nation’s central economic reality in the work and income history of Jean Eisen:

By the early 1980s, gas and rent strained their finances. So she took a job as a quality assurance clerk at a factory that made aircraft parts. It paid $13.50 an hour and had health insurance.

When the company moved to Mexico in the early 1990s, Ms. Eisen quickly found a job at a travel agency. When online booking killed that business, she got the job at the beauty salon equipment company. It paid $13.25 an hour, with an annual bonus — enough for presents under the Christmas tree.

Christmas presents or no, 25 cents less per hour 10 or 15 years later translates to an after-inflation pay cut of 30 percent. This is the story of most American workers.

It’s my story, too. Today I earn almost exactly my salary of 2000. After inflation, it’s a 20 percent pay cut. After 22 years as a journalist I earn today about five percent less, inflation-adjusted, than I made in 1988, my first year out of college.

I’m going to go out on a limb here and baldly assert that this is not because I suck at what I do. Most of you are in the same boat.

The exceptions are government employees, who mostly still get pay raises (and pensions!) like most people used to get in the old days; “superstars” of various stripes, who hit the jackpot either genetically or by luck; mid-level or higher folks in financial services, who even now are paid rather too generously, in my opinion; and a deceptively large and mostly unheralded cohort of people who, by chance or design, have carved out their entrepreneurial niche in the burgeoning business of fraud. I count the bankers among them, too, but I also believe this sector includes people at or near the top of multilevel marketing schemes, the “We Buy Houses” gurus, the legions of former mortgage brokers now receiving payment as for-profit “foreclosure consultants” and credit counselors, and the lawyers these people employ. Answer one of those spam e-mails or Craigslist ads promising “work at home” riches, and you’re food for someone on the lowest rung of this enormous, mostly invisible desperation mill.

The Times piece discusses the alleged “social safety net” and, as usual, laments its sorry condition. But it glosses over a big story below the surface: as welfare programs have shrunk, and jobs have for regular people have become scarce, “disability” payments have exploded.

Though unexamined in the story, the Times‘ example illustrates this as well:

But six years ago, her husband took a fall at work and then succumbed to various ailments—diabetes, liver disease, high blood pressure—leaving him confined to the couch. Not until 2008 did he secure his disability check.

and then:

Their daughter has back problems and is living on disability checks, making the church their ultimate safety net.

These are small payments—$1,500 a month in this example, which is about double the norm. But social security disability payments add up.

Between 1970 and 2000, the percentage of U.S. workers receiving government disability payments increased at five times the rate of working age population growth. Supplemental Security Income, which uses the same disability means test but does not require the recipient to have a work history, has exploded; 8 million Americans received SSI benefits in 2009, totaling $49 billion (up from $34 billion in 2004). The Social Security Administration has been working to clear the million-strong backlog of new applicants. This year the government expects to process 5 million retirement, survivor, and medicare claims and 3.3 million disability claims.

Today there is a whole community of lawyers, working on contingency, who specialize in getting people SSI benefits. This is why you’ll see able-bodied men all over Baltimore (and the nation) collecting these payments. Under the rules, drug addiction no longer counts, by itself, as a disability. But as a Baltimore City official told a neighborhood meeting recently, “there are usually co-diagnoses.”

No one can live on disability payments, but they preclude one’s getting a straight job, so the recipients are left scrounging in the shadow economy to make ends meet. The program itself carries with it an identity—”disabled”—which recipients then adopt, accurately or not, to their whole persona.

Epidemic “disability” is the predictable outcome of two generations of economic policy, from “trickle down economics” to NAFTA to “Welfare Reform” and “to-big-to-fail” bailouts. Ordinary citizens have no place in our hollowed-out, deindustrialized economy engineered for “knowledge workers” and “symbolic analysts.” SSI is about the only shot the desperately poor have at a steady income.

It didn’t—and doesn’t—have to be this way. This month’s Harper’s has an essay by labor lawyer Thomas Geoghegan, “Consider the Germans,” (subscription required) touting the reasons you’ll see ordinary Germans all over the Grand Canyon, Disney World, and Broadway if ever you manage to get there yourself. Inevitably they’ll be on tour for six months (six weeks, minimum), and they’ll pity you with your lousy two-week vacation.

Geoghegan doesn’t mention this, but for their 38-hour work week, German workers average a gross wage of 870.87 euros. That’s 45,000 euros per year. Each euro is worth about $1.36. So the average German with a job makes about $59,000 per year.

One of the reasons Germans have longer vacations, shorter work weeks, and still get paid more than us is because, by German law, employees get to seat about half of every corporation’s board of directors. With this power, workers can set “conditions” under which the bosses can lay people off, or outsource work to other countries. Wages are set across industries and across regions, the ideal being that everyone doing the same job gets paid about the same.

Americans—especially, ironically, American workers—deride this as “socialism.”

Well, yes. It’s socialism.

It’s also a large part of the reason Germany is out-competing the U.S. as a high-tech, quality manufacturer, Geoghegan contends:

They have kept a tool-making, engineering culture, which our own entrepreneurs, dreamily buried in their Ayn Rand novels, have gutted. And now, thanks in large part to these smart structural decisions, Germany is not only competitive, it’s rich.

The German system is no panacea. Unemployment is usually higher than here and the middle class has been shrinking there as everywhere (though unemployment in Germany, and the rest of Europe, is no where near as dire a proposition as it is here—you can still see a doctor, for instance). But Germany’s comparatively inflexible labor market makes it much better at developing “human capital”—that mystical combination of smarts and loyalty to which U.S. managers pay lip service and little else.

The idea that American workers could take back some of the benefits our great-grandfathers and great-grandmothers fought and died for (anyone remember the 40-hour work week?) seems remote in these tea-bagging, immigrant-bashing, anti-socialist times. Geoghegan acknowledges this:

Is it likely? No. Is it possible? Yes. At any rate, it’s just nonsense that “Europe’s way” and “our way” can never be the same. We may have messed up our part in globalization, but we still have time to fix things.

But he is hopeful, and so am I. Everyday idiots have seen the fraud at the center of U.S. economic policy for 30 years at least. Now even the New York Times has caught on, and some of its readers have clearly been waiting. When I read the jobs piece on Sunday morning, the second most reader-recommended comment was this:

the blogs are filled with rumors that the 30′s were just like this—that 2010 is in fact 1932. and it was not until the unemployed started demanding work, started striking that the capitalists started to understand the social need for WPA and other New Deal projects.

The truth is there is all kinds of money for health care, for jobs for everyone, but the politics is too skewed toward corporate greed today.

The top 1% in this country has as much as the bottom 90%? I wonder why that isn’t a t shirt yet?

Revolting.

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