American society is crumbling. Our buildings, roads, bridges, dams—all our municipal facilities are breaking down. And there is very little investment being made in correcting that situation. Something more important is breaking down. Our job skills. As a nation, we need the collective experience of skilled workers. Since the Bush Administration took office in 2001 U.S. corporations have sent over 60,000 factories and 5,000,000 manufacturing jobs to Asia.
Republicans in Congress have sold out to major corporations. In 2012, when America desperately needed jobs here in the United States, the Republicans defeated the “Bring Jobs Home Act.” This legislation would have given corporations a 20% tax credit for bring jobs back to the United States. It would also have disallowed the current deductions, established in the Bush Administration, of 25% for the costs of moving jobs and production out of the United States. The Republicans filibustered the same bill again when it was brought up again 2014.
From 1950 to 1970, according to sources like the Hamilton project and the Brookings Institution and others, male wages in the U.S. grew 25% per decade. In the 1970s they slowed, while at the same time more women entered the marketplace. Then they began to fall. Over the last 40 years, wages for men have fallen by 19%, and for men with only a high school education, by 41%. A man with a median income today earns only as much as a man with median income did in 1964. We’ve stagnated.
Women face problems similar to men. The share of women in the workplace advanced from about half in 1970 to over 70% by 2010. But between 2000 and 2010, they also faced wage reductions and by 2010 were making 6% less than they were in 2000.
Then George W. Bush devastated regulations on finance. He appointed the arch enemy of financial regulation, Christopher Cox, a follower of the idiotic Ayn Rand wing of the wingnut Republicans to let the markets run free. They did and Americans lost somewhere between $7 trillion and $14 trillion in personal wealth. Wages dropped drastically. According to studies by the National Conference of Mayors, wages in some areas had risen to $61,637 before the 2008 Depression began. When jobs returned to those same areas in 2014 the average wages were $47,171.
While the Bureau of Labor statistics reports that there are an enormous number of workers who work part time but would like full-time jobs, there are not enough full-time jobs available. Whereas over 94% of men were occupied in full time jobs in 1970, by 2010 only 81% of men seeking jobs could find full time employment. Without jobs available except at poverty level or below poverty level wages, many individuals have opted out of the workforce, disillusioned and depressed. The consequences have ranged from many more seeking Social Security disability, more poor, more homeless and many more with social problems like illness, including mental illness and crime.
What has illegal immigration added to the problem? Do illegal immigrants reduce the number of jobs available? The question has not really been answered. Studies provide conflicting information. There seems to be some feeling that perhaps half a million net jobs at the entry level are lost to illegal immigrants. The fact is that of the roughly 11 million illegal immigrants in the country, about 8.5 million have jobs. They earn about $240 billion, pay something like $90 billion in taxes and use about $20 billion less in services than they pay in taxes. While they contribute to revenues at the federal level, they cost slightly more in services at the local level. They do account for a number of low-level jobs, do pay their own way and are eventually, two or three years, absorbed into the economy. Do they cost jobs? It is pretty clear that they do. With unemployment at under 6%, at percentages of the workforce considered normal, it is quite likely that illegal Hispanic immigrants at least are taking jobs in many cases that would go unfilled and at wage rates that would not be acceptable to American workers.
The other issue is this: American jobs in far greater numbers than the illegal aliens have taken and in much higher skilled positions have gone to Asia. To counter this, numerous job creation bills were submitted by Democrats in Congress but defeated by the advocates of the global corporations. Illegal immigration has slowed dramatically—some say has no net influence on the economy any longer and may be more of a political rather than an economic issue at present. Since evidence shows that once illegal immigrants are assimilated into society for two or three years they have a positive effect on the labor force, illegal immigration does not seem to be a factor in long-term American job growth.
We have something like 155 million people in the workforce. The impact of about 8 million people, whose skills seldom rise above entry level work, or basic construction, landscaping or menial duties in the first several years, moves the needle very slightly, one way or another. There may be other factors involved with illegal immigration but it is not a contributing factor to the long-term structural problems of the American workforce.
American society has changed demographically and educationally—leading to different earning and job patterns. Since the early years of the Reagan Administration, those at the low end of the education scale have fared far worse than others, while college graduates have fared much better. High school dropouts have lost about 14% of earning power, high school grads have lost 9% and yet college graduates have increased their earnings by 25%. During the worst parts of the Bush Recession, while unemployment levels were at 8%-9%, in many areas unemployment for college graduates remained at 4% to 5%. So education does make a difference but there are problems.
About 3.3 million students graduate from high school each year. Of those about 65% actually enroll in college and about 1.8 million graduate every year, plus another 800,000 who earn graduate degrees. There are also about 175,000 doctoral graduates each year. So, about 2.8 million college-educated or with higher degrees go into the workforce each year. The rate of African-American or Hispanic students has been climbing steadily as a percentage of enrollment and graduation totals.
The problem with the statistics about college education is that it has now become extraordinarily expensive. Private university education can run between $150,000 and $200,000 for four years, plus interest on debt, and for public universities, between $80,000 and $100,000. The starting average income for college graduates is something below $50,000. Now, one might say that there would be few individuals attending private universities who are not from affluent families but that would not be true. School counselors and parents know that a degree from an Ivy League school opens the doors to many more opportunities than does a degree from a state university, especially in states where the school is less highly credentialed. So what’s the problem? The problem is that fewer high school graduates with good grades can now afford to go to college.
How does educational attainment affect income? If your parents told you that you had to go to college, they may have been talking about making a living. The fact is that, on average, educational level does affect income. In 2015, someone with no high school degree, if employed at all, can expect to earn an average of something like $488 per week. High school graduates average $688 per week. Those with some college or an associate degree can earn $761 per week. Bachelor’s degree: $1101. Bachelor’s degree with additional education but no Master’s Degree: $1,193. And Master’s Degree or higher: $1,386 per week. Professional degrees: Doctor, Lawyer, etc. are, or can be, considerably higher. So, education is a considerable influence on income earnings.
An average bachelor’s degree earns more income than a high school diploma over a four-year period to make up for the costs of a degree from a public university. That is roughly the earnings differential between those two educational levels. But it does not tell the whole story. As an individual works through a career, many management decisions about that career will include the person’s academic attainments, college graduates often being the minimal requirement for advancement. So the early years or the average year’s income will not always tell the whole tale of why advanced education is significant to earnings. .
Another problem today is the cost of a two-income family. Many families today cannot afford to have one person at home as a homemaker and child caretaker. The result may be a doubling of earnings but it is also a doubling of costs. In order for a two-income family to operate, they need a convenient place to live, which may cost more. They need not one but two reliable automobiles. They need day care and they need health care. Which means that the two-income family comprised of two people who might, for example, each owe college loans must make substantial incomes and must not lose one of the jobs. The rise of women in the workforce from under fifty percent in the 1950s to over 70% in the 2000s has changed the financial equation substantially—and not necessarily for the better.
So we need lots of jobs, good jobs, and long-term employment so that families have the opportunity, after many years paying off bills for school, for a house, for miscellaneous early-family costs associated with raising children, can save enough to retire. At present, the average American household saves relatively nothing. Incomes from 2010-to 2013 did not earn enough to restore what they lost between 2008 and 2010. In other words the Bush Depression caused such a loss in savings and home equity and job loss, that the average person, not the median, did not make enough money…actually no wage gains…to recover their losses. The median (because of the way the enormous incomes of the rich affects the statistics) did earn a little bit more than from 2007 to 2010.
From the 1950s through 2015, the average savings by a U.S. family was about 9% of income. In 1975, it was 17%. In 2015, after years of Republican economics, it is less than 5%. Remember that many people lost all or a large part of their savings in 2009 in the Bush Crash and subsequent Depression. So, the average family’s savings of $1750 on an annual after tax income of $37,500 is not going to take people over 45 into retirement starting from 2015. If there were no Social Security, a huge segment of the population would be penniless and homeless. Remember also that an average of 5% does not take into consideration one other very important fact. Savings are not evenly distributed—half of all Americans say that they save nothing at all. And most of those under the poverty level have no other source of retirement savings, no stocks, bonds or any kind of a 401K or pension or even equity in a home. Nothing.
The more people are out of work, the lower wages are depressed. So even if the official unemployment numbers are low, companies understand the true employment conditions. For the average family this means not only lower incomes but also less job security. Among the unemployed right now in April of 2015, there are 8.6 million people unemployed (5.5% of the workforce.) But there are another 6.7 million people who are working part time but seeking full time employment. They are not unemployed, but they are looking for work. And then there is the other category “marginally attached to the labor force.” There are 2.1 million people, long term unemployed, who have exhausted all their benefits, who are looking for work but have not “searched for work” in the last four weeks, according to government procedures. Of the 2.1 million no longer looking, two thirds were not looking because of some situational problem, such as illness, (or perhaps the cost of looking for work) but fully one third of the marginally attached (730,000 people) have simply given up. Consequently, we have a total of 17.4 million people (11.2 % of the workforce) who are looking to improve their financial status but cannot find a job
The reason they cannot find jobs is not an accident. In the mid-1970s, coincident with other economic problems in the U.S., like oil prices that were seemingly unstoppable in raising inflation to unheard of levels, more and more companies began sending jobs to other countries with wage rates 20 or more times lower. Americans were earning $20 an hour and Asians were making 50 cents an hour. Soon Asian manufacturing facilities were making apparel, shoes and toys among a wide range of products that had been, but soon no longer would be, “Made in the USA.” Contacts in Asia were made as early as the late 1960s and the early 1970s by retailers like Sears, Kmart and J.C. Penny’s, as well as the major department store chains as a result of increased competition, leading to massive discounting.
By 1975, there was a direct link between U.S. retailers and manufacturers in Taiwan and South Korea, Singapore and Hong Kong. In the midst of an economic downturn as the result of the after-shocks of Viet Nam and skyrocketing oil prices, consumer sought cheaper products. Specialty and discount retailers became formidable competitors to the large department store chains. Products were made in Asia at a fraction of the cost and a decade-long price war was underway in consumer markets. By the mid-1980s, firms like Schwinn, Eddie Bauer, General Electric and Compaq were all manufacturing in Asia on a large scale. In reducing their domestic manufacturing, they created what we came to know as the “rust belt.”
The mid-1980s saw the introduction of the personal computer. Products could be made cheaper in Asia and shipped to the United States. Computers followed the trend by management in major corporations. Computer manufacturing went to Asia. By the early 1990s all kinds of products from toys to apparel to furniture and eventually electronics were made abroad.
Manufacturing, therefore, as a share of the economy plummeted. In 1965, manufacturing accounted for 53 percent of the economy. By 1988 it only accounted for 39 percent, and by 2014, after three Republican administrations, it accounted for only 12%. The years 2001-2011 were the serious watershed years for the loss of U.S. manufacturing. In addition to legislation by the Bush/Cheney Administration that created tax credits for companies closing down in the U.S. and opening abroad, the initial attraction of lower wages captured a number of industries.
Americans used to make things. We made everything in this country from shoes, shirts, toys to nuclear reactors. In the 1950s, which—except for the Clinton years—were the most prosperous in our country’s history, we made 88% of our domestic consumption right here in the U.S. And 32% of workers were union members, with good wages, retirement and health care. Because of the loss of manufacturing, we’ve lost much of our mechanical and industrial engineering infrastructure. Having lost manufacturing in an age of electronics, we’ve lost much of our electronics infrastructure. We educate fewer engineers than other countries of comparable size.
To compound the problem we have as many competitors here at home, ruthless competitors for the American dollar, as in any foreign country. The Republicans, backed by the campaign contributions of the Right Wing Billionaires, have decided to create a two-tier society. One group has good jobs, good health care, fine homes, and good schools. The other group has lessening prospects, lesser education, poorer schools, lower wages and a constant barrage of propaganda that tells them that they are being dragged down by their neighbors and those poorer than themselves rather than the billionaires who have bought the politicians, bought the media, and bought the people who spread the idea that everyone should live a little less comfortably. It is no accident that during the greatest sustained period in our country’s growth, under President Clinton, that a popular Neo-Fascist radio host by the name of Rush Limbaugh was paid $20 million a year to spend four hours a day, on a captive network of over 1400 radio stations around the country, owned by one Right Wing group of Texas millionaires to harangue and castigate the Democratic administration. You almost literally could not travel through the south or through rural areas of this country in the 1990s or early 2000s without hearing his voice, often on more than one station in an area.
We can no longer, certainly not since the election of a Black President, ignore the racial component of our social and political lives. Yes, the Republicans have a political philosophy that divides in order to win elections. They divide the whites from the blacks and Hispanics, the poor from the middle class, the union workers from the non-union, the public workers from the private workers and the secular socially conscious from the religious fundamentalists. It is a simple system, expressed in public by the Fascist governor of Wisconsin, Scott Walker, when he said, on camera, that he would get to a Right-to-Work state using a technique of “divide and conquer,” a slogan made famous over 80 years ago by none other than Adolph Hitler. But for a long time, the goal of the Republican Party was to attract the old Segregationist segment of the old Confederacy. The solid south is now solid racist, with the vilest and disgusting elements in our society electing lunatic politicians.
They were told that Right-to-Work would bring jobs because unions were bad. And they did get menial jobs, while high-paying jobs went to states like Massachusetts, with household incomes 50% higher in some areas than states like Alabama. Football and barbeque and racing cars around tracks may be entertaining, but those who have technologically advanced education, are moving ahead. It isn’t the fault of Massachusetts or California. Those citizens are constantly advocating for better wages for everyone, not just for their citizens. But the Old South, the solid Republican South holds itself so foolishly in an arrogant posture of passive racism, and religious fanaticism that it hurts the country and eventually will destroy those states. In Mississippi, average annual income is already down to $36,451, the lowest average income in the country. It is closely followed in lowest incomes by West Virginia, Arkansas, Kentucky, Alabama, Tennessee and Louisiana—all Republican states. By comparison, Maryland has a median income of $70,004, Connecticut, $65,753, Massachusetts, $64,859, and Minnesota, $61,814.
When the only good job is to go to war, after a while the number of dead and wounded in the South will pile up. The burden on Southern society for endless, meaningless wars to fill the coffers of military contractors in other states while the South houses old, worn out military bases and veteran’s hospitals will one day cause the impoverished Southerner to ask—what kind of life has being a superior person in my own mind benefited me? What did I get out of the false patriotism that sent boys off to kill and be killed or maimed in Republican wars to support the oil barons and the corrupt Sheikhs of Saudi Arabia? Southerners have been propagandized to think that everyone acts in the ridiculous way that Rush Limbaugh or Michael Savage or Sean Hannity describes them. And so the South has far less net worth per family, less average income, poorer educational institutions and fewer top academic institutions than other states, with a very few and modest exceptions. The South has been lied to in order to keep them from organizing, seeking their fair share of the wealth. They have been whipped into a posture of racism and religious fanaticism by the Republican propaganda machine that has made this area that courageously over came Segregation, into the laughing stock not only of the rest of America, but of the world. Politicians with idiotic creationist theories and climate denial and anti-gay postures and unreasonable anti-abortion stances—all of which fly in the face of science—have been daily pounded into the simple minds of the average, largely uneducated Southerner until they have actually become the caricatures of the Southern bigot so often seen in literature. They have become that terrible image that was for so long only a fiction.
Rather than creating jobs for Southerners, the rich and powerful have used their money to buy Republican congressmen and women and Senators who reduced the quality of life of their citizens. They used the power and influence of solid Southern states to create support from billionaires to win over states like Ohio, Michigan, Wisconsin and now Illinois. The money from the super-rich enabled the Republicans to outspend Democrats two to one and elect Republican governors using television commercials to lie about everything from abortion to the state pension systems. And the result? As soon as those governors, hired by the super-rich, came in to office, they cut education, reduced taxes on the rich and on corporations and ended unions, which ended the power of workers to organize and fight back for reasonable pay and benefits. And what did the South get in return? The lowest paying jobs in the country, and the lowest tax revenues, which meant the lowest schools, worst health care and highest percentages of poverty.
So what does the future offer us? Actually, in the states mentioned with high incomes, it offers some hope for better, longer lasting, more productive and more interesting jobs. The South may have the Asian-style, low income assembly line jobs, with low pay, no job security and no benefits. In other words, dead end jobs leading to a dead end economy in those states. It is sad. Half the people in the south vote Democratic. But the Republican political thugs have so rigged the election process, and so divided the people that not only does a majority live with lies, but the slight majority cannot encourage others, so bound up in propaganda and horrid lies on every topic, so propagandized even by their religious leaders, that they cannot shake the yoke of Fascism that has descended upon them.
But good jobs lie in innovation. And that is where, in the 25 or so states, and in the special areas of educational advancement, the future lies. Let’s take decline into reverse gear. Suppose instead of losing a million jobs and residents, Detroit had gained a million new employed people over recent years. What happens then? Well, they need housing and food. But they also need markets, cleaners, gas stations, barbers, beauty salons, dentists, lawyers, insurance firms…all with their own employees attached.
But what if those one million people came as a result of the manufacture of products? Well, if the product was an airplane, there would be 30,000 components that would have to be made by someone, and several thousand in other products. The consensus is that in complex manufacturing one core job can produce as many as 17 other jobs. That doesn’t necessarily mean higher wages. Look at what the Volkswagen employees in Tennessee did to themselves. They voted down the opportunity to organize a union that would have put, according to the way VW does business, a member of the union on the board of directors. So, there are opportunities to improve working conditions and wages if people are not too dumb or too lazy or too ignorant to understand the implications. The fact is that, on average, for every skilled job that is initiated, another 2.5 unskilled jobs, service jobs are created. This is what we need.
So how can we achieve it? Well, studies have shown that in certain places in the country, aggregations or “clusters” of innovation have created highly paid jobs for well educated individuals but beyond the basic employees have also created other well-paying jobs. Just as an example, in industries like information technology and Internet services large, highly paid communities have gathered and the secondary jobs are also highly paid, in those communities. It has also happened in digital entertainment, life sciences, and what is called “clean-tech.” And others.
Let’s take bio-tech. This is one of the innovative technologies. There may be jobs for educated and semi-skilled or skilled workers in the sciences related to bio-tech. These are often referred to as the “traded sector” the employees, in this case, working directly for the bio-tech company. But experience tells us that in those communities where 65% of the jobs are from other services, (the non-traded sector) the incomes of those not working for the biotech company…education, retail, business services…are higher than similar jobs in other communities. The answer is obvious. We should be looking to create new businesses in new, dynamic, innovative technologies that will produce good profits and high-paying skilled jobs. That carries over to the community. Just as we said with Detroit. The greater the complexity of the product, the more outsourcing. In the case of innovative companies, the higher the level of skill and, therefore, pay among core employees, the higher the wages in the community. That is the history of this.
Since the Bush Depression, that is, since the recovery under President Obama, we have recovered and created about 7 million new jobs. In the last two decades, overall, we have created about 27 million new jobs which is considerable since the Bush Administration accounted for only a net 1 million new jobs. One third of those jobs are “traded” jobs. This means that one third of employees are responsible for economic activity which extends beyond their local area and even beyond our borders in some cases. Manufacturing, while it may and it certainly could return, will never be the same size or same value employer it was. Many plants that were returned to production after recovery from the Bush Depression had only a tenth of the employees that they had previously employed. But the higher-tech the industry and the production facility, the greater the number of non-traded employees, local services, will be generated.
We can bring jobs back to this country. Many companies have done so. But the key is bringing back or keeping here the hi-tech, innovative companies, the ones with technology that is on the cutting edge. Why is that important? Well, take, for example, Stamford, Connecticut over half of residents are college graduates and it is an innovative market. Salaries of college graduates are an astonishing 131, 479 but even more impressive are the wages of high school graduates, at $107,301. But it is not merely in the very high income corridor north of New York City. In Ann Arbor, Michigan, where 46% have college degrees, the average income for college graduates is $65,452 and the high school graduates, $55,456. Ann Arbor, main campus of the University of Michigan, has long been an incubator for small hi-tech firms. Other outlying areas include Fort Collins, Colorado, (Colorado State), Austin, Texas, (University of Texas) and Lexington-Fayette, Kentucky (University of Kentucky) where, surprisingly, the focus is on renewable and clean energy research.
There are other options in bringing jobs home. Certain kinds of IT jobs could be returned. Customer service jobs can be returned. Some kinds of standard manufacturing, now that wage rates among U.S. skilled manufacturing workers are more competitive with Asian workers, could be returned to the U.S. The first step is to change the Bush-era laws that encourage sending jobs out of the country. Some surcharges could be levied on U.S. corporations manufacturing abroad when products are returned to the U.S. to be sold to American consumers. Those surcharges could be aggregated into a fund to both encourage hi-tech manufacturing and train American workers in hi-tech manufacturing.
The most important thing, without question, is to elect an American government…exactly the opposite of our current government…a Democratic Congress and a Democratic President, a Liberal, Progressive, Populist Congress that will work for the American people and not global corporations.
