Image: Flickr / deanmeyersnet
In our hollowed-out economy it is important to recognize that roughly 85 percent of the ready and able working population is working. The jobs may not be that great for many. Forty percent of those jobs are in the service sector and many of those are low-wage jobs. Wages are flat for all but Wall Street types. Temp jobs spring up like spam on gmail. But, on the whole, when you get out on the freeway every morning these are the folks you see. The majority.
The others are invisible. The invisible post-middle class residents of your town aren’t out on the freeway this or any other morning because there is no particular place to go—and no place to be. The era of the walk-in applicant is over but for all but the most entry-level of jobs. If you have a degree and plan to use it, they’ll call you, thank you. Or not. If you are a union electrician, you know the rules: you are on the bench, a prisoner of seniority, until your name is called. Years may go by. And do. They do for people I know.
Progressive voices have yet to come to terms with the meaning of the middle class meltdown. It’s melting around the edges not in the solid upper middle—the manufacturing, the bluer-collar, older, female and less-educated edges, these are melting away like glaciers in Greenland. This is not news and in fact many progressive voices are on autopilot with messages about the need for investment in jobs, jobs, jobs.
Certain measures are nonstarters from the get-go. You can’t mandate a return of low-margin manufacturing jobs to the U.S. The logic of that corrective is long gone. A Chinese garment worker earns 86 cents an hour. The 2008-2009 stimulus was woefully misguided when it came to job creation. Much of the money was used to shore up state-level jobs for another year or so until the Tea Partiers gutted them. Infrastructure? Just a joke, just a throwaway line from a throwaway speech.
It’s time to get specific about what we want—and what we don’t want. We don’t want to spend tax dollars to “save” jobs. That’s just corporate welfare in the face of corporate blackmail.
Tax Policy as Carrot & Stick
We need a new tax policy laser-focused on rewarding the creation of new jobs at home. And we need to tax the proceeds of offshored jobs at a rate that hurts more than a little. If you make it there pay it here. A job-driven tax policy must be based on growing head counts. And it must be based on data. If a company had 100 workers in, say, 2010 and let 12 go in 2011, it shouldn’t get a credit for just hiring them back. That would reward temporary layoffs. But at some date-certain, announced retroactively to avoid strategic layoffs, companies would register full-time-equivalent headcounts and then be rewarded through payroll tax holidays or discounts for increasing the numbers of their workforce. At the same time, corporate tax loopholes need to be plugged so that companies would be forced to hire in order recapture some percentage of federal largesse. Hear us, energy industry?
This would allow payroll tax discounts to continue for at least a few years prior to sunsetting. And then new incentives should be introduced to reward the retention of new workers.
Call me crazy but I believe that one of the fundamental products of an economy is jobs. They get this in Europe. They get it in Asia. But we have a Wall Street-driven ethos that says fire their asses. This is the same group for whom bonuses were up in 2009 17 percent over 2008. Meanwhile, 20 percent of American children live below the poverty line. And the top 10 percent of all American workers earn 50 percent of all American wages. The only effective countermeasure to the cultural bias against creating jobs is a dollars and sense approach, because that’s the only language Wall Street understands.
Unemployment compensation funds, as odorous as they are to business, provide only the briefest of respite against the long goodbye of post-middle class unemployment. Given the 1.4 million Americans filed for personal bankruptcy in 2009, 32 percent increase over 2008, and that 40 million people are on food stamps, and the number is projected to hit 43 million this year, our tax structures need to reflect that.
Sixty-six percent of the income growth between 2001 and 2007 went to the top 1 percent of earners. People who understand history, economics and politics, know that trickle-down job creation theories are no different than the theory, say, of intelligent design. It’s magical thinking for magical thinkers. Hiring is driven by demand. Period. And preposterous theories like “regulatory uncertainty” are just canards cooked up by Chamber of Commerce spin doctors.
What we need to do is lower the bar so that in an era of endemic weak demand companies are rewarded for risking investment in their own workforces. Jobs are people, too. Corporate America needs to learn that. The theory of retrenching one’s way to profits may lead to decent rewards for companies that replace workers with new business models, offshoring and technology. But it hurts the nation. You can’t sustain a population—or an economy—without population growth. A stagnant Italy or Spain proves that. And you can’t sustain population growth without growing the number of available jobs, and I mean middle class jobs. No parent ever aspires to raise their child to a life of servitude or drudgery. And yet… Look around.
Even the employer match on Social Security should be eligible for a discount as we consider the alternative. We just don't get the implications of a lost generation here. There were a number of them in the 20th Century in various places around the world. But here? Such an insult to our exceptionalism, an entitlement that paradoxically continues to increase in the face of overwhelming adverse evidence. At this moment we are exceptionally paralyzed, and that’s about it.
The real issue is akin to what Nikki Stern brought up in an Open Salon cover post last week—a crisis of character. It is most apparent in politics. But in boardrooms and executive suites, around the country, thedeal is, “Unemployment? Not my problem.”
And it isn’t. Until it is. When the whole system begins to rot from the inside like it did in the 1930s it is a boardroom problem. Even petty despots like Henry Ford understood this. Unless his workers—his many, many, workers—could afford to buy the cars he had to sell, he had a problem on his hands. Today, the bottom 50 percent of workers owns less than 1 percent of the nation’s weath.
So many of us in the shadows of the MSNBCs and the Mother Jones have yet to come to terms with our own lack of, well, directed anger. The middle class is possessed of no malaise. Uh huh. They’re pissed. And they’re toast. But, as I said, not all of them, just some. The people left behind are moving in with Mom and Dad, pawning gold, failing in marriage, drinking too much and dropping off the grid to some shady cash economy that the middle class can’t even fathom much less negotiate. A tale of two, not cities, but realities. Like Paris versus its suburbs. That’s where we are heading. Gated communities. Not little pink houses. That’s gone. Not foothold in the middle class. No, now the future looks like gated, locked, communities, whether they are fortified by high walls and sentries or just out-of reach home prices, zoning and an attendant exclusionary culture to keep out the riff raff.
Not my problem? Look around. Check in with those ne’er do well cousins, or maybe even your kids, maybe returning vets, trying to claw their way in. There is only one way in. A good job. Without that, the middle class is just a mirage. But not for everyone. Only for some. Only for 45 million or so ready and willing, would-be workers that a broken system excludes.
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Note: Statistics about the middle class cited in this article are from the article, “22 Statistics That Prove the Middle Class Is Being Systematically Wiped Out of Existence in America,” by Michael Snyder, published at businessinsider.com on July 15, 2010.