Howard R. Gold claims the
U.S.
economy has left behind 20 million Americans. In a recent article published in MarketWatch, he thoughtfully chronicles
changes in the American workplace, how they happened, what their immediate
effect was, and how their long range result took shape. When a plant closes
things happen to the worker, to his family, to his household, neighborhood and
probably to his entire community.
In a vibrant economy
furloughed workers are re-employed at another plant or industry. The household
remains economically viable. So does the community. And the life of the family
continues to prepare the next generation for education, careers and independent
lives that matter.
The opposite is true in
an economy stripped of its vibrancy. The primary breadwinner is reduced to
humiliation and a feeling of worthlessness. Children in the household witness
the personal degradation of their parent and wonder what is in store for them.
As the household misses rent or mortgage payments, a move is planned to less
costly quarters. At the bottom of this process homelessness beckons with all of
its trappings and horrors.
Worse, younger
generations witness the decay of their lives and wonder how they will fare in a
new world that does not care for them or their families. Education to move them
out of this chaos is less accessible to them. Local schools suffer declines in
budget, enrollment and worsening facilities. Scholarship is the first to go in
the schools. Thus graduation rates plummet and poor kids become poor adults.
When industries move
production overseas to reduce product costs and improve their competitive
pricing, jobs are lost here at home. They may come back, but how soon? When the
industry learns it is more cost effective to retain local manufacturing? When
they learn that a vibrant American economy produces not only its own products,
but also its own mass market of consumers? There is a quid pro quo to such business decisions. There are hidden costs to
deduct from the surface benefits they once ached for. One of those costs is the
social cost now borne by government agencies to care for the people left
behind, abandoned by an unthinking business strategy.
Like minimum wage laws.
Whole classes of workers earn so little they need food stamps, rent subsidies
and medical care vouchers to survive. It is in our interest that they do
survive well enough to raise themselves out of poverty and raise a new
generation of kids that can do the same. Poverty is regenerating if left
unaided. But it needs more than just aid; needs education, nurture and
motivation to birth a generation out of their bonds of poverty.
Mr. Gold documents what
happens when greedy, profit motive businesses forget their employees. Short
term tactical thinking creates long term strategic issues in the society on the
whole. Those issues must be grappled with and solved. Better handled if we all
are doing our share to minimize the problem in the first place, and solve it in
the second place.
Overseas production
facilities are not more competitive. They are just cheaper. Eventually that
cheap factor exacts its price.
Read Howard Gold’s
article shown below. If you have an issue with his data, please contact him
directly, not me! I’m involved in this discussion because of the larger issue
and the public policy challenges that caused the problem in the first place and
will need retooling to solve in the second place.
Happy Reading!!
Howard R. Gold is a MarketWatch columnist
and founder and editor of GoldenEgg Investing, which offers free market
commentary and simple, low-cost, low-risk retirement investing plans. Follow
him on Twitter @howardrgold.
Tony, who is currently living at a shelter run by the Bethesda
Project, pauses during dinner on October 22, 2014 in Philadelphia,
Pennsylvania. The program for homeless men is run by the Bethesda Project which
serves…
Last month, when Baltimore was burning after a young
African-American man died in police custody (six officers were subsequently
charged), I did a Google search to find what David Simon thought about it.
Simon, a former reporter for the Baltimore Sun, was the
creator and show runner of “The Wire,” which ran for five seasons on HBO and
which Entertainment Weekly called the greatest television show ever. It was a
brilliant narrative of the struggle for survival in a violent, drug-riddled Baltimore neighborhood
much like the one that went up in flames.
In my search, I came across an interview
Simon did with Bill Moyers a few years ago in which he declared: “ ‘The Wire’
was not a story about America;
it’s about the America
that got left behind. … These really are the excess people in America. Our economy doesn’t need
them — we don’t need 10% or 15% of our population.”
Have 10% to 15% of the U.S. population really been left
behind? I contacted Simon at his website to ask where he got the number, but he
didn’t get back to me. So I did my own calculations, and he’s actually not too
far off.
With a little help from the Labor
Department’s Bureau of Labor Statistics, which produces the famous monthly jobs
reports, I added up several categories of the unemployed, the underemployed and
people on some form of public assistance.
My conclusion: About 20 million
Americans, roughly 10% of adults of working age, have at best marginal ties
with the U.S.
economy. I excluded the elderly, because most of them are retired and getting
Social Security, and children, whose lives and futures are often collateral
damage in the economic struggles of their parents. Here’s how it adds up:
• 2.5 million are among the long-term
unemployed, which the Labor Department defines as being out of work and
actively seeking work for 27 weeks or more. That’s less than half what it was
in 2009, but it’s still high.
• 6.6 million Americans are working
part-time for economic reasons but would prefer to work full time.
• Another 2.1 million are marginally
attached to the labor force, according to the Labor Department. That means they
are “not in the labor force [but] want and are available for work, and … have
looked for a job sometime in the prior 12 months.”
• Nearly 5 million adults from age 18-64
are collecting Supplemental Security Income (SSI) disability benefits, which go
to people who can’t work because of various disabilities.
• Almost 1 million adults receive public
assistance from Temporary Assistance to Needy Families (TANF) and General
Assistance (GA), according to the U.S. Census Bureau. Those are temporary cash
payments with some work requirements that replaced the old welfare system under
welfare reform.
• In 2013, 3.3 million Americans earned
the federal minimum wage or less, according to the Pew Research
Center. If you think they
haven’t been left behind, try living on $7.25 an hour.
Grand total: 20.4 million adults. Now,
there is some overlap, and Labor Department figures are for people from 16 to
64, while the other stats cover those from 18 up. But those caveats aside, 20
million is a reasonable ballpark number — and a disturbing one.
What’s behind it? It’s complicated. But
obviously there’s been a confluence of macro factors cited by both liberal and
conservative thinkers, from globalization and outsourcing to technological
advances to family breakdown, drugs, lingering racism, terrible schools, failed
government programs (Sandtown-Winchester, where Freddie Gray was arrested, got
$130 million in private and public aid, to little effect), and growing
dependency on government. It’s hard to tease out which was most important.
But if I had to pick one, it would be the
decline of decent-paying manufacturing jobs. That happened first in urban
centers like Baltimore,
which lost hundreds of thousands of such jobs even before the 2000s. That’s
when 5.7 million manufacturing jobs vaporized in what IndustryWeek called “the
worst decade for manufacturing employment in the Republic’s history.”
When breadwinner jobs disappear, families
break down, kids are adrift, and desperation takes hold.
Fifty years ago, the sadly prophetic
Moynihan Report captured the early stages of the breakdown of urban
African-American families. Now, more than 70% of African-American children are
born out of wedlock. But whites are catching up. Since 1980, their
out-of-wedlock birth rate has tripled to almost 30% as the same economic
chickens come home to roost.
Bethlehem Steel’s Sparrows Point plant in
Baltimore produced the steel that went into
girders for the Golden Gate
Bridge. The shuttered
facility symbolizes so many once-great industrial enterprises that lifted
Americans of all backgrounds into the middle class. Those jobs aren’t coming
back. Until we find something to replace them, more and more people will be
left behind.