20 Million Left Behind

 

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.