Good Times for Whom?



In early April, a trainload of fed-up Washington Metro subway passengers, ordered to disembark in the middle of rush hour, rebelled, and refused to leave the subway cars. “Metro Riders Stage Mutiny on Packed Train,” reported the Washington Post the next day. The Post quoted Georgetown University sociologist William F. McDonald, who assured the paper that it would be a mistake to attribute this behavior simply to anger or frustration. “People haven’t been in a situation like this before,” McDonald explained, “and don’t know what’s going on. They’re without norms…. They just figure they’re going to lose out, and are not willing to go on the next train.”

The Post didn’t mention whether Lawrence Mishel, Jared Bernstein, or John Schmitt were among the Metro mutineers. It’s a good bet that these Economic Policy Institute economists could have provided a more cogent explanation for what happens when people have finally had enough. Their new book, The State of Working America 1998—99, is a bleak but well-documented portrait of a country that is not working. Oh, we – the working class – are working all right. But our country isn’t.

Unfortunately, most working Americans won’t have time to read this book. That’s a crying shame, too, because it’d be a lot more useful to them than, say, the latest breathless report on new stock market highs. They’d learn, for instance, that amid all the happy economic talk of low unemployment and a booming stock market, median family income rose by just $285 from 1989 to 1997. I’m no math whiz, but my calculator tells me that’s roughly thirty-six dollars a year. You could take the family out for a celebration, if you like, but I don’t think you’ll be able to afford champagne. Observer readers know full well that the much-hyped economic “boom” of the nineties is a Wizard of Oz-like hot-air balloon – filled with over-heated huffing and puffing by a convenient nexus of interests among Wall Street, political leaders, and the corporate media. But the daily deluge of good economic headlines, business-page investment advice, and profiles of the latest millionaires can make even the most confident of us feel distinctly Chicken Littlish.

So if you’re looking for evidence that the sky really is falling, consider this book. The State of Working America has been published every other year since 1988 by the Economic Policy Institute, and is a welcome and much-needed antidote to the current epidemic of economic boosterism. Indigestible as the hundreds of charts and graphs may seem, they’re far more palatable than the full-color versions that run in USA Today, and which come from the wrong end of the horse. It’s a familiar story told here, “one of great disparities,” as the authors put it in their Executive Summary – twelve pages of excoriating and brilliantly succinct economic analysis that alone is worth the cover price, and which should be required reading for every politician and C.E.O. in the country.

A useful example of howWorking America shreds the pretty tissue of good-news pronouncements is its dissection of the improvements in wages of 1997 and 1998, which generated the usual congratulatory headlines. First of all, it’s hardly good news that by 1997 families were finally able to claw their way back up to their 1989 income (especially since the cost of living has not cooperated by staying at ’89 levels). Furthermore, they reached this level not by getting paid better, but by working more. A lot more: 247 more hours, or six more full-time weeks. On top of which, an 8 percent increase in worker productivity over the same period of time meant that the average family was working harder just to keep from slipping backwards, while missing out on gains from its members’ increased productivity.

And while four desperately needed minimum-wage hikes in the nineties (virulently opposed by business) boosted earnings for millions of low wage workers, they are blips in the twenty-year decline and stagnation of wages for the bottom 60 percent of all workers. “In real terms,” the authors write, “earnings of the median worker in 1997 were about 3.1 percent lower than they were in 1989.”

In a book filled with riveting stats, one in particular jumped out at me: “The worst declines in wages have been for entry-level jobs.” During my own job search here in D.C., I have been flabbergasted to see jobs for skilled workers advertised – without apology – at $20,000 a year. This, in a city with one of the highest costs of living in the whole country. Access to power is all well and good – but you can’t eat it, which is why there are also so many ads in the paper for third and fourth roommates, to stretch that housing dollar even further. According to the Wall Street Journal, three out of four college students think they’ll be millionaires. If they were to read Working America, they’d know that “Male college graduates with one to five years’ experience earned 6.5 percent less in 1997 than in 1989. Their female counterparts were earning 7.4 percent less in 1997 than in 1989.” At least they won’t have to worry about what to do with those stock options.

I’ve decided that the national obsession with the stock market explains the popularity of cell phones and the Internet, as every American who can mouth or type the words “buy” and “sell” makes a killing while I, as usual, miss the boat. Imagine my surprise to discover that – at least as of 1995 – almost 60 percent of American households owned no stock. Even assuming that this percentage has dropped in the ensuing four bull-market years, it’s likely that “many of those new to the stock market have only small investments there,” according to Working America. As of 1995, for example, “fewer than one-third of all households had stock holdings greater than $5,000.” Such a presumption is reasonable because – unless there are a lot of unreported bank robberies going on – the bottom 90 percent of American households own just 17.1 percent of the nation’s net wealth, which (in plain English) is what you have left when you subtract your debts from your assets. One out of five households in America has a zero or negative net wealth, while almost a third have net wealth of less than $10,000.

There is some “good news”: “Salary, bonus and returns from stock plans of the average C.E.O. grew 100 percent between 1989 and 1997.” The top 1 percent of households control 38.5 percent of all wealth, 51.4 percent of all corporate stocks, 65.9 percent of bonds, and 69.5 percent of private business equity. Meanwhile, “the wealthiest 1 percent of families have seen their tax bills fall by $36,710 since 1977,” while the effective tax rate for a middle class family has edged up to 24.4 percent.

“It is hard to fathom an insurrection environment,” a spokesman for the Philadelphia subway smugly told the Washington Post in a follow-up story to the Metro subway mutiny. “It’s kind of hard to believe it could ever happen here. I don’t think our people are that unreasonable.”

Working America is a detailed accounting of the tinderbox that is America on the cusp of a new millennium. When this combustible fuel explodes, it will be too late to acknowledge that it was not the American working people who were being unreasonable.

Chris Garlock lives and writes in Washington, D.C., and works for the D.C. Metropolitan Labor Council.