After Their Boom, It’s
Our Recession —
Heads They Win,
Tails We Lose
By LISA FRANK
UE Research
Director
If you haven’t been hibernating this winter, you know that
the economy’s stopped booming. Even if you’re skeptical about any
impending recession (lots of economists still think that scenario is too
gloomy), many indicators are unmistakably pointing to a real economic
slowdown. Dotcom entrepreneurs are on the streets, people are postponing the
purchase of cars, and "consumer confidence" has dropped dramatically
from the highs of last year. More alarming for us is a steep decline in
business investment in new plant and equipment and, alongside that, recent
announcements of mass layoffs from the country’s largest manufacturers.
While a slowing economy is likely to alter the problems that
we face day to day, it’s worth remembering that the boom was far from
perfect. A recent article in the Financial Times puzzled over the
phenomenon of laid off workers cheering their pink slips, but anybody who’s
faced mandatory overtime for weeks on end can readily sympathize. A few weeks
of unemployment will no doubt dampen these workers’ enthusiasm, but the
truth is that over the course of the boom, we’ve picked up one month
per year of extra hours. Towards the very end of the boom, we began to be paid
a bit more for those hours, as real wages started to rebound from their decade’s
long descent.
UNEQUAL SHARE
But by far, the largest benefits of brisk economic growth went
to the wealthy. We exit the boom with wealth more polarized that it has been
since the nineteenth century. And the tight labor markets which cause such
concern on Wall Street really did very little to improve our futures.
Unemployment declined, to be sure. But by and large we were not able to parlay
this temporary advantage into longer-term economic security. Indeed, the boom
was accompanied by an unprecedented increase in consumer debt (that in part
drove growth) and a plunge in the rate of savings for most Americans. As the
economy slows, many people are more susceptible than ever to economic
disaster.
If booms aren’t necessarily good, slowdowns aren’t
necessarily bad. For instance, if we were able to achieve a goal long
advocated by the UE, namely, a full-employment with income maintenance, a
slowdown could be a very good thing for our families and communities. We could
use our reduced hours to volunteer in our community, to read to our children,
or to learn the polka. Alas, it appears likely that the current bust will be
managed very much like the previous boom. Whether growing or shrinking, the
economy is run to advance the interest of corporations.
RECESSION JITTERS
We had only just heard "drop in the NASDAQ" and
employers got busy protecting corporate profits by reducing inventories and
payrolls. Never mind that both of these actions can themselves deepen
recessionary tendencies. So the Fed got busy lowering interest rates, hoping
to free up cash and prop up the stock market. Elected officials then began to
debate the size rather than the sanity of an income tax cut. And just for good
measure, bank lobbyists got busy pushing legislation to make it harder for
individuals— but not corporations— to get debt relief through bankruptcy.
Bosses got busy asking for givebacks of whatever modest gains we made over the
past couple of years.
For the past quarter century our choice for some time has been
between booming for the boss or busting for the boss. And of the two, booming
is better, if only because it improves our chance of employment. No question
about it: the coming slowdown spells rough sledding for most working people.
But the answer is not another boom like the last one. The answer remains a
struggle to make booms and busts alike respond to the priorities of America’s
working people.
UE News - 02/01
