IN LAST WEEK’S COLUMN, I promised to discuss in more detail the need for jobs that fulfill three conditions: they should not require a college degree; they should be good-paying; and they should be plentiful.
The 30 years after World War II saw a labor landscape that fulfilled all these requirements. It was the golden age of American manufacturing. Between 1945 and 1975 the economy doubled in size, and then doubled again, and — unlike the years since — the workers in those factories shared in the good times. There were several reasons for that happy situation.
In his runaway best-seller, “Capital in the Twenty-First Century,” Thomas Piketty discussed how the starting point for the postwar boom was the immediate wake of two existential crises in western civilization: the Great Depression and the Second World War, both of which were (in different ways) massively disruptive of the tendency of capitalism to concentrate wealth into a smaller and smaller slice at the very top of the income scale.
First of all, both crises saw massive spending on public works and defense by governments at all levels.
For example, it seems almost inconceivable today but there was no interstate highway system before the mid-1950s. If you wanted to drive to New York from Oakland, much of it would either be on city streets or on two-lane highways, some of which were little more than potholed, sage-strewn desert “roads” that barely merited the name. These relatively primitive roads were often the scenes of grisly head-on collisions, which, in an era before air bags or even seatbelts, took the lives of many American travelers.
In the 35 years from 1956 until 1991, almost 50,000 miles of roads, bridges and tunnels were constructed, and the construction enabled a boom of suburban development that was one of the distinguishing features of postwar America.
The full name is the Eisenhower National System of Interstate and Defense Highways, and because of the massive construction of much of the system — the overpasses, for example, were designed with the transport of ICBMs in mind — a lot of it will probably exist for many hundreds of years into the future.
Another example is the enormous amount of basic research, much of it defense-related, by the federal government that has created entire industries. It is easy to forget that the Internet, and even computers themselves, began as government projects, as did nuclear power generation, rocketry and space travel, most of the major innovations in aviation, solar power, a huge portion of the advances in materials science (nylon, Teflon, carbon fiber, etc.), radar and other sensor technologies — the list is long and growing continuously.
I’ve mentioned before that the United States is the only industrial power without a nationwide high-speed rail system. Given a national commitment on the scale of the construction of interstate highways, this could be remedied in fairly short order, which would provide hundreds of thousands of jobs for construction crews as well as permanent new jobs for engineers, conductors, dining car staff, baggage handlers, track maintenance staff and so on.
Secondly, a significant fraction of the postwar labor force was represented by unions. In 1954, about 35 percent of workers belonged to a union. This gave workers considerable power when it came time to decide how a company’s profits were distributed, since most companies wanted to avoid crippling strikes. Today, after three decades of anti-union efforts, the proportion is around 6 percent.
A commonplace of political economics is that an increase in productivity — roughly speaking, the number of widgets produced by each worker — is good for the economy because it makes it possible to increase workers’ pay without having to raise prices, which leads to more demand in the economy, which leads to more widgets being sold and thus more revenue for Consolidated Widgets Inc.
In short, everyone wins.
What has happened in the last 30 to 40 years, however, is that when workers make more widgets per hour Consolidated Widgets pays almost all of those gains to its shareholders — ordinary workers see almost none of it. The more technical way of putting this is that the “profit share of income has increased (it is currently at record levels) while the labor share of income has decreased.”
The most important remedy to this situation has historically been strong unions, which have had the muscle to bargain for a fair distribution of the gains in the economy.
Finally, we need trade reform designed to support manufacturing jobs in the U.S. One key method of undermining the bargaining power of American workers has been the threat to move operations overseas to low-wage countries. After every recent trade agreement, there have been large losses in manufacturing jobs and large gains in jobs like software engineers and other jobs requiring advanced degrees.
I mentioned in last week’s column that China has a de facto policy that whoever wants to sell products in China has to also make those products there, thus providing jobs for Chinese workers. I think a similar policy ought to obtain for all the major industrial powers: If BMW wants to continue to sell cars in the United States, then they need to make them here. If Apple wants to sell phones in the United States, then the vast majority should be manufactured here, by American workers who (see my second point about unions) could bargain for a greater share of Apple’s profit — which, in their second fiscal quarter, was $13.3 billion, or about $85 for every worker in the entire American labor force.
I’ve mentioned this before, but it bears repeating: One of the consequences of living in a democratic system is that the blame for systemic injustice rests as much on the people, when they fail to act, as on the oligarchy. It is time we demanded a bigger share of the gains in our economy, and that we demand the government takes action to insure not only tech workers and upper management, but also ordinary blue-collar workers, can have a shot at the American Dream.
Matt Talbot is a writer and poet, as well as an old Benicia hand. He works for a tech start-up in San Francisco.
Peter Bray says
Matt;
Always good to read you. Don’t stop beating your drum(s). – pb
DDL says
Two points Matt that warrant consideration:
From the article: Consolidated Widgets pays almost all of those gains to its shareholders ordinary workers see almost none of it.
Actually, I do not think I would be wrong to say you are one of those shareholders, as are most of us. Anyone who owns mutual funds or stocks of some sort has a financial interest in corporations having a fair and reasonable ROI.
Also: If Apple wants to sell phones in the United States, then the vast majority should be manufactured here, by American workers who (see my second point about unions) could bargain for a greater share of Apple’s profit
What you are proposing is government dictating to business how they should conduct their business operations, which then is in conflict with point one above. When you say “bargain for” you are really talking about “striking for”, as let’s face it, that is the primary bargaining chip of all Unions.
What I have advocated for in the past is an improved synergy between the workers and management: a seat at the table for the workers and increased compensation (not increased hourly wages) through profit sharing, reduced stock buy options, or other methods.
I know and trust American workers well enough to know that if they have a piece of the pie, productivity will increase.
Unfortunately both of your above comments represent that which is a primary cause of today’s problems: “us” against “them”. The 97% against the 3%. Until such time that “we” is the primary concern, increasing divisiveness is not the solution.
JLB says
Government control and the size of the government used to gain and use that control over us is a big part of the problem. Government has layered on so much compliance, taxation and various other burdens on the businesses (especially manufacturing businesses) that they finally said, enough, we will move our manufacturing offshore where we can get things built at a competitive price and be able to make a profit. Then couple that with the free trade of other countries (China) bringing products to the US and you have a formula for disaster of the American worker.
More government forcing businesses to an additional layer of compliance and conformity to certain thresholds ($15 dollar minimum wage) does nothing to help the American worker. Quite the opposite.
Matt your ideals, when read sound nice and “wouldn’t it be great if ….” but they are just not based on reality. You would be better served at sticking with your stories about non-political, non-utopian concepts.
Greg Gartrell says
The size of the federal government is an interesting statistic. If measured by number of federal employees including military or not it peaked about 1988 at the end of the Reagan years and declined until Bush 2 when it rose slightly after 2000. It has declined since 2009.
If measured by inflation adjusted dollars in the federal budget or by inflation adjusted federal spending per capita it peaked in 2009 and has declined since. The dramatic increase came from 2000 to 2009.
DDL says
Here is a link for government employees, including military.
http://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/historical-tables/total-government-employment-since-1962/