If there’s one thing the Great Recession has taught this country, it’s that the protracted pain is not equally felt. While millions of Americans struggle to make ends meet at one end, wealth is concentrating in the hands of the upper one percent of the population in a way not seen since 1928, the year before the stock market crashed. The gross disparity between the polar opposites, however newsworthy, has distracted attention away from the plight of the middle class.
It’s their existence that has long provided equilibrium in the U.S. by holding out the promise of a better life. During the Great Depression, unions served as the primary vehicle for workers in the private sector to achieve that goal. The passage of the Wagner Act in 1935 made collective bargaining a reality at a time when hopelessness permeated the land. It was an overwhelmingly popular law, which benefited workers across the board. One little known union, the Affiliated Property Craftspersons Local 44, serves as a case in point. It allowed laborers and skilled workers in Hollywood in the 1940s to earn a decent living so that their families for the first time could buy their own home and enter the middle class.
It was only between the late 1950s and the 1970s, however, that states extended collective bargaining rights to state and local employees. It’s interesting to note that by the end of that period the top one percent of the population raked in only nine percent of the nation’s total income. But as union power waned, so did wages. By 2007, the top one percent was back almost to where it once was, with 23.5 percent of the total. Things only got worse thereafter as unions continued their descent. Between 1979 and 2007, income for the top one percent skyrocketed 281 percent, while income for the bottom 20 percent of the country rose an anemic 16 percent. Correlation is not causation, but there is an uncanny link between union ascendancy and equitable income distribution.
Another way of viewing the connection is the Gini Index. It measures the range of income inequality in a nation from 0.0 (total equality) to 1.0 (total inequality). Sweden, for example, has a Gini of .23, while Namibia rates .70. The U.S. has one of the worst Ginis for an industrialized country at .468 in 2009.
This background has direct relevance to education. Studies show that children of workers who lose their jobs and then go back to work at lower salaries suffer from lower wages too. This spillover effect is particularly felt in lower-income families, whose children are less likely to stay in school. Those who drop out often wind up in prison or on welfare. Children whose parents are jobless also feel the pain in the form of poorer nutrition, fewer medical and dental checkups and frequent changes of residence. They bring the effects of these factors to school. The costs are ultimately borne one way or another by taxpayers, adding to state deficits.
Nevertheless, critics charge that unions are the cause of budget deficits. With a deficit of $28 billion, California, for example, is in its worst financial shape since the 1930’s. In an op-ed published in The Wall Street Journal, Andrew G. Atkeson and William E. Simon Jr. laid much of the blame on the cost of pensions and retiree health care benefits negotiated with public-employee unions (“How to Revive the California Dream,” Jan. 10).
What they don’t mention is that when people are unemployed or are rehired at a fraction of their previous salary, they can’t buy the goods and services that create tax revenues. It’s always easier to seek out scapegoats than to confront the fact that there are 14.5 million people receiving unemployment benefits, including 6.5 million who have been jobless for more than six months. It will be years, if ever, before their wages return to where they were before the Great Recession. In the meantime, their anger and frustration grow, creating ideal conditions for demagogues to exploit.
Today, critics increasingly argue that teachers unions are in a class of their own in creating gaping budget holes. For example, in his first State of the State address, Gov. Chris Christie singled out the gains that teachers have won as one of the major causes of New Jersey’s budget woes. He said he intended to fight for elimination of teacher tenure and adoption of vouchers, as if doing so will balance the state’s budget.
If that charge were true, then states where employees are denied bargaining rights should have small deficits. But that is not the case. Nevada, North Carolina and Arizona, for example, post huge deficits of over 30 percent of spending. In contrast, Massachusetts, New Mexico and Montana, which give their state employees bargaining rights, have small deficits of less than 10 percent of spending. Christie is using the budget crisis as a justification for destroying everything that teachers have fought for over the years.
What is hard to understand is that if public-sector jobs, including teaching positions, offer such a sweet deal because of their respective unions, then why don’t far more people choose to work in them? In a capitalist society, aren’t people supposed to seek jobs based on their relative attractiveness? The truth is that the attack on public-sector unions, which are the last bastion defending the existence of the middle class, is a red herring. The ultimate goal is to create a permanent two-tier society.
What few realize, however, is that when the objective is finally achieved, it will create conditions in the U.S. characteristic of a banana republic. That doesn’t make for stability.