Jobless recovery: Only remedy is workers’ struggle

Fred Goldstein

Guess what? There is a slight rise in some corporate profits. The corporations and biggest banks are doing a bit better. So the experts see a “recovery.”

No big surprise, however.

The government gave the banks and the auto industry trillions of dollars in bailout money. No wonder they are doing somewhat better.

If Washington gave $1.2 trillion in cash to a genuine workers’ jobs program, instead of giving it to AIG, Citigroup, Bank of America, Wells Fargo and the rest of the robber barons, the 30 million workers now unemployed or underemployed would be doing a whole lot better too.

If the government spent $10 or $12 trillion to buy up the workers’ unpayable debts and guaranteed their loans, the way they have done for Wall Street, workers would still be exploited and underpaid, but things would not be quite so bad.

Instead there are 30 million workers either unemployed or underemployed, with depression-level rates of joblessness in the African-American and Latino/a communities, and things are getting worse for them and their families, not better.

1,000 apply for 30 jobs

A taste of how hard it is for workers to find jobs, especially African-American workers, was revealed in a story about unemployment in Uniontown, Ala., whose surrounding Perry County is very poor and almost 70 percent Black. Uniontown had been paid $3 million to dump thousands of tons of ash that spilled at a site in eastern Tennessee last December.

An announcement said the deal would create 30 jobs in a county whose unemployment rate was 17 percent. Arrowhead Landfill stopped taking applications after 1,000 were submitted (New York Times, Aug. 29).

The situation in Perry County is much like the situation in Michigan, Ohio, Rhode Island, California, North Carolina, Nevada and counties and cities throughout the U.S. One conservative estimate is that for the country as a whole there are six unemployed workers for every job opening, and things are getting worse.

Boosting profits by cutting jobs

It is the mass shedding of workers by the capitalists that is behind the slight and temporary upturn in business profits, not renewed business activity.

“The market barreled ahead this summer and is hovering near its high for the year,” wrote the Wall Street Journal on Aug. 31, “fueled in large part by stronger-than-expected second-quarter earnings. But the significant driver of the good news was cost cutting. Many companies had disappointing sales.”

The bosses are staring a contradiction in the face: “You cannot simply cut costs forever to have sustainable earnings,” said a strategist at Zack Investment Research. “You need revenues to grow [profits] over time.”

The bosses rely on sales to make their profits. They make their money from workers’ sweat and blood by selling what the workers produce. But to boost profits, bosses have cut wages, trimmed the labor force, cut hours and reduced benefits. As each company tries to maximize its profits by cutting labor, this trend inevitably deepens and widens poverty and hardship.

“Cost cutting” is a code word for layoffs, pay freezes, pay cuts and forced furloughs or cuts in hours. Fearing low sales, bosses also shrink inventories, which results in lower orders. In turn, lower orders mean more unemployment or underemployment.

Foreclosures up, tent cities spread

Despite talk of recovery and revival of the housing market, foreclosures are on the rise and getting worse as the unemployment crisis deepens. There were 360,000 foreclosures in July, a 7 percent increase over June and 32 percent above the year before. A record 13.6 percent of households are either in foreclosure or behind in their mortgage payments. More and more foreclosures are on prime mortgages of workers who have lost their jobs.

As workers lose their jobs, homelessness and tent cities are sprouting up around the country. Fearing mass rebellion, many municipalities are moving to legalize tent cities around the country. Examples are Nashville, Tenn.; Ontario (near Los Angeles), Ventura and Sacramento in California; Lacy, Wash.; and Champaign, Ill. These are among the many localities either providing services to the homeless or allowing charitable institutions to do so.

New York City and Seattle, on the other hand, have moved sharply to repress the growing homeless movement.

In Nashville, on any given night there are 4,000 homeless people, according to city authorities, and 785 shelter beds. There are now at least 30 known tent encampments in Nashville.

David Olson, 47 years old, is typical of the new homeless population. He and his spouse wound up living under a Nashville overpass after he lost his job making cement pipes in Iowa. They came to Nashville for a construction job that did not exist. “I’ve got five years experience in carpentry and 10 years roofing and I can’t find a job.” (Wall Street Journal, Aug. 11) The city and nonprofit organizations found housing for 25 people. David Olson was not one of them.

This is the answer of the richest capitalist country in the world to homelessness. It lets the evicted masses live in tents instead of providing housing, which should be a fundamental right of all people.

Unemployment leads to failed mortgages. It is a measure of the remaining real estate crisis and the excessive debt of all types that 84 banks have already failed this year. Furthermore, there are 416 banks, with assets of $299 billion, on the list of the Federal Deposit Insurance Corporation in danger of failing. The FDIC has only $10 billion left in its fund to deal with insolvent banks.

Instead of coming to the aid of the foreclosed, enabling them to pay their mortgages, which would keep the banks solvent, the FDIC has spent $40 billion taking over insolvent banks and merging many of them with other banks.

The FDIC has created “loss shares” in which they let stronger banks take over the weak ones and guarantee from 80 percent to up to 95 percent of potential losses on bad real estate loans. It would be the most direct and efficient measure to use the tens of billions of dollars to guarantee homeowners’ mortgage payments, keep them in their homes, keep home prices from falling and keep neighborhoods from deteriorating. But the FDIC is manipulating the process to let banking sharks get stronger by devouring the weaker banks.

‘The mother of all jobless recoveries’

As far as the working class is concerned, underlying the entire economic crisis is the crisis of unemployment. It is becoming clearer and clearer that the capitalist system, in its present state of development, cannot solve the growing crisis of mass, long-term unemployment.

An Associated Press story on Aug. 24 reported: “So many jobs have been lost—nearly seven million since the recession began in December 2007—that the unemployment rate will remain high long after the economy begins to rebound.

“Many out-of-work Americans have lost unemployment insurance and severance benefits and are depleting their savings. Others are saving more and spending less, still shaken from the worst economic downturn since the Great Depression.”

The dispatch cited Alan Sinai, a highly respected bourgeois economic analyst: “This is going to be the mother of all jobless recoveries,” he said.

The vast majority of layoffs during the present crisis have been permanent layoffs. This means that of the seven million jobs destroyed so far, most will not return. The average household debt is near $10,000. Unemployment rises steadily. Wages and benefits are going down. Personal bankruptcies are going up.

Profit-hungry health insurance companies, pharmaceutical companies and for-profit hospitals are eroding the health care benefits of the 250 million people who are covered. The number of people without health insurance is rising steadily with the growth of unemployment and is now approaching 50 million.

All in all there are no prospects for any real capitalist revival—the kind where workers go back to work; where the stress and insecurity imposed by fear of layoffs and plant closings and the endless demands for concessions ceases; where wages are brought up to a level to support a decent living; and where jobs are secure.

The average annual wage of 80 percent of the working class is now down to $33,000 a year—about one-and-a-half times the official poverty level (Business Week, Aug. 27). If there is no resistance as workers are forced to compete with each other more and more for jobs, wages decrease, unions are weakened, and the collective strength of the working class is eroded.

Independent united class struggle the only way

The only way to overcome this crisis is for the working class and all the oppressed to unite in struggle. The time of waiting for the Democratic Party leadership to reverse the fortunes of the workers must be ended. The time of waiting for capitalism to revive itself and bring back boom times is over.

The labor movement must unite with the communities; the organized must unite with the unorganized; the employed must unite with the unemployed. U.S.-born workers must unite with immigrants, including the undocumented. White workers must reject racism and division. This is the only way to build the kind of mighty movement to turn things around.

This is precisely the goal of the Bail Out the People Movement and dozens of sponsoring organizations that are building a mass March for Jobs in Pittsburgh on Sept. 20 to protest the gathering of the G-20—the twenty rich governments that are coming together to try to bolster the profit system that bleeds the workers of the world.

There will be a fighting Tent City in solidarity with the unemployed starting on the weekend of Sept. 19-20 and culminating in a March for Jobs on Sept. 20.

The good news is that as August ended the Steelworkers union and the United Electrical union, both of which have their national headquarters in Pittsburgh, have formally endorsed the March for Jobs, which is also already gathering support in Pittsburgh’s African-American community.

Be there. Declare that a job or income is a right. If you have a job, fight to keep it. If you don’t have a job, fight to get one!

Workers World - 03.09.09