As President Barack Obama said in his inaugural address, America cannot succeed when a shrinking few do very well and a growing many barely make it.
By ROBERT REICH
Tribune Media Services
Not even the very wealthy can continue to succeed without a broader-based prosperity. Thats because 70 percent of economic activity in America is consumer spending. When most Americans are becoming poorer, theyre less able to spend. Without their spending, the economy cant get out of first gear.
Almost a quarter of all jobs in America now pay wages below the poverty line for a family of four. The Bureau of Labor Statistics estimates that over the next decade, seven out of 10 growth occupations will be low-wage, like serving customers at big-box retailers and fast-food chains.
At this rate, whos going to buy all the goods and services America is capable of producing? We cant return to the kind of debt-financed consumption that caused the bubble in the first place.
Its not a zero-sum game. Wealthy Americans would do better with smaller shares of a rapidly growing economy than with the large shares they now possess of an economy thats barely moving.
If they were rational, the wealthy would support public investments in education and job training, a world-class infrastructure (transportation, water and sewage, energy, Internet) and basic research all of which would make the American workforce more productive.
If they were rational, theyd even support labor unions, which have proven the best means of giving working people a fair share of the nations prosperity.
In the 1950s, when the U.S. economy was growing faster than 3 percent a year, more than a third of all working Americans belonged to a union. That gave them enough bargaining clout to get wages allowing them to buy what the economy was capable of producing.
But as of 2012 only 6.6 percent of U.S. private-sector workers were unionized, the lowest rate of unionization in almost a century.
Whats to blame? Partly globalization and technological change. Globalization sent many formerly unionized jobs abroad. Technologies have replaced many formerly unionized workers in telecommunications and clerical jobs.
But other nations subject to the same forces have far higher levels of unionization than America. Some 28 percent of Canadas workforce is unionized, as is more than 25 percent of Britains and almost 20 percent of Germanys.
Unlike other rich nations, our labor laws allow employers to replace striking workers. Weve also made it exceedingly difficult for workers to organize, and we barely penalize companies that violate labor laws.
Dont blame globalization and technological change for the reason employees at Wal-Mart, Americas largest employer, dont have a union. Theyre not in global competition, and their jobs arent directly threatened by technology.
The average pay of a Wal-Mart worker is $8.81 an hour. A third of Wal-Marts employees work less than 28 hours per week and dont qualify for benefits.
Wal-Mart is a microcosm of the American economy. It has brazenly fought off unions. But it could easily afford to pay its workers more. It earned $16 billion last year. Much of that sum went to Wal-Marts shareholders, including the family of its founder, Sam Walton.
But how can Wal-Mart expect to continue to show fat profits when most of its customers are on a downward economic escalator?
Wal-Mart should be unionized. So should McDonalds. So should every major big-box retailer and fast-food outlet in the nation. So should every hospital in America.
That way, more Americans would have enough money in their pockets to get the economy moving. And everyone, even the very rich, would benefit. As the president said, America cannot succeed when a shrinking few do very well and a growing many barely make it.
Robert Reich is a professor of public policy at the University of California at Berkeley and former U.S. labor secretary.