Out of the Frying Pan, Into the Fire: Victimized During the “Recovery” Workers Face a Deluge of Attacks

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The ruling class likes to call the period of time that goes from one recession to another a "recovery." The last such period in the U.S. began in 2002 and ended in 2007 with the bursting of the speculative real estate bubble.  What was unique about this alleged period of capitalist "prosperity" was that the living conditions of the working class actually continued to deteriorate at an alarming rate- even during the economic recovery. There was no recovery for the working class, in either employment, wages, benefits or working conditions.  Even from the ruling class's own figures, we can see clearly the dreadful conditions and increasing pauperization under which the working class in the U.S. already lives as the economy enters the depths of worsening economic crisis.

Let's take a look at health coverage, for example.  According to the Census Bureau, which released its annual report on income, poverty, and health insurance coverage for the US population August 26, the number of people without health insurance decreased from 47 million in 2006 to 45.7 million last year.  While this would seem to encourage the ruling class to continue to spread its lies about the successes of capitalism in lifting people's overall conditions of existence, they cannot bask in their own glory for too long, because this drop is due to an increased number of people enrolled in Medicaid and other public programs. In other words, the number of people without health insurance dropped because there is an increasing number of people whose income has declined so significantly that they are now poor enough to qualify for Medicaid! Rather than showing progress, the Census Bureau figures prove that a higher number of Americans are becoming pauperized. In any case, uninsured Americans are today 7.2 million stronger than in 2000. 

But these numbers don't tell the whole story, because those workers who still have employer-provided health benefits have seen an erosion in the extent and quality of coverage provided.  Employer-provided health care coverage eroded from 1979 until 1993-94, when it stabilized, and then began falling again from 2000 through 2006. Coverage dropped from 69% of workers in 1979 to 55% in 2006, with a 3.9 percentage-point fall since 2000, which translates into an increasing differential in life span between rich and poor.  For example, in 1980 the rich lived on average 2.8 years longer than the poor. By 2000, despite twenty years of advances in medical science, the gap in life expectancy between rich and poor increased to 4.5 years.

The percentage of American workers covered by employer pension plans has seen a similar decline. In 1979, nearly 51 percent of American workers were covered by employer pension plans, which declined to 45.6 percent by the year 2000.  During the just-ended economic recovery, this figure dropped by another 2.8 percent; it was only 42.8% in 2006. Pension plan quality also eroded, with the percentage of workers in defined benefit pension plans,  the "traditional" type of pension that assures workers  a definite pension payment (usually based on a formula linked to years of service and average yearly pay at time of retirement) declining from 39% in 1980 to just 18% in 2004. This means that many more workers are paying for their own pension benefits or relying almost exclusively on the meager benefits from a social security check. In fact, the share of workers with a so-called "defined-contribution pension" plan who have to contribute to their pension accounts and whose benefit payments are uncertain and dependent on stock market fluctuations rose from 8% to 31% since 1980.  Increasingly, workers nearing retirement age are putting off their plans to retire. A higher percentage of Americans older than 55 are now working than at any time since 1970. While still working, they are also dipping into their 401(k) accounts and borrowing form the accounts to pay for living expenses, including credit card and mortgage debt.  

The federal government also claims that the overall poverty rate dipped slightly, but nothing could be further from the truth. This is because of the absurdity of the artificially low official poverty measure, which is $21,027 annual income for a family of four-- $404 a week for four people!    Currently, under this official measure, 36 million people lived in poverty in 2006. But other, more realistic measures put 16 million more people living in poverty - approximately 52 million or nearly 18 percent of the population. And these figures don't take into account the growing debt of families who struggle to stay out of poverty, by borrowing beyond their means to maintain their standard of living.

This pauperization of the working class in the U.S. has occurred at the same time as productivity has increased faster than in earlier periods.  As the rich grow richer, many working class households are left with little or nothing in the way of assets and often with significant debt.  Approximately 30% of households have a net worth of less than $10,000, and approximately one in six households have zero or negative net wealth.  For over a quarter of American households, income from Social Security, pensions, and personal savings are expected to replace less than half of their pre-retirement income, which is already forcing many to continue to work longer before retiring, for longer hours, thus affecting further their health and chance to live longer.  And this is happening in the midst economic "recovery"!  The only thing that "recovered" during the "recovery" was productivity, which grew by 11%, a faster growth than any recovery since the 1970's.  Yet, median hourly compensation did not grow at all during the same period.

Notwithstanding the dreariness of these figures, it is the figures on unemployment which more starkly reveal at once the suffering of the working class and the definite tendency of capitalism in decadence to reduce its own ability to secure survival for the vast majority of the masses.  Because it took longer -nearly four years-during the last "recovery" to return to the employment levels prior to the recession of 2001, because employment growth remained sluggish thereafter, because the employment-to-population ratio during the "recovery" deteriorated for the first time on record, and because there hasn't been an adequate income growth for most workers for a long time, the present recession will have tremendous repercussions on a working class already embattled by unemployment, the erosion of their living standards, and falling wages also due to inflation.  So far in 2008 alone, the economy has lost over 760,000 jobs even before the job losses stemming from September's financial industry meltdown have been counted, and  official unemployment has jumped to 6.1% from 5.5% by mid-2008, up from 4.4% in March 2007.  This adds more than 2,300.000 unemployed to the jobless rolls. There are official 9.5 million workers without jobs, 2 million unemployed for more than 6 months. Eight hundred thousand have seen their unemployment benefits expire. And this does not include the "discouraged" workers who have no job and have given up looking for jobs that do not exist and or the 6.1 million workers who are involuntarily working part-time jobs and are officially considered "employed."

The growing pauperization of the working class during the last recovery period sets the stage for an even more devastating impact of the new recessions, undoubtedly raising the stakes and increasing the pressure for workers to fight back.  In this sense, the impact of the crisis is a potential ally to the working class - it will help workers to see the dead end that this moribund system offers.  If  the working class in the U.S. is today more vulnerable than ever to the brutality of capitalism in a state of permanent crisis, if more and more are workers are laid off, more and more lose health coverage and pension benefits now, after the years of so-called "recovery," what is in store for the immediate future?   For its own survival, the working class will have to take the path of struggle.  As its discontent builds, and as the class fights back, it will develop the consciousness that it is the only force in society that has a real future to offer to the world. As the effects of the electoral circus recede in significance, the bourgeoisie will have to confront an angrier, and more combative, class. 

Ana 10/2/08