Blog

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

The biggest question among activists now occupying Wall Street and dozens of other cities is how to strike back against the nation’s almost unprecedented concentration of income, wealth, and political power in the top 1 percent.

The two questions are related. With so much income and wealth concentrated at the top, the vast middle class no longer has the purchasing power to buy what the economy is capable of producing. (People could pretend otherwise as long as they could treat their homes as ATMs, but those days are now gone.) The result is prolonged stagnation and high unemployment as far as the eye can see.

Until we reverse the trend toward inequality, the economy can’t be revived.

But the biggest question in our nation’s capital right now has nothing to do with any of this. It’s whether Congress’s so-called “Supercommittee” — six Democrats and six Republicans charged with coming up with $1.2 trillion in budget savings — will reach agreement in time for the Congressional Budget Office to score its proposal, which must then be approved by Congress before Christmas recess in order to avoid an automatic $1.5 trillion in budget savings requiring major across-the-board cuts starting in 2013.

Have your eyes already glazed over?

Diffident Democrats on the Supercommittee have already signaled a willingness to cut Medicare, Social Security, and much else that Americans depend on. The deal is being held up by Regressive Republicans who won’t raise taxes on the rich — not even a tiny bit.

President Obama, meanwhile, is out on the stump trying to sell his “jobs bill” – which would, by the White House’s own estimate, create fewer than 2 million jobs. Yet 14 million people are out of work, and another 10 million are working part-time who’d rather have full-time jobs.

Republicans have already voted down his jobs bill anyway. (more…)

Robert Reich

Robert Reich
Chancellor’s Professor of Public Policy,
University of California at Berkeley; Author, ‘Aftershock’

Finally, it seems, the economic burdens of America’s vast middle class may be catching up with the Street. The Dow lost 2.22 percent Wednesday; the Standard & Poor’s 500-stock index was down 2.28 percent. Both marked their worst declines since August 11, 2010. The Nasdaq composite index fell 2.33 percent.

We’re coming full circle: The stock market is dropping because corporate earnings are slowing. Corporate earnings are slowing because consumers are pulling back. Consumers are pulling back because they don’t have enough jobs or adequate wages. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

The U.S. economy continues to stagnate. It’s growing at the rate of 1.8 percent, which is barely growing at all. Consumer spending is down. Home prices are down. Jobs and wages are going nowhere.

It’s vital that we understand the truth about the American economy.

How did we go from the Great Depression to 30 years of Great Prosperity? And from there, to 30 years of stagnant incomes and widening inequality, culminating in the Great Recession? And from the Great Recession into such an anemic recovery? (more…)

Liz Shuler

By Liz Shuler
Secretary-Treasurer, AFL-CIO

John Russo

By John Russo
Co-Director, Center for Working-Class Studies at Youngstown State University

It’s graduation season, and while commencement speakers encourage graduates to work hard and pursue their dreams, most new grads are worried about finding a decent job.  All their professors can suggest that students use internships to gain valuable work experience and be prepared to have five jobs by the time they are 35.

Here’s the reality, grads: things are worse than you fear.  When you’re 35, you could still be looking for a good job. You’ll have a family to support, your salary could well be lower than you expect, and you’ll receive little or no pension contributions or health care benefits. Taken together, episodic work with little opportunity for advancement and poor wages and benefits reflect the characteristics of work life once found largely in the informal economy but now becoming all too common in the formal economy. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

After a week of non-stop Osama Bin Laden, Washington is now returning to the battle over the budget deficit and the debt ceiling.

All over Capitol Hill Republicans and Democrats are debating spending caps and automatic triggers, and whether to begin them before or after Election Day.

But if you don’t mind my asking, what about the economy? I’m not talking about the economy five or ten years from now, when projections show the federal budget wildly out of control or when foreigners might start dumping dollars.

I’m talking about the here and now economy — the one Americans are living in day to day.

The Labor Department reported today that unemployment for April was 9 percent, up from 8.8 percent in March. And of course that official figure doesn’t count the percent of Americans working part-time who’d rather have full-time jobs. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

Exxon-Mobil’s first quarter earnings of $10.7 billion are up 69 percent from last year. That’s the most profit the company has earned since the third quarter of 2008 — perhaps not coincidentally, around the time when gas prices last reached the lofty $4 a gallon.

This gusher is an embarrassment for an industry seeking to keep its $4 billion annual tax subsidy from the U.S. government, at a time when we’re cutting social programs to reduce the budget deficit.

It’s specially embarrassing when Americans are paying through their noses at the pump.

Exxon-Mobil’s Vice President asks that we look past the “inevitable headlines” and remember the company’s investments in renewable energy.

What investments, exactly? Last time I looked Exxon-Mobil was devoting a smaller percentage of its earnings to renewables than most other oil companies, including the errant BP. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

As the government approaches its borrowing limit of $14.3 trillion, Republicans are seeking political advantage over what conditions should be attached to raising that limit.

This is a scandal — or should be. Raising the debt limit shouldn’t be subject to party politics. Economic extortion should be out of bounds.

It’s bad enough government shutdowns have become an accepted part of political negotiation. But failure to increase the amount the Treasury can borrow would have far graver results.

Not only would the government be unable to issue Social Security or Medicare checks but the United States couldn’t pay interest on its current debt.

We’d go into default. The full faith and credit of the United States would be in jeopardy. Treasury bonds would go into free fall. Interest rates would skyrocket. We, and most of the rest of the world, would fall into financial chaos. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

Why aren’t Americans being told the truth about the economy? We’re heading in the direction of a double dip — but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington.

Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.

The Reuters/University of Michigan survey shows a 10 point decline in March — the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.

Pessimistic consumers buy less. And fewer sales spell economic trouble ahead.

What about the 192,000 jobs added in February? (We’ll know more Friday about how many jobs were added in March.) It’s peanuts compared to what’s needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment. And the nation has lost so many jobs over the last three years that even at a rate of 200,000 a month we wouldn’t get back to 6 percent unemployment until 2016. (more…)

Scott N. Paul

By Scott Paul
Executive Director of Alliance for American Manufacturing (AAM)

When IHS Global Insight revealed this week that China has passed the United States to lead the world in manufacturing output, the response from some in government and manufacturing was to quibble with the data. The correct response is to develop a national manufacturing strategy, so that we can once again lead the world in manufacturing, which is a position we’ve held for 110 years.

Why a strategy? Well, Germany has one. China has one. South Korea has one. In fact, every other industrialized nation has a network of currency, trade, tax, investment, innovation and skills policies that promote domestic manufacturing. We stand alone in allowing our jobs to be freely outsourced overseas. Our economic and training policies spur on a service and financial sector economy at the expense of investments in manufacturing.

First, let’s consider the data on the size of manufacturing. Manufacturing accounts for one-third of China’s economic output. For most of our industrial competitors, the number is somewhere between 15 and 20 percent. In America, manufacturing accounts for less than 13 percent of our GDP, and that figure is falling every year.

The rate of growth in manufacturing in China has averaged over 20 percent per annum over the past three years. In the U.S., despite a recent rebound, that figure is only 1.8 percent. We’ve shed 50,000 factories and 5.5 million manufacturing jobs over the past decade. Meanwhile, one company in China — Foxconn — created more manufacturing jobs last year than the entire U.S. economy. (more…)