Time for a Bailout for the American Workforce

[Donnachaidh]

http://www.economicpopulist.org/content/time-bailout-american-workforce

Introduction:

As the third year of recession ends, the scale of the task of undoing the social and economic damage of the recession is now made plain. It is already well-known that 15 million Americans are officially unemployed, with another 15 million unofficially unemployed. But the scope of the recession goes far beyond their ranks - more than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the recession began in December 2007.

The widespread nature of workers' declining fortunes, even if they have not suffered unemployment, explains why it is that one-third of U.S working families are now low-income (i.e, under 200% of poverty), one lost paycheck, one illness, or one accident away from disaster. But as I have noted before, the underlying illness of stagnant wages and a weak labor market have existed before - the one-third figure discussed above is only 7% higher than before the recession, and during the previous recovery in '02-05 we saw that figure increase, never falling below its 2007 level.

A rescue is deeply needed.

So how then do we bail out the labor market - to rescue American workers? Any such effort much rest on three pillars - increasing wages (both to restore the damage done by the recession and to go further) directly, creating a permanent mechanism for maintaining purchasing power through a more redistributive tax system, and (as should be no surprise) establishing a system of social protection that can truly shield workers from the effects of a recession.

Rebuilding Wages:

Long-term readers of The Realignment Project know that the through-line of my posts about economic and social policy is an argument about a long-term structural shift away from wages and labor costs and toward profits and capital that is leading to persistent weakness in labor demand, especially for jobs that pay a living wage. I believe that it is this shift and the weakness it creates that is the ultimate cause of wage stagnation.

MORE at the link --