Online | March 28, 2017 at 2:37 pm

Re-Capturing the American Dream: How to Restore Middle Class America

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Workers at Force Protection Industries Inc., make Cougar H 4 X 4 Mine Resistant Ambush Protected (MRAP) vehicles at the factory in Ladson, S.C., Jan. 18, 2008. A week and a half ago, a military medical specialist who was passing through Charleston called the factory and asked if he could stop by to thank the workers personally for the production the Buffalo provided him during his 15 months in Iraq. ÒHe said heÕd used the Buffalo 15 times, and that it saved his life 13 times,Ó said Tommy Pruitt, Public Relations Director. Defense Dept. photo by Cherie A. Thurlby (released)

For most middle class Americans, the dream of a stable, well-paying job is a fiction of a past long-departed. With the arrival of the modern system of flexible labor, working class America has waved goodbye to the economic prosperity championed by its forefathers—and begrudgingly welcomed an economy marked by stagnant income levels, dismal prospects of upward mobility, and a lowered seat at the workplace bargaining table. But as many prepare to bury the American Dream as a relic of days past, there endures a spirit of hope within some circles about the prospects of a brighter economic future for working class Americans. While the debate persists over the admirable goals of re-arming America’s unions and implementing a universal basic income, many have turned towards a more proven approach, known as “flexicurity,” that could pave the way for middle class America to reclaim its former glory.

An Ambitious Debate

The descent of the American middle class was largely catalyzed by movements of automation and globalization throughout the 1970s and ‘80s. As an increasing number of developed countries emerged alongside automated manufacturing in an expanding international market, demand for American labor plummeted. Buckling under the weight of a global economy that demanded unprecedented labor flexibility, the industrial Fordist workplaces of post-war America that offered long-term job security to gain experienced, long-term employees eventually collapsed. The Fordist economy characterized by powerful unions, monopolistic competition, and strong wages coupled with massive consumption, has now faded into history. As America has become further removed from Fordism, job stability has weakened, work-life balance has practically vanished, benefits have been slashed, and for most workers, wages have either stagnated or dropped. And as the “flexible” workplace has extended its reach, demanding the flexibility to quickly hire and fire workers according to the demands of the international economy, America’s income has polarized towards the wealthiest on one end, and the poorest on the other—pushing middle class America to the brink of extinction.  

The disintegration of America’s middle class has not gone unchallenged, however. As American workers have seen their once healthy wages and robust benefits slip from their grasp, many have clinged tightly to the protection of unions. Nodding to the well-documented victories of union members in the mid-1900s, unions in today’s flexible economy have often resorted to the tried-and-true methods of collective bargaining to defend themselves. But while these techniques proved successful in the Fordist economies of the mid-1900s, they have been largely ineffective in their attempts to protect workers in a post-Fordist economy that has made employers less dependent upon their workers. As a result, union participation rates in the United States have dropped from nearly one in three during the 1950s to a modern rate of only one in ten—with the U.S now donning one the lowest unionization rates in the world. Amidst Fordism’s collapse, American workers have found themselves questioning where they can find their footing in today’s economy.

Many believe that a resurgence of the American middle class demands a reclamation of the formidable unions of our past. After all, stronger unions have historically led to  expanded healthcare, stronger pensions, and increased productivity in the workforce. To achieve this revitalization, scholars have foregrounded an array of methods currently employed in workplaces in both the United States and across the globe. Many believe that for unions to regain their lost strength, they will have to become more involved in the executive decision-making process of American companies. In Germany, unions have successfully earned corporate representation to fight for company laborers and curb unprecedented pay raises on executive boards. Like most European labor unions, Germany’s unions achieved corporate representation via legislative action, which suggests that American unions might find more support through government avenues in the modern economy. In other instances in the United States, some workers have gained considerable ground through litigation against their employers. In Washington, Walmart employees who were forced to skip breaks and work off-the-clock were able to earn a $35 million settlement after filing a class action lawsuit against the company. Other laborers have successfully threatened employers with negative press to regain their foothold in the workplace. At Amazon, where ambulances waited outside company warehouses to transport fainted workers to the hospital, employees were able to earn improved working conditions by reaching out to the local paper. While these cases were often only beneficial to a concentrated cohort of workers, they present a more feasible approach to reestablishing workers’ footing than the Fordist era strategies still employed by American unions.

Others maintain that a resuscitation of the middle class also requires political reforms that protect workers from the insecurity of the modern economy. An increasingly popular remedy among scholars is a universal basic income. With a U.B.I, all existing social-welfare programs in the United States would be replaced by what is generally proposed as an annual stipend of roughly $12,000 received by every legal U.S resident. With a substantial form of automatic, unconditional income, work would become truly voluntary for many of the low-skilled laborers in the United States. For American workers, this means a significant increase in bargaining power, as employees will be more capable of refusing unsatisfying levels of compensation for their labor. As a result, employers would be forced to increase the wages of the least-favorable jobs—positions that often employ the unskilled labor that has been most decimated by the modern economy. Furthermore, with a U.B.I., those who decide not to work can focus on job re-training or education to earn a more advanced position down the road. But while some fear that a U.B.I may cause massive unemployment, social experiments conducted in Seattle and Denver that tested a U.B.I found that hardly any workers decided to quit their jobs. While some workers reduced their hours, the maximum reduction in hours recorded in the experiment was 8 percent. Still, the colossal price tag on a U.B.I has discouraged most politicians from endorsing the policy.  

A Proven Solution

Some economists believe that a seasoned approach focused on protecting unemployed victims of the flexible labor economy could prove more feasible and effective at empowering American workers. One particularly popular technique, known as “flexicurity,” has a simple premise: in order to protect workers from a flexible economy that allows employers to quickly hire and fire employees, the government provides unemployed workers, provided that they are searching for a job, with a sustainable level of income throughout the period of their unemployment. Essentially, members of the working class exchange higher tax rates for employment security in the flexible labor market. In Denmark, flexicurity has enabled unemployed citizens to receive up to 90 percent of their former pay, compared to as low as 33 percent received by their American counterparts. Furthermore, all displaced Danish workers receive access to job-search centers and training programs, compared to only one in eight in the United States. Danish employees also have strong prospects of receiving an equivalent level of income upon workforce re-entry—while a significant number American workers receive lower pay upon returning to the workforce. Most importantly, however, Danish workers enjoy these protections for up to four years, compared to a maximum of 26 weeks in the United States, where over 25 percent of unemployed citizens fail to find a job in less than 27 weeks.

Flexicurity complements the modern economy because it focuses less on protecting workers’ job security, and more on maintaining employment security. In a global economy, firms must be able to rapidly adapt to a constantly fluctuating market. This means being able to quickly hire and fire workers according to the demands of the global economy. To ensure businesses’ adaptive abilities are maintained in the pursuit of protecting workers, flexicurity focuses on creating a workforce that can comfortably adapt to the complex demands of a fluid labor market. In the United States, a system of flexicurity would allow American firms to retain their adaptive capabilities while simultaneously creating an unemployment insurance system that provides unemployed workers with both liveable incomes and the necessary training to develop skills that are compatible with a dynamic labor market. Still, critics of the flexicurity model may claim its expensive nature would make rallying political support for the measure a daunting task in the United States.

No matter which path we choose in our pursuit to reclaim the American middle class, it remains imperative that we refrain from engrossing ourselves in a dream of returning to the unprecedented prosperity relished by those before us. An increasingly accepted notion among economists is that the golden age of the American middle class was an economic anomaly—a fortuitous postwar boom that left America perched high atop the global economy for two decades. As the reality of the modern flexible economy descends upon us, it is thus crucial that we remain skeptical of miracle economic formulas touted by each side of the aisle—exorbitant tax hikes on the left, and outdated protectionism on the right—that falsely promise a return to economic glory days no fiscal policy can re-capture. Still, the extinction of America’s most celebrated social caste is not something most Americans can allow while standing idly by. Policymakers, union leaders, and everyday Americans alike must be willing to fight for every inch of footing and security in a modern economy that thrives off its own volatility. It is an exhausting and costly endeavor—but it is the only hope we have of reclaiming the economic class that built this country from the ground up.

Image Credit: Wikimedia Commons / Cherie A. Thurlby [public domain]

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