[This article was written by the American Trotskyist group known as the Spark for their monthly journal, Class Struggle issue 117, on 11 November 2023]
Nearly 70% of those recorded in opinion polls say that the economy is in bad shape and that their own economic conditions are getting worse.
Officials in the Biden administration, as well as most liberal economists, pretend to be confounded. The economic news has been almost all good - they say - the unemployment rate is at a 50-year low, a hiring boom has created a record 13 million jobs, and wages are rising faster than inflation, especially for low wage workers. On top of that, the rate of inflation has dropped - so they say - without triggering a recession, which is practically unheard of.
Nobel Prize economist and New York Times columnist, Paul Krugman, put it this way in early September, “The economic news in 2023 has been almost all good - indeed, almost surreally good... We’ve gained 13 million jobs since Joe Biden took office”.
Certainly, from the viewpoint of the capitalist class, the economic news has been almost all good, “almost surreally good” as Krugman says. Corporate profits have never been higher. They have been hitting one record after another. And profits are taking the biggest chunks out of the entire economy since World War II. As of October 2023, the Forbes 400 richest people in the country are now 500 billion dollars richer than they were last year. And it takes a minimum fortune of close to three billion dollars just to make it onto that list.
The capitalist class has accomplished this feat by viciously pushing down the standard of living of the working class on every front. Such attacks are nothing new - workers’ standard of living has been declining for many decades. But the attacks have become particularly ferocious in the midst of crisis and worsening economic chaos, leaving big parts of the population in a grave situation. To impoverish the ordinary layers of the population is the only solution the capitalist class can find to the crisis its own system has produced.
The jobless depression
Put aside those rose-coloured statistics, and even Krugman would have to acknowledge that there is a real jobs crisis in this country. The Bureau of Labour Statistics (BLS), itself, admits that there are over 100 million workers, 16 years and older, who don’t have a job. That’s not counting the nearly two million people in prison and jails throughout the country. The number of people not working (102 million) is significantly more than half the number who are working (168 million).
Some of those without jobs cannot work, such as the very old and the very infirm - which is the excuse often given - but most could, and most want a job. But employers don’t hire workers with restrictions or underlying health problems, especially older workers. This condemns millions of workers who got hurt or developed health problems, because of poor working conditions or overwork, from getting hired anywhere else. That is one important reason for so many jobless workers in their 50s and 60s. Besides that, millions more live in depressed, de-industrialized regions, and the jobs just aren’t there. So, tens of millions of workers are condemned to a life of deep poverty and dependency by the way the bosses organise their economy.
If the government counted all those tens of millions of people without jobs as unemployed, the official unemployment rate would stand at levels not seen since the Great Depression. Perhaps higher.
The hiring bust
The much-advertised “hiring boom,” the 13 million jobs supposedly created during Biden’s term, is a statistical sleight of hand. Most of these 13 million jobs existed before the 2020 pandemic. During the pandemic, employers slashed jobs at a much faster rate than during the Great Depression. It wasn’t until July 2022 that employment returned to pre-pandemic levels, which were already low.
Companies were simply refilling old positions. Strip that away and new job growth in Biden’s term (2. 8 million) hasn’t even kept up with the growth of the adult population during that time (3. 1 million people).
In vital parts of the economy, such as the public sector and public education, there still are fewer jobs than there were before the pandemic hit. But all throughout the economy, public and private employers are short staffing, trying to force fewer workers to do more work - which also leaves a lot of necessary work undone, depriving working people of vital services, and many people of needed jobs.
Regular, full-time jobs are becoming increasingly scarce. This is not because jobs were shipped overseas, to China or Mexico, as propaganda would have it. Instead, employers turned millions of full-time jobs into part-time and temp jobs. Today, for example, out of nine million manufacturing jobs, over a million are held by temporary workers, that is, over 11%. Add to that, gig workers and independent contractors, who make up almost 20% of the whole workforce. Employers are shifting the bill as workers pay for the ongoing expenses employers used to pay for, including benefits, office space, vehicle costs, insurance, energy, etc.
The number of workers without a steady income has more than doubled since the 1970s. Tens of millions of people are living on the knife’s edge, not knowing from week to week if they will have enough money to buy food, pay for housing and cover the car note.
Rampant joblessness and near joblessness weighs on the rest of the working class, which the capitalist class takes advantage of in every way.
Behind the shifts in the work force
The unending quest of the capitalist class to cheapen and degrade labour in order to maximise its profits has led to vast shifts in the work force, and most notably to the big increase in the number of women working - which means a large part of the workforce earning lower wages. Women workers dominate many low-wage sectors, the ones considered “women’s work”. Women account for the vast majority of the tipped wage workforce, for example, which means they face disproportionate wage theft, sexual harassment, and precariousness, as well as a much lower median wage. But even in heavy industry, where workers are doing essentially the same kind of work, companies manage to establish different categories, allowing lower pay scales to exist for women or other disadvantaged parts of the work force.
When the pandemic ended and social spending was cut back, in many cases to levels below pre-pandemic support, the loss of income forced women in their prime working years (ages 24–54) back into the workforce, pushing up their labour participation rate. For the first time, women were working at almost as high a rate as men (83 versus 86%), despite the lack of adequate, inexpensive childcare.
In this United States, dripping with wealth, there is no collective responsibility for raising the next generation. As opposed to arrangements in most rich countries, childcare in the United States is not publicly run, and there is little or no government aid. Low-wage workers are forced to depend on grandparents, even great-grandparents, siblings, neighbours, or other kids, to take care of their young children.
Women weren’t rushing back to work because of choice, but because of need. Employers who were pushing to get them back were well-served by the government cuts in social service spending, which helped create that need.
The counterpart of the bosses’ shift to women in the work force is an erosion of jobs among prime-age men. This is a much longer-term problem, with male workers in their prime employment years, ages 25 to 54, working at a rate nine percent lower than they were as far back as the 1960s. If employment levels were as high today as they were then, five million more men would be working. This erosion of jobs among prime working-age men is a kind of long-running, silent economic catastrophe that weighs on the entire working population.
And then, there are all the other parts of the population that employers use to lower their wage bill. Not only have they been taking advantage of the “illegal” status of millions of immigrant workers for years, but employers have also increasingly turned to child labour to fill out their workforce.
According to the Department of Labour, child labour increased by 37% over the last year and by almost 300% from 2015. The government admits that its count likely represents a small fraction of the real number, since much of this hiring is done under the table.
Many of these children are part of a vast wave of “unaccompanied” migrant children coming into the United States “illegally”. They are fleeing poverty and violence in Guatemala, Honduras or Venezuela. Far from home, children are under intense pressure to earn money. They send cash back to their families who are often in debt to the child’s “sponsors” for smuggling fees, rent and living expenses. This extremely desperate and vulnerable situation pushes many children to work long shifts at very low wages on some of the most dangerous jobs, including in slaughterhouses, construction sites, factories making parts for the auto industry (including the three American companies), garment sweat shops and food processing plants all across the country.
US capitalism is turning the clock back to the most barbaric practices of the 1800s when child labour was a constant.
The wage crisis
Obviously, all the propaganda about fast wage growth due to some kind of fake job shortage is a total fabrication. Not only have average hourly wages for production workers not kept up with inflation over the last three years, they are at least 10% lower than they were in the late 1970s, according to the BLS.
Wages aren’t everything. There are also “fringe benefits,” which are either disappearing or are taking a much bigger bite out of workers’ income. The proportion of the workforce with defined benefit pensions (those that are supposed to pay retirement benefits until workers die) has been cut in half compared to the 1980s. With only a few exceptions, future defined pension benefits go only to public sector workers, and many of those workers now see deductions taken from their regular salary to put into their pension account. And even those pensions have been slashed because they no longer cover health care benefits, making early retirement before Medicare kicks in at 65 almost impossible. At best, most private sector workers get some kind of 401(k) (pension) plan, which workers directly pay into, sometimes with a subsidy from the employer. Given how much workers’ wages are already squeezed, most have little that they can funnel into these accounts. After retirement it doesn’t take long for the retirement accounts to run out of money, leaving the retiree with only Social Security to fall back on, which means, living in poverty.
As for health care benefits, their cost to active workers is much greater than they were before the 1980s, and the coverage itself is much more restricted - when workers have any medical benefits at all.
To try to survive, to try to make up for much lower wages and no benefits, people work more overtime, more second and third jobs, while taking few if any days off. The bottom 60% of wage earners are now on the job about 13% more hours per year than in 1975, according to the Economic Policy Institute. That’s the equivalent of an extra five weeks of work per year for every worker. It’ s all part of the “no-rest culture”, the “no-vacation nation”.
The inflation cliff
Accompanying this class war has been the steep rise in prices over the last three years. Despite the headlines that seem to say that inflation is declining, it is not. It’s just going up less rapidly, but prices are still going through the roof on the items that working people depend on.
The consumer price index (CPI) is 18% higher than it was three years ago. But the government’s own statistics show that the prices for basic necessities rose much faster than that. Food prices increased by 27%. Rent and utilities increased by 36%. Supplies for children going back to school in the fall leaped up by 19% in less than a year. The cost of a new vehicle jumped by more than 20% ... up to an average price of $47,000. The cost of a used vehicle went up even faster, up to $30,000. In fact, all transportation costs just to be able to get to work - including gas, insurance, car repair - are many times higher than the rate of inflation.
These price increases disproportionately hit the ordinary working population, who devote a much greater part of their income to simply paying for the essentials.
The big boost in prices has forced working people to take on more debt just to pay their bills. And the growth in debt has also accelerated due to big increases in interest rates. As a result of this double whammy, nearly 25 million people are behind on their credit card, auto loan or personal loan payments, according to a Moody’s Analytics analysis of Equifax data. This is a bigger number than at any time since 2009 in the midst of the Great Recession.
A social system not fi t for the living
Less and less does the capitalist system provide even the very basics.
Hunger stalks the land. According to the latest report from the Department of Agriculture, in 2022, 17 million families, or one in eight US families, were considered to be “food insecure” – in ordinary workaday language, they didn’t have enough to eat. The food situation is much worse for families headed by single women. One-third of those families suffer from hunger, with all of theterrible health consequences, especially for children.
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Fast-rising housing costs, along with rising prices for essentials like food and transportation, have led to a new surge in homelessness across the country. In Denver, homelessness is up 32% this year compared to last year. In Boston, it’s up 17%. In Los Angeles, where it already was extremely high, it’s up 10% more. In Washington DC, it’s up by nearly 12%. In New York, the city reached 100,000 homeless people, a first, according to the New York Times.
Most of the homeless are the working poor. In ordinary times, they scrape by. But, for one reason or another - a huge increase in rent, an illness, an injury, the loss of a job, a spouse dies - they suddenly lose their housing. They end up on the street, with its violence, and where poor health quickly overtakes them.
A sweeping study published in June by the University of California, San Francisco (UCSF) confirmed this destitution. The UCSF study also confirmed that the fastest growing segment of the homeless population is made up of working people in their 50s and older. They had never been homeless before. But without retirement benefits, without savings, their only source of income being Supplemental Security Income or Social Security, they find themselves without enough to pay the rent.
The rise in homelessness is not simply a question of people’s low income. It’s also a product of the insane increase in housing costs. Housing produced not only rapidly increasing profits for real estate developers and management companies, it attracted a huge amount of financial speculation from all parts of the capitalist class, especially Wall Street financiers who bought up stocks of mortgage-defaulted single-family homes, then rapidly pushed up rent to maximise a quick return for themselves.
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Increasing impoverishment and joblessness has led another part of the population directly into the gargantuan US penal system. This system encompasses about 1. 6 million people in prisons and jails, along with another 4. 5 million people on probation or parole-that is, under the direct “supervision” of the criminal justice system, or one step away from going back to prison. This system, the biggest in the world, involves about two and one half percent of the US adult population at any one time.
Those heading to prison are for the largest part young men from impoverished, working class neighbourhoods plagued by chronically high unemployment, poor housing and poor schools.
Disproportionately, they are young black men. But poor whites still end up in the system in high numbers; in fact they make up the overall majority of those incarcerated. And increasing numbers of women are also being locked away. Instead of society preparing those who come from impoverished neighbourhoods to lead productive lives, giving them the training and the intellectual tools to do it, it condemns them to joblessness, and a life under the iron heel of cops and prison guards.
A study published last year by the American Association for the Advancement of Sciences found that by the age 35, a solid 64% of unemployed men have an arrest on their record, while 46% have been convicted of a crime.
In prison, the formerly unemployed and jobless are fed into the country’s burgeoning prison labour system of camps and convict leasing programs, where they earn pennies a day. It’s forced labour-nothing but slavery by another name!
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All of this taken together has led to a dramatic decline in life expectancy for the working class. Princeton economists, Anne Case and Angus Deaton, found in a recent study that life expectancy for the two-thirds of the US population that does not have a college degree has been falling since 2010. By 2021, it had already dropped by two years. Then, during the pandemic, it dropped a further year and-a-half. Case and Deaton’s study concluded, in typical academic jargon: “Death is particularly indicative of societal failure”.
Actually, these deaths are casualties in the class war that the capitalist class has been waging against the working class.
The working class holds the key
This is the catastrophic balance sheet that capitalism offers us today. Every job and wage cut, every hungry child and homeless person is an indictment of the capitalist class that holds society in its deadly grip. The fact that this decline is taking place in the richest, most advanced country in the world, shows what kind of dead end for all of humanity capitalism represents.
In 1938, in the midst of an earlier capitalist crisis that featured 10 years of sprawling unemployment, as well as the threat of war spreading to engulf the world, the Fourth International issued the Transitional Program and the Struggle for Socialism. Effectively written by Trotsky, it might just as well have been issued today, its discussion of the situation of the working class is so accurate a depiction of today’s social reality.
“The policies of the capitalists... like the policies of their agents, the reformists, aim to place the whole burden of militarism, the crisis, the disorganisation of the monetary system and all other scourges stemming from capitalism’s death agony upon the backs of the toilers...
“Under the conditions of disintegrating capitalism, the masses continue to live the impoverished life of the oppressed, threatened now more than at any other time with the danger of being cast into the pit of pauperism... . But two basic economic afflictions, in which is summarised the increasing absurdity of the capitalist system, that is, unemployment and high prices, demand generalised slogans and methods of struggle... ”.
But the Transitional Program was not simply a description of reality. It also was a call to action. In the part that focused on those “two basic economic afflictions”, it proposed an immediate struggle by the working class if it were to avoid sinking into absolute destitution, a struggle implicit within which is the possibility that the “workers will come to understand the necessity of liquidating capitalist slavery”. It was at the same time a program for a struggle to defend the workers’ own immediate interests inside capitalist society, and a struggle which would, as it were, merge with and develop into a revolutionary struggle to build a new society.
The perspective was simple and to the point: “The Fourth International demands employment and decent living conditions for all”.
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“Against a bounding rise in prices, which with the approach of war will assume an ever more unbridled character, one can fight only under the slogan of a sliding scale of wages. This means that collective [i. e. , union] agreements should assure an automatic rise in wages in relation to the increase in price of consumer goods... ”.
This doesn’t mean the kind of COLA (cost-of-living allowance) that some unions have in their contracts. Because those wage increases follow the rise in prices only after a long lag-close to six months, or more - and they recuperate only a portion of the price increases. No, wages should increase immediately. Moreover, government inflation numbers do not reflect the real impact of price increases on workers’ budgets. But Trotsky had confidence that workers, in their collective position, had more than enough means to keep track of the real price increases.
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“Against unemployment, ‘structural’ as well as ‘conjunctural,’ the time is ripe to advance along with the slogan of public works, the slogan of a sliding scale of working hours. Trade unions and other mass organisations should bind the workers and the unemployed together in the solidarity of mutual responsibility. On this basis all the work on hand would then be divided among all existing workers in accordance with how the extent of the working week is defined. The average [weekly] wage of every worker remains the same as it was under the old working week. Wages, under a strictly guaranteed minimum, would follow the movement of prices. It is impossible to accept any other program for the present catastrophic period”.
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It is clear that in 1938, Trotsky envisioned that the unions, the primary mass organisations of the working class, could play a role in organising a fight for such demands. It’s obvious that the unions as they are today are only a pale shadow of the organisations that the working class was creating in 1938, out of industry-wide mass strikes, factory occupations and city-wide general strikes. But even in that period, Trotsky warned against the double nature of the unions, being at the same time the organisations the workers looked to when they were ready to fight and the mechanism through which bureaucracies were imposed on their struggles, limiting them within the perspective of what is “possible” in capitalist society. The point was, as the Transitional Program put it, “the workers now more than ever before need mass organisations, principally trade unions”. But, as Trotsky reminds us elsewhere, “trade unions are not ends in themselves; they are but means along the road to proletarian revolution”.
Whether these demands can be attained, whether a fight for them is possible is NOT, in fact, an economic question. The Transitional Program itself was not aimed essentially only at those two “basic economic afflictions”, but at the growing chaos of a capitalist world hurtling toward war. What is possible is a “question of the relationship of forces, which can be decided only by the struggle”, as the Transitional Program put it. Can the working class realise socialism? That, just as much, is a “question of the relationship of forces”. And what plays the basic role here is what the workers understand, through their own consciously organised activity, about the degree to which they hold the potential of power in their own hands. And that finally comes back to the same question, whether there is a revolutionary current inside the working class and involved in its struggles. Are there enough forces dedicated to building a revolutionary party within the perspective laid out in the Transitional Program? Can that party be built in time?
It is, in fact, an old question, but the need to solve this problem gains increasing urgency, as the different crises of the capitalist world speed up and extend, as war becomes more of a generalised fact. The future of human civilisation depends on the extent to which the working class gains consciousness of its ability to overthrow capitalist society and to create a socialist one.
This is what Spark has always believed, and it is the basic goal of all our activity.
11 November 2023