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We need a worker-led social movement now

Worker protections, price controls, public health care, UBI and more

Our Gross Domestic Product (GDP) is growing rapidly and the unemployment rate is low, yet there’s been a mass resignation by workers, an increased number of strikes, inflation is high and we are all experiencing greater stress and anxiety about the future. What’s going on?

If we evaluate the economy by the two most common measures, the unemployment rate and GDP growth, the economy is doing well over the second half of 2020 and 2021.

As of December 2021, the unemployment rate is 3.9%. This is one of the lowest rates over the past seventy-five years. There has been steady growth in employment over the last year, but there are still almost four million fewer people working than before the pandemic.

Gross Domestic Product (GDP) is a measure of the production of goods and services. After falling very rapidly from February to June 2020, GDP has been growing again. Since the third quarter of 2020 it has been growing at 5% per year, twice its historic trend. Real output has grown primarily in goods, while services only reached their pre-pandemic level in December 2021.

Why have employment and GDP grown significantly?

A major factor has been large increases in government income support. The child credit of $250 to $300 a month helped a great deal. Landlords receive income, which helped keep tenants from being evicted. There were increases in unemployment benefits of $300 to $600 a month and an extension of eligibility. The Paycheck Protection Program put funds in the hands of businesses and three stimulus checks totaling $3200 for adults and $2600 for young people put dollars directly into the hands of individuals. There was also federal aid to state and local governments and the Federal Reserve Bank lowered interest rates and substantially increased the money supply.

These Keynesian expansionary fiscal and monetary policies pursued by the Trump and Biden administrations added up to five trillion dollars between March 2020 and December 2021. Households were able to maintain their standard of living. Demand for goods grew for cars, food, consumer durables like electronics, for gym equipment and food consumed at home, as did savings. However, these government programs have largely come to an end.

Is the economy really thriving? In most polls, around two-thirds of US residents say the economy is doing poorly and they expect it to get worse in 2022. A majority, however, say their financial situation is good and similar to just before the pandemic.

What’s really going on

The economy is much more than GDP or the unemployment rate. It’s people’s lives, their access to goods including housing, the quality of one’s work, and the quality and affordability of services like day care and health care.

Working conditions. Working conditions for the majority of workers have worsened. Whether you work in retail or hospitality, a warehouse or a slaughterhouse, drive a bus or are on staff at a health care facility, the danger of catching Corona virus is real. With the Omicron variant, the risk grows. There is increased demand for workers to take on extra hours as colleagues get sick or leave to take care of their kids. In many situations, there just aren’t enough workers. Jobs go unfilled because employers refuse to improve wages and working conditions enough to attract workers.

The “Great Resignation.” All this and more have led to the “Great Resignation.” As many as 4 million people per month are quitting their jobs—an all-time high attributable to workers taking early retirement, fear of infection, or deciding to live off their pension and savings. The majority are women. There are ten million unfilled jobs. One can view the Great Resignation as a form of successful resistance which has led to increased wages for many openings, but it’s not collective action.

Inflation. Then there is inflation. Inflation is a general increase in prices. Prices rose 7% on the average in the US in 2021, the highest percentage increase since 1982. Gasoline was up 58%, meat 13%, food 6.5%; utilities and used cars rose by a third; housing prices are rising even more rapidly than rent.

One way of thinking about inflation is analyzing it in relation to wages. One’s real wage is the change in their wage rate minus the change in prices. If your wages went up by 4% but prices went up 7%, your real wage went down by 3%. This is what happened in 2021. Something else happened in 2021: for the first time in forty years, the wages for lower income workers grew more rapidly than the inflation rate.

Supply and demand. This seven percent inflation rate in 2021 can be explained by looking at the interaction of demand and supply. On the demand side, there has been a shift towards purchases of durable goods. Purchasing of these goods increased over 20% in 2021. Given that firms are profit maximizing, this increase in demand allows corporations to raise prices and sell more goods. With the various stimulus packages, families can still maintain or even increase their demand for goods. This is where inflation has been concentrated.

On the supply side, neo-liberal capitalism has a just-in-time production system fed by global supply chains. This system was designed to eliminate the need for inventories. Many of the goods we demand are imported, but the supply chain has failed—our ports can’t accommodate the increase in imports and there aren’t sufficient truckers to move all the unloaded goods. The cost of shipping has risen substantially, which contributes to higher prices.

Global pandemic. The on-going pandemic exacerbates this just-in-time system. The surge in the coronavirus means higher prices and more unemployment. There are seven times more Covid cases today than in November 2021. Hospitalizations have more than doubled since November 2021 and deaths are increasing to 2000 or more a day. This means reduced income as more workers are sick or stay home to take care of others. Prices are likely to continue to rise because of increased shortage of goods and workers. We should demand another economic stimulus package, immediately, as the number of coronavirus cases continue at elevated levels. Let us put it on the national agenda!

Our economic situation in the immediate future is alarming

Higher Interest Rates or Price Controls. The Federal Reserve Bank wants to decrease the demand for goods by raising the interest rates so people will save rather than spend. This presumes that wages are the reason prices have risen. But, as we have seen, real wages have not gone up. Corporations are the ones marking up prices. A better solution to inflation would be price control of goods, as well as rent controls on housing prices.

Biden’s “Build Back Better”, in whole or parts. There were many positive reforms in the Build Back Better. They include the $300 a month child credit, affordable day care with well-paid day care workers, free preschool, expansion of Medicare to include hearing, vision and eyesight, lowering the price of prescription drugs, expanded Medicaid, a path to citizenship for millions of undocumented immigrants, and significant programs towards reducing fossil fuels and increasing the use of solar and wind energy. It was to be financed by higher taxes on the incomes and wealth of the 1% and by raising corporate taxes. Passage, however, is unlikely. If parts of the Build Back Better proposal can be made into separate bills and passed with 51 votes in the Senate that is probably the best that can be accomplished.

needed more than ever is social movement unionism, where unions provide leadership and organizational strength to other movements

Worker strikes and social movement unionism. Labor organizing and worker strikes at places like Amazon, Uber, Starbucks, John Deere offer a lot of potential, especially in the midst of the Great Resignation. There is increased public support for unions but what is needed more than ever is social movement unionism, where unions provide leadership and organizational strength to other movements. Here are some possibilities:

A universal public health care system. The need for a public health care system open to all has never been clearer. Our profit-oriented private health care system has meant a pandemic disaster with needless deaths, dysfunction hospitals and endangered staff.

A universal basic income. No one should have to face death just to get a wage. Creating a universal basic income where one can survive without having to work is a sensible way forward.

A stance in favor of essential workers. Essential workers are disproportionately immigrants, women, low paid and Black. They are demanding respect for their work, better wages, safer working conditions and their right to organize.

If we are to improve our economy, we must make it work for most US residents. This will take their active participation in broad based social movements for worker control and publicly owned infrastructure providing health care, childcare, public education, public housing and basic income.

Peter Bohmer taught at Evergreen and is a convenor of Economics for Everyone. He thanks Dan Leahy for transcribing this article from a talk he gave at a recent EE forum.


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