[Marxism] Conditions for American workers worst since 30s

[Louis Proyect <lnp3@xxxxxxxxx>]

World Socialist Web Site
wsws.org
Published by the International Committee of the Fourth International (ICFI)
USA Today report: Workers face worst conditions since the Great Depression
By Barry Grey
13 June 2009

Even as US unemployment rolls soar to their highest levels in post-war 
history, employed workers face the worst conditions since the Great 
Depression, according to a front-page article in Friday’s USA Today.

Based on its analysis of employment data, the newspaper reports that pay 
cuts, reduced hours, furloughs and involuntary part-time work have 
driven the working class back to conditions not seen since the 1930s.

USA Today writes that in the first quarter of 2009, US businesses cut 
total wages at a staggering 6.2 percent annual rate. It notes that 
paychecks are being further slashed by reduced hours of work. The 
employed worked fewer hours in May—an average of just 33.1 hours a 
week—than at any time since the Bureau of Labor Statistics began keeping 
records in 1964.

Part-time labor, the report continues, is at an all-time high, and 
overtime at a record low. A record 9 million people want full-time work 
but can find only part-time positions.

Those who are laid off face protracted unemployment. The average 
duration of joblessness is at a post-Depression high of 22.5 weeks. 
“Baby boomers—79 million people born from 1946 to 1964—have been hit 
particularly hard,” the newspaper states. Unemployment rates for workers 
45 years and older have reached the highest levels since at least 1948, 
when the government began tracking this demographic.

USAToday cites Laura Sejen of compensation consulting firm Watson Wyatt 
as saying, “The use of pay cuts—the last choice of most companies after 
hiring freezes, salary freezes and layoffs—shows how the recession is 
unlike any since the Depression.”

These statistics demonstrate that the American ruling elite is carrying 
out a class-war policy. It is exploiting the economic crisis produced by 
capitalism to create an environment of mass unemployment, and utilizing 
the threat of protracted joblessness to blackmail workers into accepting 
cuts in wages and benefits.

This offensive is being spearheaded by the Obama administration. Its 
decision to force Chrysler and General Motors into bankruptcy, while it 
continues to hand over trillions of taxpayer dollars to the banks, is 
part of a deliberate policy aimed at permanently slashing the living 
standards of the working class.

A raft of economic indicators and reports released this week show that, 
despite the talk of recovery by the government and the media, the 
economic crisis in the US and internationally continues to deepen. The 
World Bank on Thursday nearly doubled its projection of global economic 
decline in 2009. On the eve of this weekend’s meeting of G8 finance 
ministers in Italy, the World Bank said it expects the global economy to 
contract by “close to 3 percent,” a far bleaker assessment than the 1.7 
percent decline it made in March.

World Bank President Robert Zoellick said that while there are signs 
that the pace of the contraction may be easing in the wealthy countries, 
the crisis in the so-called “developing” countries is accelerating. The 
fall in consumer demand in the advanced countries, combined with massive 
government borrowing to bail out the banks and prevent a collapse in 
consumer spending, has led to a plunge in exports, remittances and 
foreign investment in much of Africa and Asia. He warned of “large-scale 
public defaults” that could undermine financial institutions in the US 
and Europe.

Even in the wealthy countries, the much-touted recovery trends are 
highly exaggerated. Figures released this week showed German exports 
falling 28.7 percent in April from a year earlier, the sharpest drop 
since the government began keeping records in 1950.

The Commerce Department report on the US trade deficit for April, 
released Wednesday, underscored the ongoing contraction in world trade. 
The deficit rose to $29.2 billion from $28.5 billion in March, but most 
significant was a decline in both exports and imports, with the fall in 
exports accelerating from March. The overall decline in trade surprised 
most analysts, who were predicting a small uptick in world trade volumes.

China, which is being looked to by the West as an engine of global 
recovery, issued a disastrous report on its exports for May. They fell 
26.4 percent from a year earlier, accelerating from April’s 22.6 percent 
decline. May exports also fell sharply in South Korea and Taiwan.

The crisis has already taken a massive toll on the wealth of the 
American people. The Federal Reserve Board reported Thursday that US 
households lost $1.33 trillion of their wealth in the first three months 
of the year. In its “flow of funds” report, the Fed said household net 
worth—total assets such as homes and checking accounts, minus 
liabilities such as mortgages and credit card debt—fell to $50.8 
trillion, the lowest level since the third quarter of 2004.

The first quarter loss represented a decline of 2.6 percent from the 
final quarter of 2008. US households have seen their net worth contract 
for seven straight quarters. The first quarter 2009 figure represents a 
decline of $16 trillion from the highpoint in the second quarter of 2007.

A major part of the decline comes from the stock market. Stocks, which 
are disproportionately held by a small percentage of the population, 
have fallen $8.1 trillion from their peak. But the bulk of the decrease 
comes from the collapse in home prices, which are down 32.2 percent 
since peaking in the first quarter of 2006. Real-estate-related 
household assets decreased by $551 billion in the first quarter of this 
year, following a $974 billion fall in the final months of 2008.

Other indicators herald a further rise in unemployment, home 
foreclosures and defaults on consumer debt. The Labor Department’s 
report on initial jobless claims, released Thursday, showed that 601,000 
people filed for jobless benefits in the week ended June 6. While this 
is a small decline, 24,000, from the previous week, it brought the 
number of workers collecting benefits to an all-time high of 6.82 million.

Mass layoff announcements this week included American Airlines, which 
said it would cut 1,600 jobs, about 2.4 percent of its work force. Delta 
announced that it would slash capacity, a prelude to further layoffs by 
the world’s largest airline.

Home foreclosure filings in May were up 18 percent from a year earlier, 
according to a report issued Thursday by the California firm RealtyTrac. 
“There were almost one million foreclosure filings in a three-month 
period, and that’s simply unprecedented,” said RealtyTrac Senior Vice 
President Rick Sharga.

The firm counted 321,480 filings nationally, making May the third 
consecutive month that foreclosure filings exceeded 300,000. RealtyTrac 
estimates that in a normal market, filings would be under 100,000 a 
month. May also saw a rise in bank repossessions. RealtyTrac forecasts 
some 4 million foreclosure filings will be made this year on 3.1 million 
households. This is 900,000 more than the record number in 2008.

Credit-reporting bureau TransUnion LCC reported Monday that 
delinquencies on bank credit cards jumped in the first quarter of this 
year by 11 percent from a year earlier.

The Commerce Department reported Thursday that retail sales rose 
slightly in May, up 0.5 percent from a month earlier. However, the bulk 
of the increase was the result of sharply higher gasoline prices, a 
trend that can only depress consumer spending going forward. Retail 
sales in May were still 9.6 percent below their levels of last year.

The Federal Reserve’s “beige book” survey of regional economic 
conditions from mid-April to mid-May, released Wednesday, showed a 
continued weakening of economic activity. The report, issued by the 
Fed’s 12 regional banks, concluded that economic conditions “remained 
weak or deteriorated further” in all regions.

While the report noted that businesses in five of the districts said the 
pace of economic decline was slowing, this marked no improvement from 
April, when the same number of districts reported a moderation of the 
rate of decline. Even the more optimistic regions reported that they “do 
not see a substantial increase in economic activity.”

All districts reported the labor market remaining weak and wages 
generally “flat or falling.” The report also warned of an accelerating 
crisis in commercial real estate, with vacancy rates rising “in many 
parts of the country.”

In the Cleveland district, manufacturers predicted that demand this year 
would be lower than last. They said they were continuing to cut jobs and 
wages and slash capital spending.

Chicago reported that sales fell, and manufacturing and capital spending 
declined. Dallas said business was “bouncing along the bottom.” A large 
number of manufacturers in the St. Louis region announced shutdowns and 
several auto companies said they planned permanent layoffs.

At the same time, massive government borrowing and the flooding of 
financial markets with dollars to pay for the rescue of Wall Street have 
sparked a decline in the dollar on world currency markets and sharply 
rising interest rates for Treasury notes. In the immediate term, this 
has reversed the decline in home mortgage rates, which track the yields 
on ten-year Treasury notes, aborting an earlier surge in home 
refinancings and new home sales.

Longer term, the rise in the price paid by the government to finance its 
huge deficits and soaring external debt—the federal government increased 
its borrowing by 22.6 percent in the first quarter of the year—threatens 
to undermine the position of the dollar as the world reserve currency, 
with catastrophic implications for the US and world economy.

This week Russia and Brazil announced that they were reducing their 
purchases of Treasury notes.

The so-called recovery envisioned by the Obama administration and the 
Fed entails an end to negative growth and a small rise in gross domestic 
product of 1-2 percent later this year or early in 2010. Even should 
this occur, it will not mean a recovery in the jobs and wages of workers.

The Wall Street Journal on Friday reported that economists in its latest 
forecasting survey expect the jobless rate to hit 9.9 percent by the end 
of this year. They see an additional one million jobs being wiped out 
over the next 12 months. As of December of 2010, they predict an 
unemployment rate of 9.4 percent. Even this dire prognosis is likely to 
prove optimistic.

The newspaper noted that officials at the Fed assume that the 
unemployment rate is “likely to remain above 9 percent for years.”

Within this environment of mass unemployment and wage-cutting, policy 
makers in the Obama administration and the Fed are demanding austerity 
measures to slash social spending, so as to prop up the dollar and 
corporate profits. The Journal cited the remarks this weak of Dennis 
Lockhart, president of the Federal Reserve Bank of Atlanta. Pointing to 
the danger of rising rates on Treasury bills, Lockhart said the trend 
“can be seen as an expression of creeping doubt that the American 
polity, community, is up to the sacrifices, trade-off decisions and the 
courage of convictions the situation requires.”

This is the reality behind the administration’s talk of an imminent 
economic recovery. It is seeking to restabilize the banks, and the 
capitalist system as a whole, by wiping out the social gains won by 
previous generations of workers and impoverishing large sections of the 
working class.

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