Note: This paper was given at the 2009 Annual Conference of the United Association for Labor Education at the National Labor College in Silver Spring, MD. This paper can be shared and/or posted on web sites as long as it is attributed, and it is not changed.
Neo-Liberal Economic Policies in the United States:
One note to Labor Educators: This is a very different approach than you usually take. While presenting a “big picture,” this does not suggest what you are doing is “wrong” or “bad.” What it suggests, however, is that the traditional labor education approach is too limited: this suggests that your work is valuable but that you need to put it into a much larger context than is generally done, and that it is in the interaction between your work and this that we each can think out the ways to go forward. This is presented in the spirit of respect for the important work that each of you do on a daily basis.
Most contemporary discussions of globalization, and especially of the impact of neo-liberal economic policies, focus on the countries of the Global South (see, for example, Bond, 2005; Ellner and Hellinger, eds., 2003; a number of articles in Harris, ed., 2006; Klein, 2007; Monthly Review, 2007; and, among others, see Scipes, 1999, 2006b). Recent articles arguing that the globalization project has receded and might be taking different approaches (Bello, 2006; Thornton, 2007) have also focused on the Global South. What has been somewhat discussed (see Giroux, 2004; Piven, 2004; Aronowitz, 2005) but not systematically addressed, however, is what has been the impact of globalization and especially related neo-liberal economic policies on working people in a northern country?[i]
This paper specifically addresses this question by looking at the impact of neo-liberal economic policies on working people in the United States. Following Frances Fox Piven, “neo-liberal economic policies” refers to the set of policies carried out, in the name of individualism and unfettered markets, for “the deregulation of corporations, and particularly of financial institutions; the rollback of public services and benefit programs; curbing labor unions; ‘free trade’ policies that would pry open foreign markets; and wherever possible the replacement of public programs with private markets” (Piven, 2007: 13).
The case of the United States is particularly useful to examine because its elites have projected themselves as “first among equals” of the globalization project (Bello, 2006), and it is the place of the Global North where the neo-liberal project has been pursued most resolutely and has advanced the farthest. In other words, the experiences of American workers illuminate the affects of the neo-liberal project in the Global North to the greatest extent, and suggest what will happen to working people in other northern countries should they accept their respective government’s adoption of such policies.
However, care must be taken as to how this is understood. While sociologically-focused textbooks (e.g., Aguirre and Baker, eds., 2008; Hurst, 2007) have joined together some of the most recent thinking on social inequality—and have demonstrated that inequality not only exists but is increasing—this has been generally presented in a national context; in this case, within the United States. And if they recognize that globalization is part of the reason for increasing inequality, it is generally included as one of a set of reasons.
This paper argues that we simply cannot understand what is happening unless we put developments within a global context: the United States effects, and is affected by, global processes. Thus, while some of the impacts can be understood on a national level, we cannot ask related questions as to causes—or future consequences—by confining our examination to a national level: we absolutely must approach this from a global perspective (see Nederveen Pieterse, 2004, 2008).
This also must be put in historical perspective as well, although the focus in this piece will be limited to the post-World War II world. Inequality within what is now the United States today did not—obviously—arise overnight. Unquestionably, it began at least 400 years ago in Jamestown—with the terribly unequal and socially stratified society of England’s colonial Virginia before Africans were brought to North America (see Fischer, 1989), much less after their arrival in 1619, before the Pilgrims. Yet, to understand the roots of development of contemporary social inequality in the US, we must understand the rise of “Europe” in relation to the rest of the world (see, among others, Rodney, 1972; Nederveen Pieterse, 1989). In short, again, we have to understand that the development of the United States has been and will always be a global project and, without recognizing that, we simply cannot begin to understand developments within the United States.
We also have to understand the multiple and changing forms of social stratification and resulting inequalities in this country. This paper prioritizes economic stratification, although is not limited to just the resulting inequalities. Nonetheless, it does not focus on racial, gender or any other type of social stratification. However, this paper is not written from the perspective that economic stratification is always the most important form of stratification, nor from the perspective that we can only understand other forms of stratification by understanding economic stratification: all that is being claimed herein is that economic stratification is one type of social stratification, arguably one of the most important types yet only one of several, and investigates the issue of economic stratification in the context of contemporary globalization and the neo-liberal economic policies that have developed to address this phenomenon as it affects the United States.
Once this global-historical perspective is understood and after quickly suggesting in the “prologue” why the connection between neo-liberal economic policies and the affects on working people in the United States has not been made usually, this paper focuses on several interrelated issues: (1) it reports the current economic situation for workers in the United States; (2) it provides a historical overview of US society since World War II; (3) it analyzes the results of US Government economic policies; and (4) it ties these issues together. From that, it comes to a conclusion about the affects of neo-liberal economic policies on working people in the United States.
Prologue: Origins of Neo-liberal Economic Policies in the United States
As stated above, most of the attention directed toward understanding the impact of neo-liberal economic policies on various countries has been confined to the countries of the Global South. However, these policies have been implemented in the United States as well. This arguably began in 1982, when the Chairman of the US Federal Reserve, Paul Volcker, launched a vicious attack on inflation—and caused the deepest US recession since the Great Depression of the late 1920s-1930s.
However, these neo-liberal policies have been implemented in the US perhaps more subtly than in the Global South. This is said because, when trying to understand changes that continue to take place in the United States, these economic policies are hidden “under” the various and sundry “cultural wars” (around issues such as drugs, premarital sex, gun control, abortion, marriages for gays and lesbians) that have been taking place in this country and, thus, not made obvious: most Americans, and especially working people, are not aware of the changes detailed below.[ii]
However, it is believed that the implementation of these neo-liberal economic policies and the cultural wars to divert public attention are part of a larger, conscious political program by the elites within this country that is intended to prevent re-emergence of the collective solidarity among the American people that we saw during the late 1960s-early 1970s (see Piven, 2004, 2007)—of which the internal breakdown of discipline within the US military, in Vietnam and around the world, was arguably the most crucial (see Moser, 1996; Zeiger, 2006)—that ultimately challenged, however inchoately, the very structure of the established social order, both internationally and in the United States itself. Thus, we see both Democratic and Republican Parties in agreement to maintain and expand the US Empire (in more neutral political science-ese, a “uni-polar world”), but the differences that emerge within each party and between each party are generally confined to how this can best be accomplished. While this paper focuses on the economic and social changes going on, it should be kept in mind that these changes did not “just happen”: conscious political decisions have been made that produced social results (see Piven, 2004) that make the US experience—at the center of a global social order based on an “advanced” capitalist economy—qualitatively different from experiences in other more economically-developed countries.
So, what has been the impact of these policies on workers in the US?
1) The Current Situation for Workers and Growing Economic Inequality
Steven Greenhouse of The New York Times published a piece on September 4, 2006, writing about entry-level workers, young people who were just entering the job market. Mr. Greenhouse noted changes in the US economy; in fact, there have been substantial changes since early 2000, when the economy last created many jobs.
• Median incomes for families with one parent age 25-34 fell 5.9 percent between 2000-2005. It had jumped 12 percent during the late ‘90s. (The median annual income for these families today is $48,405.)
• Between 2000-2005, entry-level wages for male college graduates fell by 7.3 percent (to $19.72/hr).
• Entry-level wages for female college graduates fell by 3.5 percent (to $17.08).
• Entry-level wages for male high school graduates fell by 3.3 percent (to $10.93)
• Entry-level wages for female high school graduates fell by 4.9 percent (to $9.08)
Yet, the percentage drop in wages hides the growing gap between college and high school graduates. Today, on average, college grads earn 45 percent more than high school graduates, where the gap had “only” been 23 percent in 1979: the gap has doubled in 26 years (Greenhouse, 2006b).
A 2004 story in Business Week found that 24 percent of all working Americans received wages below the poverty line (Business Week, 2004).[iii] In January 2004, 23.5 million Americans received free food from food pantries. “The surge for food demand is fueled by several forces—job losses, expired unemployment benefits, soaring health-care and housing costs, and the inability of many people to find jobs that match the income and benefits of the jobs they had.” And 43 million people were living in low-income families with children (Jones, 2004).
A 2006 story in Business Week found that US job growth between 2001-2006 was really based on one industry: health care. Over this five-year period, the health-care sector has added 1.7 million jobs, while the rest of the private sector has been stagnant. Michael Mandel, the economics editor of the magazine, writes:
… information technology, the great electronic promise of the 1990s, has turned into one of the greatest job-growth disappointments of all time. Despite the splashy success of companies such as Google and Yahoo!, businesses at the core of the information economy—software, semi-conductors, telecom, and the whole range of Web companies—have lost more than 1.1 million jobs in the past five years. These businesses employ fewer Americans today than they did in 1998, when the Internet frenzy kicked into high gear (Mandel, 2006: 56).
In fact, “take away health-care hiring in the US, and quicker than you can say cardiac bypass, the US unemployment rate would be 1 to 2 percentage points higher” (Mandel, 2006: 57).
There has been extensive job loss in manufacturing. Over 3.4 million manufacturing jobs have been lost since 1998, and 2.9 million of them have been lost since 2001. Additionally, over 40,000 manufacturing firms have closed since 1999, and 90 percent have been medium and large shops. In labor-import intensive industries, 25 percent of laid-off workers remain unemployed after six months, two-thirds of them who do find new jobs earn less than on their old job, and one-quarter of those who find new jobs “suffer wage losses of more than 30 percent” (AFL-CIO, 2006a: 2).
The AFL-CIO details the American job loss by manufacturing sector in the 2001-05 period:
• Computer and electronics:&n