Book Review: The Big Squeeze - Tough Times for the American Worker

[El Pinko]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/29/DDHDVM6MM.DTL


The Big Squeeze

Tough Times for the American Worker

By Steven Greenhouse

Knopf; 365 pages; $25.95

We like to believe America is a place so full of opportunity anyone can climb the economic ladder with a little elbow grease. We tell ourselves ours is an exceptional country, where the American dream means immigrants become governors and the sons of farmers become president. So we might be surprised to learn that more than half of an American child's long-term income prospects are determined by the income of his or her parents. Or that a white child born poor has a 27 percent chance of staying poor, while a black child born poor has a 61 percent chance. Perhaps we would be most surprised to learn there is more economic mobility in Canada, France and Sweden than in the United States. (Umm, no, that doesn't surprise me in the least...)

It was not always this way. Fifty years ago, Vice President Richard Nixon boasted to Soviet Premier Nikita Khrushchev, "The United States comes closest to the ideal of prosperity for all in a classless society." It was a time when the divide between the country's rich and poor was the smallest it would be in the 20th century. In 1976, a typical American CEO earned 36 times as much as the average worker; today that ratio is 369. From 1979 to 2004, income for the top fifth of American households grew by 63 percent, while income for the middle fifth grew only 15 percent. ...and incomes at the bottom fifth decreased

How we got here is part of the story New York Times correspondent Steven Greenhouse tells in his new book on the tough issues facing American workers. In "The Big Squeeze," Greenhouse notes that the '80s and '90s witnessed a major shift in corporate America: "The hugely greater importance of the shareholder over the worker represented a sea change in American capitalism." As a result, star CEOs were lauded for trimming costs, laying off "redundant" workers and amplifying share prices. Corporate profits soared and worker productivity grew apace, while wages stagnated. In the economic expansion that began in November 2001, corporate profits doubled, but average wages increased only 2 percent. As Greenhouse notes, "this may be the first time in American history that the typical working household goes through an economic expansion without any increase in income whatsoever."

But the change in mentality was not limited to corporate executives and investors. Beginning with the Carter and Reagan administrations, the public focus on deregulation and cuts in social spending has eaten away at the safety net once supporting American workers. Deregulation destroyed unionized companies in airlines, trucking and telecommunications. The federal minimum wage remained stagnant for much of the past three decades; after inflation, the $5.15 minimum wage in 2007 was 33 percent below its 1979 level. And federal Pell grants to help poor students go to college are more limited than before, covering only about 32 percent of average tuition.