The Vanishing Middle
We're leveling down.
With the bankruptcy filing Saturday of Delphi Corp., the largest American auto parts manufacturer, the downward ratcheting of living standards that has afflicted the steel and airline industries hit the auto industry big-time. As Delphi executives tell the tale, they need to reduce the hourly pay of their 34,000 unionized employees from the current $26 to $30 range to a somewhat more modest $10 to $12.
No one denies that Delphi is losing money -- about $5.5 billion over the past year and a half. Its labor costs are roughly 10 times those in Mexico and China, where an increasing number of parts that go into cars assembled in the United States are made.
The crisis for autoworkers, their families and communities isn't likely to be limited to parts suppliers. Delphi, which General Motors spun off in 1999, still sells about half its products to GM. Under the terms of the spinoff, GM is liable for the wages and pension payments of a number of Delphi workers, a fact that has not worked wonders for the value of GM shares since Saturday's bankruptcy filing. The specter of sharply reduced wages and benefits looms over the entire industry.
And in the United States, auto isn't just any old industry. For much of the 20th century, it was, by many measures, our premier industry, the pride of the nation. Its Big Three manufacturers employed the most workers, produced the most output, made the largest profits, and paid their workers enough to transform the economic profile of the entire nation. In 1914, one year after he opened his first assembly line, Henry Ford doubled the daily pay of his workers, saying he wanted them to make enough to buy the cars they produced. The Fordist compact was greatly enhanced by the rise in the 1930s of the United Auto Workers, whose contracts (along with those of the United Steelworkers) created the first employment-based health insurance benefits in the land and soon became the model for our mid-century economy. In the post World War II decades, America became home to the first decently paid working class in the history of the world. This was no mean distinction.
But that was oh, so then. If Delphi gets its way, its employees will clearly not be able to buy new GM cars. (At the rate things are going, they'll have to save up to buy gas.) In the face of the combined onslaught of globalization, de-unionization and deregulation, the bottom may not be falling out of the American economy, but the middle certainly is. The very notion of a decently paid working-class job has become a defining oxymoron of our time.
Those middle-income jobs that still come with benefits attached are increasingly clustered in the public sector, where they are becoming more vulnerable politically. In the 1960s, '70s and '80s, teachers, nurses and cops struggled to win contracts comparable to the auto and steelworkers' deals. Today, they are among the last workers in America -- along with chief executive officers, we should note -- to still have defined-benefit pensions. How long they can go on before their standards, too, are ratcheted down is anybody's guess. In California, whacking public employees has become the primary purpose of Gov. Arnold Schwarzenegger; it is the goal that underpins his initiatives in the special election he has called for next month.
So we level downward, and the normal workings of the economy seem powerless to stop it. We are in the third year of a recovery, but poverty rates and the number of medically uninsured continue to rise, while median household income continues to fall. Many millions of Americans are doing very well, of course, but, the inflation of home values aside, their ranks don't include their countrymen whose jobs can be offshored or digitized.
But how many millions of American workers have jobs that can't be offshored or digitized? Two weeks ago, when the seven unions that have left the AFL-CIO held the founding convention of their new federation in St. Louis, that question was uppermost in the mind of Tom Woodruff, the accomplished organizer who will head the new group's organizing campaigns. By Woodruff's count, there are roughly 50 million private-sector American workers -- nurses, truckers, supermarket and other retail clerks, hotel and restaurant employees, construction workers, janitors, security guards -- whose jobs can't be shipped to Beijing or Bangalore. Only 6 million of those 50 million are union members, and it is the goal of the new federation (whose member unions have little in common save that they represent workers in these non-relocatable sectors) to organize the remaining 44 million.
That's no small task in a nation where the legal protections for union organizing have eroded to the point of nonexistence. But in a nation whose economically secure working class has gone the way of the dodo, few tasks are more important.