The War on the American Worker
The economist Herbert Stein is famous for what is arguably the only generalization of social science that is a universal law: “If something cannot go on forever, it stops.” Having caused growing cracks to appear throughout the crumbling edifice of American society, the fifty-year war on American worker power must be brought to an end.
What do falling fertility in the United States, a plague of loneliness and lack of friendship, bitter conflicts over racial and gender identity, and a politics of culture wars and moral panics have to do with one another? Like cracks in a building that radiate up from a crumbling foundation, these dystopian trends are influenced, directly or indirectly, by an underlying factor: the existence of too many bad, low-wage jobs in America.
America’s bipartisan elite has its own preferred solution to the problem of too many low-paying jobs: “Learn to code!” That trite phrase became a bitter joke during the Great Recession of the 2010s.
The learn-to-code cliché persists because it is shorthand for the dominant way that America’s elite thinks about work and wages in the United States. According to the simpleminded version of economics that is all that most policy makers and pundits know, in the private sector the labor market automatically sets the wages of all workers depending on their productivity, which in turn depends on their skills. Hedge fund managers and corporate executives who earn a million times more than janitors have skills that are valued by impersonal, competitive markets vastly more than are janitorial skills.
This is a myth. It could be called a lie, if it were not for the fact that its beneficiaries, including those hedge fund managers and corporate executives, devoutly believe this theory that hap- pens to justify their high incomes. The truth is less flattering to the economic elite: society would collapse if all low-paid workers in health care, retail, waste management, and service industries “upskilled” for jobs in the knowledge industry. In reality, wages are determined largely by the relative bargaining power of workers and employers. And right now, that bargaining power is at an all-time low.
Worker bargaining power in the United States did not die because of globalization or technological innovation. American worker power was murdered by American business and its allies among American politicians and policy makers.
The strategy of American business, encouraged by neoliberal Democrats and libertarian conservative Republicans alike since the 1970s, has been to lower labor costs in the United States, not by substituting laborsaving technology for workers, but by schemes of labor arbitrage: offshoring jobs in some sectors when possible to poorly paid workers in other countries and substituting un- skilled immigrants willing to work for low wages in other sectors, like meatpacking, construction, farm labor, and commercial and residential cleaning. American business has also driven down wages by smashing unions in the private sector, which now have fewer members—a little more than 6 percent of the private sector workforce—than they did under Herbert Hoover. Another wage- suppressing tactic of American business is replacing full-time employees with benefits with part-time contractors or gig workers with lower wages and no benefits.
The result of de-unionization, offshoring of industry, and mass low-wage immigration has been the growth in the United States of a category of workers known as the “working poor,” who are paid too little to survive without dependence on means-tested public assistance or “welfare” programs like food stamps and housing vouchers. Perversely, these welfare programs—including the earned income tax credit (EITC), a wage subsidy for the working poor—indirectly encourage employers in sweatshop sectors like retail to pay low wages. Why not pay low wages, as long as the taxpayers guarantee that low-wage workers and their children will not starve?
This explains why the United States, which has lost much of its manufacturing to China and other countries, remains a world leader in one area—creating bad jobs with low wages and inadequate hours and no union representation. Since the 1960s, as a share of private sector, nonsupervisory jobs, goods-producing jobs that once provided steady jobs at good wages have shrunk from 42 percent to 17 percent. Their share of the private sector work- force has been replaced almost exactly by job growth in service sectors with bad jobs and low wages: retail, leisure and hospitality, administrative, waste management, and health care and social assistance services.1 The low wages and poor working conditions of these jobs can be directly traced back to the decimation of unions by big business.
The growth of service sector jobs in an advanced industrial economy is not a problem in itself. The problem is that in many of these occupations, wages are so low that full-time workers rely on means-tested public assistance in order that they and their families can survive. According to a 2019 study for the Brookings Institution that defined the low-wage workforce as those who made less than $16.03 an hour, adjusted for regional differences, 26 percent of low-wage workers found themselves forced to rely on the government safety net for assistance, compared with only 8 percent of the U.S. workforce as a whole.
If the effects of low wages and bad jobs were limited to the working poor, that would be a national disgrace and a challenge for social reform but not necessarily a society-wide catastrophe. But the effects of having a substantial number of workers who can never earn enough to survive without government assistance ramify throughout all of American society.
Fear of joining the miserable proles who must supplement their inadequate wages with food stamps and housing vouchers and the EITC leads more and more Americans to engage in a self-defeating credential arms race. While the wage premium associated with union membership has vanished along with unions in most of the private sector, credentials—in the form of college diplomas or occupational licenses—can act as tickets to good jobs in cartelized professions and crafts or in big, hierarchical firms that are somewhat immunized from competition by their own market power. Thanks to the desperate scramble for credentials by Americans who fear sinking into the quagmire of working poverty, licensing requirements in one trade after another have increased. And the number of Americans aged twenty-five years or older with bachelor’s degrees or higher has undergone a cancerous growth from 8 percent in 1960 to 36 percent in 2020.
Thanks to credential inflation, the value of diplomas declines over time. Today many college graduates find themselves working in jobs that require only a high school education or less, like the proverbial Starbucks coffeehouse worker with a bachelor’s degree. As the BA becomes the new high school diploma, the master’s degree becomes the new BA. In a destructive and wasteful competition for access to a limited number of good jobs, American students spend more years and more money on campus pursuing credentials whose value constantly declines.
Michael Lind is a contributing editor of Tablet and a fellow at New America. This excerpt is adapted from "Hell to Pay: How the Suppression of Wages is Destroying America" by Michael Lind with permission from Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House, LLC copyright © 2023 by Michael Lind.
