After the New Economy

Friday, November 7, 2003

After the New Economy
David Brancaccio talks to Doug Henwood

BRANCACCIO: Give us a sense of where we are, with our working lives. Here, now, in the 21st Century. There are challenges of the low-wage work. But what about, you know, with some new skills, some education, maybe those workers can lift themselves up into the middle class? Or maybe their children could.

HENWOOD: Well, if they're lucky. But the record of upward mobility in the United States is not anywhere near as happy as a lot of people would like to think. Most people stay roughly in the income category they were born into. That their parents occupied.

And the United States isn't particularly mobile compared to other countries. We think of this as the great land of upward mobility, but that's really not that much more mobile in either direction than western Europe. And we also have a very, very large low-wage workforce. About the largest in the northern hemisphere.

And also people don't exit from that very quickly. They just sort of stay there for much of their working lives. It's not really a point of entry into the labor market. But for most people where they're going to have a long-term residence.

BRANCACCIO: I mean, surely we all know people who grew up in poverty and moved on to middle class and beyond. But you're saying that actually this isn't representative? Or it's just not as true as we think it is?

HENWOOD: It's not as true as we think it is. And if people move, they move a notch. They don't move four or five notches up the ladder.

And this has been true for many, many decades. But, you know, we have the widest distribution of rich and poor in the developed world. And surprisingly the smallest middle income category in the developed world. Which is of course exactly the opposite of what most Americans would think.

BRANCACCIO: What would account for this?

HENWOOD: Well the best predictor of your own education is your parents' level of education. The best predictor of your income is your parents' income. And there are reasons for this. If you're born into a lower middle class family, say, you're going to probably go to schools that aren't as good as people who are further up the income ladder.

You're going to grow up in a household that doesn't have books. You're not going to develop the connections that people need to get to move up in the world. Certainly people do it. There's no doubt about it.

But it the odds are really, really against you.

BRANCACCIO: You're full of surprises here, Mr. Henwood. You also just mentioned that the middle class is small? I mean, I've seen those statistics. The ones that show that if you ask Americans most of them say they're middle class.

HENWOOD: Yes, you're right. That most… many Americans, a very large majority of them probably think of themselves as middle class. But if you look at… if you define this strictly in income terms, incomes you know, around the average, we have the smallest percentage of our population in that middle income category of any of the developed countries from which the numbers exist.

BRANCACCIO: So we may not be as upwardly mobile as we think. Our middle class is smaller than we think. But surely we're a productive bunch. I mean, we get a lot of work in a short amount of time, we Americans.

HENWOOD: Well, we work a lot. There's no question about that. But the absolute level of productivity, what an American worker produces in a year is sort of the middle of the pack of the rich countries. Places like Sweden and the Netherlands actually produce as much or more in a year.

BRANCACCIO: Well, I was looking in your book. And I saw a graph here about work hours necessary to make average yearly family income.

HENWOOD: It's almost a straight shot upwards, about 45-degree angle. It just keeps relentlessly rising. You know, certainly incomes have gone up. But we're working much harder to make those incomes.

BRANCACCIO: The number of weeks you would have to work so that you'd earned average income?

HENWOOD: Right, yeah. So the, you know, average… we know that our average incomes have been rising. But what we don't know is that we're working a lot harder to get that.

You talk to almost anyone who works at an office or a factory these days and there are fewer hands on deck. But people are almost expected to do more work. Somebody leaves or somebody gets laid off, you know, somebody else will take up that job in addition to his or her own job.

And I think that is throughout the whole economy. We've had, I think the productivity numbers really underestimate the length of time people are working to provide this miracle of productivity. Because what they measure is what people are paid for. Not the actual hours that they put in.

And in a lot of cases, for example, in the computer industry, the government statistics assume that white-collar worker worked 35 hours a week. Now, no one in the computer industry would find that anything but hilarious.

BRANCACCIO: In fact, for anybody who ever wanted a little bit more vacation, it looks like the United States may not be the place to be.

Do you see these statistics? On average, the Swedes get 25 to 35 days off. The Italians about 30, a lot of countries 30. What about the United States?

HENWOOD: Well, we have very short vacations, maybe an average of two weeks and there's no legal mandate to offer vacation. A lot of Western European countries, even southern… Latin American countries, they mandate four weeks of vacation, paid vacation, a year.

There's no such mandate in the United States. And even people who are entitled vacations, according to surveys, a lot of people don't take them, because it is perceived as a lack of dedication to the work effort. And they're reluctant to appear lazy.

We have the longest… among the longest work years in the world. If you look at the number of hours a worker puts in a year.

The only-comparable country would be South Korea, where they probably work slightly longer. Japan used to be ahead of us. But they had their recession, and they've fallen down.

BRANCACCIO: But what is it? The Protestant work ethic? Or are we just diligent people?

HENWOOD: Well, I think it's the Protestant work ethic. A lot of Americans, yeah, really are driven by work. To the point I think where it really damages their own lives. But it's also that we have a very large low-wage sector. But we don't have a lot of benefits.

A lot of the things that we… Americans complain about high taxes. But we have relatively high taxes and don't get that much for it. You know. In other countries people will have good benefit systems — healthcare taken care of, reasonable income security if they lose their jobs. We don't have any of that here to speak of. We have to work very, very hard, very long hours just to make ends meet in a lot of cases. We have low wages, low benefits. And that inspires people… forces people to work very hard.

BRANCACCIO: Even with all these fancy computers, computer networks, robots and so forth, we're still working these long hours.

HENWOOD: Yeah, well, that's one of the paradoxes of this productivity revolution. The statistics say productivity is rising. But I think a more colloquial definition of productivity, ordinary people would think of would be, being able to produce more stuff.

BRANCACCIO: How much I get done in a given day.

HENWOOD: Right. And we're not taking the dividends of that productivity in the form of relaxing. You know, you'd think that productivity means that machines are doing more of our work for us. But in fact we're working longer hours and productivity is an abstraction.

BRANCACCIO: Well, your book is called AFTER THE NEW ECONOMY. Is that what is after the new economy? These longer hours and technology not helping as much as advertised?

HENWOOD: Well, it's kind of hard to say what's after the economy. I think we're in this phase of longer term economic trouble. I think we're still thinking of it as kind of a conventional business cycle. And the recovery is just not coming, or it's coming very slowly.

And certainly some of numbers are looking up. There's no question about that. Although the job market is the last place these numbers are looking up. I don't want to be one of those people who are complaining about foreigners taking our jobs. I think in many cases they're getting better jobs than they would have otherwise. And a lot of the people who are getting jobs in India, actually are doing very well compared to what they would have had if it weren't for these outsourced jobs.

It's too bad that Americans are losing their jobs. But I don't want to like set this sort of "they're stealing our lunch" kind of rhetoric. But if you actually look at the kinds of jobs that have been created here and the Bureau of Labor Statistics projects will be created over the next decade, it's nothing like these high-tech fantasies.

Sure we've got things like systems analysts and senior managers. But those are really in the minority — maybe a third of the top new jobs in the next decade. What are far more prevalent are things like cashiers, home-help aids, truck drivers. Really low-wage, in many cases.

And certainly not high skill jobs of the future that most people think are compensating for it. There are what, like three times as many truck drivers as there are people… computer programmers. And that's not going to change any time significantly.

BRANCACCIO: Now, you do paint a pretty grim picture of what's really going on in the American economy as you see it. Do we leave it there? Is there anything that you would like to see done to sort of move the debate forward, move conditions forward, if that's indeed how we live in this country?

HENWOOD: Well, I think the first step to progress is just seeing the way things… the way they are, and stripping away the myth-making. So, that's, I think, the most urgent task. But I would, you know, I have I guess a fairly conventional socially democratic… social democratic political agenda, you know. I'd like to see higher minimum wages, more unions, better social benefits, national health care. You know, those sorts of things that are almost ruled out now of polite political discussion. And they work very well.

And we have a almost $11 trillion economy. We can certainly afford it. But they're just considered impossible. And that's the kind of thing that respectable people don't bring up in public.

BRANCACCIO: But how? I mean, it's sort of like I've asked you, how do you play the flute, and you said, "Well, you run your fingers up and down the keys in the right order." How, if that is, indeed the goal…

HENWOOD: Takes a lot of practice, too.

BRANCACCIO: Lots of practice, lots of practice. But indeed, if that is a goal, strengthening unions' rights and more universal health care, how do we get there, do you suppose?

HENWOOD: Well, it's certainly not easy. We have a very demobilized population politically. People have very low expectations of what politics can achieve. And now, you know, I think after California, I think the "throw the bums out" mentality is in the ascendancy.

But that's all a very negative agenda. And California, I think, is a perfect example of this box that American politics is in. You have a state with severe constraints raising revenues. People still expect relatively high levels of public services.

And there's no money to pay for it. And people have a very hard time, you know, connecting the dots in there. And California, I think, is an extreme version of the thing that goes on nationally. People like to hear about tax cuts and tax relief.

And the government is a big burden. The government's the problem, you know. That Reagan quote still, I think, infects a lot of our political thinking. But it's really the, you know, without that, we're all condemned to continue this life of stress and overwork and having trouble making ends meet.

BRANCACCIO: The book is called AFTER THE NEW ECONOMY. Doug Henwood, thanks for stopping by NOW.

HENWOOD: Thanks for having me.