We Have to Fight for a Workers Recovery

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In a crisis, the ruling class tends to sugarcoat the real economic situation. Politicians and mainstream media outlets are searching for any “silver lining” signaling a recovery in order to avoid facing the failures of capitalism that are on full display: One in three U.S. families with children don’t have enough food. Millions are headed toward disaster after two months without the $600 unemployment, and a major financial crisis is just around the corner.

Convincing people that we are headed “back to normal” makes it easier for the bosses to call people back to work, force teachers and students to return to school, and avoid social outrage at mass unemployment and an astronomical 200,000 COVID-19 deaths.  

We have seen many examples of this in recent months. In June, Trump seized on the understating of unemployment due to a misclassification error in the May jobs report to boast of a booming recovery. Just weeks ago, headlines announced new unemployment claims dropping to below one million per week, while in reality the labor department had changed its reporting methods and the number of claims had actually risen. 

Working people can see all around us the signs of economic turbulence and looming disaster. When we look at the actual trends in the labor market, it’s clear that we need to prepare for the possibility of a prolonged economic downturn, with many more potential crises on the horizon. 

August Jobs Report: What is the Real Story?

The Bureau of Labor Statistics’ official unemployment rate declined in August to 8.4 percent.

However, beneath the headline’s unemployment rate are signals of a slowdown: jobs added in August fell far below those added in July and June. Permanent job losses increased by more than half a million. More than 8 million Americans have been unemployed for 15 weeks or more. Additionally, a quarter of jobs added were government positions, many of them temporary census workers who will be laid off when it concludes. 

Furthermore, the 8.4% figure is a drastic understatement. Economists warn that the real number may be 11.1% or higher. Given that 27 million are currently receiving unemployment insurance according to the Department of Labor, out of a total labor force of 160 million, real unemployment is twice the official number at 16.7%. Overall, the economy has added back less than half of the 22 million jobs lost during the pandemic.

Hidden from headlines, also, are the many indications of another wave of layoffs ahead. Corporate bankruptcies are at a 10-year high, especially in retail and manufacturing, and these companies are moving to shrink their workforce. Major airlines have already begun announcing massive layoffs. 

While the retail sector added jobs back as lockdown restrictions eased, a major disaster is looming over the industry. Businesses can’t pay the rent, especially small businesses being wiped out in the absence of government aid. Permanent storefront closures are continuing to climb. According to Yelp, 60% of businesses that closed temporarily won’t reopen. Restaurants that have so far survived on outdoor dining will struggle to stay afloat as the weather gets colder.

Consumer spending, which makes up more than two-thirds of the U.S. economy, has declined, and overall consumer confidence is “in the dumpster.” Struggling workers simply can’t afford to keep the economy afloat. As a result, there is a real risk of long-term unemployment for the millions already out of work, as well as workers whose entire industries may well collapse in the coming months and years.

Millions Still Out of Work

The unemployed are suffering from a massive loss of income since the $600 unemployment expansion ran out. Enduring without federal aid for over a month, millions are surviving on state unemployment insurance which typically only covers half of lost wages. Now, 50% of unemployment recipients say they can’t cover their basic expenses.

Lack of childcare has been the cause of unemployment for 1 in 5 adults, predominantly mothers. Working class parents are being forced to choose between their families and their jobs, a problem that has been compounded by schools remaining closed. 

In August, 30-40 million renters were at risk of eviction by the fall. In the outrageous absence of any Congressional response, the CDC introduced a sweeping eviction moratorium to postpone many evictions until the end of the year. But households will be on the hook for months’ worth of rental debt by the time the ban expires. 

Millions of families are running out of food, experiencing hunger, and visiting food pantries for the first time. The record levels of food insecurity that followed the initial COVID-19 shock were eased by expanded federal unemployment, but they are now returning. 

Widespread distress is taking root. Nearly half of laid-off workers don’t expect their jobs to come back. The CDC is reporting increased levels of anxiety and depression during the pandemic, particularly among young people and communities of color, who face the highest unemployment rates.

The Road Ahead

The media is starting to discuss the possibility of a “K-shaped” recovery, in which one section of society remains economically stable, or even prospers, while the working class is left holding the bag.

So far, many white-collar professional workers have stayed afloat or even saved by working from home. The super-rich and households with liquid assets are riding a booming stock market. Corporations like Amazon, Netflix, and Zoom have seen soaring profits. Billionaires have increased their wealth by $845 billion in the past 6 months. 

Of course, tremendous inequality long predated COVID-19. However, even those sections of society whose incomes have not yet been affected may soon see the other shoe drop.  

A major financial crisis has, until now, been prevented by unprecedented government handouts to the banks and stock market, as well as the initial direct payments to workers. Demand is crumbling in the absence of the unemployment expansion and aid to small businesses. The stock bubble is a ticking time bomb, as is the massive bubble of corporate and government debt. The housing market, already taking massive hits from climate disaster and from a shaky foundation of unpayable rental debts, could collapse. 

Economic projections for the next decade paint a grim picture. The Bureau of Labor Statistics expects economic growth to slow to a 1.8% annual rate between 2019-2029, with employment projected to grow just 0.4 percent – much slower than the 2009-2019 period. 

Tens of millions of people were already living paycheck-to-paycheck, spending 50% or more of their income on rent, earning stagnant wages, with no paid sick leave or universal health care. The working class was barely scraping by even when the economy was in a “boom.”  Now, with even greater blows being dealt to huge sections of workers, it is clearer than ever that this system does not work for us.

The Alternative

What would it take to truly solve this crisis? At the very least, the federal unemployment top-up of $600 must be reinstated to provide relief to the unemployed workers who have been hung out to dry. We need to cancel the rent, forgive all back rent owed to landlords and credit card companies, and ban all evictions. We need to defund the police to ensure strained public budgets can fund needed social services, while also taxing the rich and corporations to fully fund our schools, build high-quality social housing, and provide universal childcare. 

Millions are out of work while wildfires eviscerate the West Coast. A massive Green New Deal jobs program could provide the unemployed with productive, well-paying jobs while also addressing the urgent climate crisis. 

Workers in consumer-facing jobs like food service, retail, entertainment and travel have had to adapt to new protocols to continue working. They are often being asked to do more for less, and with fewer staff, all while fearing that their job could be gone tomorrow. We need to immediately pass a federal $15 an hour minimum wage, and cities with higher cost of living must pass an even higher minimum wage. 

Democrats and Republicans alike have failed us massively. After weeks of deadlock, the Senate abandoned negotiations on a new relief package to take recess, leaving millions without the bare minimum federal protections. We cannot expect the political establishment, whether under Trump or Biden, to give us what we need. We need a new party of the working class to point the way out of this crisis. Forming a broad organization that truly represents the interests of ordinary people, and takes the lead in mass organizing among every section of the working class, is our only option.

Looking ahead, unions will need to put up a bold fight against layoffs and demand sharing out the work in all workplaces to implement shorter hours with no loss in pay. We need a federal $15 an hour minimum wage, extended hazard pay, and PPE for essential workers operating under unsafe conditions from COVID-19 to wildfire smoke. Renters need to organize in our buildings to protect ourselves from crippling debt and eviction. These movements must be united in solidarity and combined into a real mass movement for systemic change. 

We need to find a way out of the eternal loop of boom-and-bust that routinely throws millions off a cliff, while the capitalists get ever richer. A socialist planned economy would be the only way to escape this vicious cycle. Workers and communities would democratically decide how the economy is run, and direct production toward the needs of society as a whole. Major corporations would be taken into public ownership, and workers would no longer be laid off in the thousands to protect the salaries of greedy executives. The wealth hoarded by the rich would be freed up to use for the benefit of society as a whole. 

We can’t afford another recession, and we certainly can’t afford another “recovery” where all the gains accrue to the richest. We will need to fight tooth and nail for our survival and demand an alternative!

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