Archive for June, 2007

Twenty years ago it was risky to point out the growing inequality in America. I did it in a New York Times essay and was quickly denounced, in the Washington Times, as a “Marxist.” If only. I’ve never been able to get through more than a couple of pages of Das Kapital, even in English, and the Grundrisse functions like Rozerem.

 

But it no longer takes a Marxist, real or alleged, to see that America is being polarized between the super-rich and the sub-rich everyone else. In Sunday’s New York  Times magazine we learn that Larry Summers, the centrist Democratic economist and former Harvard president, is now obsessed with the statistic that, since 1979, the share of pretax income going to the top 1 percent of American households has risen by 7 percentage points, to 16 percent. At the same time, the share of income going to the bottom 80 percent has fallen by 7 percentage points.

 

As the Times puts it: “It’s as if every household in that bottom 80 percent is writing a check for $7,000 every year and sending it to the top 1 percent.” Summers now admits that his former cheerleading for the corporate-dominated global economy feels like “pretty thin gruel.”

 

But the moderate-to-conservative economic thinkers who long refused to think about class polarization have a fallback position, sketched out by Roger Lowenstein in an essay in the same issue of the New York Times magazine that features Larry Summers’ sobered mood. Briefly put: As long as the middle class is still trudging along and the poor are not starving flamboyantly in the streets, what does it matter if the super-rich are absorbing an ever larger share of the national income?

 

In Lowenstein’s view: “…whether Roger Clemens, who will get something like $10,000 for every pitch he throws, earns 100 times or 200 times what I earn is kind of irrelevant. My kids still have health care, and they go to decent schools. It’s not the rich people who are pulling away at the top who are the problem…”

 

Well, there is a problem with the super-rich, several of them in fact. A bloated overclass can drag down a society as surely as a swelling underclass.

 

First, the Clemens example distracts from the reality that a great deal of the wealth at the top is built on the low-wage labor of the poor. Take Wal-Mart, our largest private employer and premiere exploiter of the working class: Every year, 4 or 5 of the people on Forbes magazine’s list of the ten richest Americans carry the surname Walton, meaning they are the children, nieces, and nephews of Wal-Mart’s founder. You think it’s a coincidence that this union-busting low-wage retail empire happens to have generated a $200 billion family fortune?

 

Second, though a lot of today’s wealth is being made in the financial industry, by means that are occult to the average citizen and do not seem to involve much labor of any kind, we all pay a price, somewhere down the line. All those late fees, puffed up interest rates and exorbitant charges for low-balance checking accounts do not, as far as I can determine, go to soup kitchens.

 

Third, the overclass bids up the price of goods that ordinary people also need – housing, for example. Gentrification is dispersing the urban poor into overcrowded  suburban ranch houses, while billionaires’ horse farms displace the rural poor and middle class. Similarly, the rich can swallow tuitions of $40,000 and up, making a college education increasingly a privilege of the upper classes.

 

Finally, and perhaps most importantly, the huge concentration of wealth at the top is routinely used to tilt the political process in favor of the wealthy. Yes, we should acknowledge the philanthropic efforts of exceptional billionaires like George Soros and Bill Gates. But if we don’t end up with universal health insurance in the next few years, it won’t be because the average American isn’t pining for relief from escalating medical costs. It may well turn out to be because Hillary Clinton is, as The Nation reports, “the number-one Congressional recipient of donations from the healthcare industry.” And who do you think demanded those Bush tax cuts for the wealthy – the AFL-CIO?

 

Lowenstein notes, that “if the very upper crust were banished to a Caribbean island, the America that remained would be a lot more egalitarian.” Well, duh. The point is that it would also be more prosperous, at the individual level, and democratic. In fact, why give the upper crust an island in the Caribbean? After all they’ve done for us recently, I think the Aleutians should be more than adequate.

Despite the unbridled (okay, barely bridled) glee on Wall Street at the Dow’s climb above 13,000, the tide that’s raising some boats is swamping others and running a lot of dinghies aground. Let’s follow the money to a few ports of call that UP members care about. Apparently, we’re not the only ones concerned about the health of our finances as well as the health of our bodies. MSNBC’s Gut Check America reader poll on the issues Americans care most about, with more than 6,000 participants by midnight ET on June 7, found that the top two of the five finalists are UP issues – personal economy and health insurance. The other 3 finalists are: illegal immigration, the war in Iraq, and education (in that order).

Last week’s business news contained a sprinkling of articles on the money-business’s exploitation of the working poor. Froma Harrop’s article “The Vile Business of Preying on the Poor” in the Providence Journal neatly summarized a litany of horror stories of loan sharks and con artists plundering the wide, but shallow, pool of low-income workers. We have big financial “services” (yes, my tongue is in my cheek) companies entering the payday-lending market with annual interest rates of 120 percent. Subprime mortgage lenders, who charge high interest rates and fat additional fees to people who can’t get better interest rates, are now foreclosing on all the mortgages they blithely allowed the truly not-qualified to “qualify” for during the real estate boom based on the predicted appreciation of the houses’ values. Oopsie! Well, let’s take the jaundiced view – a lot of those “not ready for prime rates” homeowners were speculators themselves, hoping to flip a few houses with a few cosmetic improvements in a rising market. They’re losing investments, not the roof over their family’s heads. But others were the working poor, hoping to become homeowners instead of renters because banks would finally lend them more money than their incomes justified. When the real estate bubble burst, so did their dreams.

Those scenarios, we can probably understand. But wait … there’s a new twist. Harrop presents the intriguing fact that “Subprime mortgages … are packaged into securities. Investors currently hold more than $1 billion in subprime loans from 22 ZIP codes in Detroit alone, according to The Wall Street Journal.” Packaged into securities? Like the hot and sour soup is “packaged into” my Szechuan chicken and fried rice lunch at the Chinese fast food place? Nah! Couldn’t be! But yes, it is.

Quoth Wikipedia in an entry titled “SubPrime Meltdown”, Federal Reserve Chairman Ben Bernanke discussed the increase in home ownership coinciding with the expansion of secondary markets in which mortgage loans were packaged and sold to investors. Among Chairman Bernanke’s observations on the “background and run-up to the present crisis in subprime lending,” he opined upon the “adjustments government regulators needed to make to minimize the scope and severity of subprime mortgage problems.”

Apparently, not much. Wikipedia quotes Bernanke: “ ‘We at the Federal Reserve will do all that we can to prevent fraud and abusive lending and to ensure that lenders employ sound underwriting practices and make effective disclosures to consumers.’ But, according to Bernanke, the kinds of innovations in credit markets represented by exotic subprime loan products have had a positive effect, opening up home-buying opportunities for millions of Americans. During the years when subprime products came into wider use, home ownership has expended from about 65 percent of all Americans in 1995 to 69 percent today, he said.” Well, all right then, that makes me feel better. A rise in home ownership of four percent over twelve years, compared to … what exactly is the current rate of foreclosures?

As of November 8, 2006, RISMedia, a real estate information site, reported that “Foreclosure marks 39 percent increase compared to last year.” Looking forward to 2007, the report continued, “Industry forecasters recently estimated that more than $200 billion worth of adjustable rate mortgages will “reset” at higher rates in 2006 and over $1 trillion will reset in 2007. This situation, compounded by the expected slowing of the economy and the housing market, which according the National Association of Realtors includes a growing inventory of unsold homes, may edge more homeowners into the foreclosure process.”

But Chairman Bernanke remains sanguine, even half-way through 2007: “ ‘The effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,’ he said. On June 5, 2007, Bernanke repeated his belief that troubles in the subprime mortgage market are ‘unlikely to seriously spill over to the broader economy or the financial system.’ ”

Why shouldn’t we rely on the happy-days predictions of this economic expert? For one thing, common sense tells me that people who are losing their homes (even if they’re house-flipping speculators losing their investment capital) are not going to be contributing very robustly to the economy overall. They’ll be too worried to work at optimum productivity, and they’re sure not going to be paying real estate taxes that contribute to the local school districts so they can produce educated citizens instead of illiterate thugs preparing to matriculate at Penitentiary

U. For another, what about all those investors who have had the hot-and-sour subprime mortgage soup packaged into their securities investments? Doesn’t sound like very secure securities to me. (Have you checked your investment bundles, lately?)

Then there’s the worrying attack of conscience that Business Week produced in a veritable True Confessions series on low-end lending – “The Poverty Business” report, “Getting Rich off the Poor,” “Perspectives on Profiting off the Poor,” and “Economics of the Poverty Business.”

As more of us who were the working middle class become the working poor, we need to rely on our educations for our survival. We may have to tighten our belts, lower our expectations (at least temporarily), retrench, get creative about what kinds of work to apply our brains to, and all those things that delay gratification. Fine! We can do that. Let’s just not get trapped by our own impatience. Let’s not mortgage our lives. It’s the economy, stupid. Let’s not be stupid about the economy.

 

I have been a “full time casual hire” ESL instructor at the Univeristy of Hawaii for 10 years with no benefits. I began to research and study this situation. I tried to change things. I gave workshops educating others about the financial ramificatons of our status. I could see things wouldn’t change. Then finally, I just walked away… My self-study of finances led me to a new career in tax preparation. I consider myself a financial literacy advocate of sorts. I now piece together seasonal tax work and part-time teaching at my old job. It’s not easy to change careers at age 47; I find the change stimulating and empowering.

Studies have reported the same facts for years: psychological stress and environmental pollution cause health problems for employees.

We used to think that it was only fair that our employers provide a safety net of health benefits. The U.S. Department of Health and Human Services issued a study in 2001 examining the Role of Health Insurance in Successful Labor Force Entry and Employment Retention that found that “[p]articipants were vocal about the importance of having access to affordable health insurance during adulthood” and “emphasized the importance of having access to affordable prescription medication, whether through public or private insurance, as key to maintaining health and functioning within the community.” This report focused on the insurance needs of people with disabilities, but the comments of participants in the focus groups cited above certainly represent the needs of all working adults. One ironic feature of the report is its section titled “Transitions from Public to Private Coverage Difficult.” While the difficulties of switching from Social Security disability coverage to employer-provided private insurance are considerable, the same level of difficulty now faces an increasing number of non-disabled workers forced to go in the other direction – from adequate private insurance to Medicaid or no insurance whatsoever.

Now the escalating cost of health benefits — let’s not get into the quagmire of the socio-political causes of that economic fiasco – has driven employers to downsize and outsource, to avoid hiring older highly-qualified workers (whose expertise they need) because of where the 50-somethings fall on the actuarial tables, and to require that their remaining employees shoulder more and more of the cost of health insurance.

These issues have been addressed before in United Professionals articles – “Sick – The Untold Story of America’s Healthcare Crisis – and the People Who Pay the Price” and “Silicon Valley workers face hardships.”

In the current situation, universal health insurance funded independently of employers seems increasingly attractive to businesses and their employees, alike. On May 30, 2007, Ronald Brownstein observes in the L.A. Times , “Democrats are trying to attract business to comprehensive reform by emphasizing ideas that would cut their costs. Hillary Clinton last week proposed that health insurance companies, as a condition of participating in federal programs, be required to cover both preventive and disease-management services that could help reduce premiums. Obama echoed her Tuesday. Obama also revived the best policy idea of Sen. John F. Kerry’s 2004 campaign: a proposal for

Washington to fund most of the bill for high-cost patients once their annual healthcare bills exceed a fixed level. Shifting those catastrophic expenses to government would lower employer premiums. So might Obama’s surprisingly sharp-edged proposals to limit insurance company profits. The best chance for reaching (or even nearing) universal healthcare coverage is a system of shared responsibility that requires government, individuals and business to all contribute. The ideas percolating in the states, and among the leading Democratic presidential contenders, move in that direction. But unless big employers also finally act on their stake in reform, healthcare for all is likely to remain out of reach — at great cost not only to the national interest but to corporate

America’s own bottom line.”

Professional Marketing individual, 43, white female, working at non-profit making nothing barely can pay the bills. Healthcare provided sucks, large co-payments and I am an insulin dependent diabetic. Need resources for expanding my career and fellowship for others thinking of a start up company.

Frustrated, harassed, devalued, demoralized and ready for a change in how employees (professional or not) are treated.

Thank you for your on-going support of and interest in United Professionals. I am pleased to take this opportunity to fill you in on our progress to date and announce the first issue of the UP Newsletter. Our primary intention is to keep you up to date on what UP is doing and to let you know about news and resources that you can use.

At the invitation of Barbara Ehrenreich, a few of us got together last August to discuss giving life to her idea of an advocacy group for the shrinking middle class. Since that inaugural meeting less than one year ago, we have:

• Formally launched as a not-for profit
• Elected a Board of Directors
• Held our first press conference call
• Established UP’s website
• Established an advisory board
• Established strong partnerships with Americans for Fairness in Lending, National Employment Lawyers Association, and the National Alliance of Professional Psychology Providers
• Held a meeting in Washington, DC for Board and Advisory Board members
• Conducted a poll of our membership
• Began a search for additional funding

In the few months of our existence we have already attracted a healthy membership. We anticipate that UP will grow exponentially as we reach out and become more visible to more people.

We will continue to build additional service capacity by strengthening our legal advice referral process and providing referrals to financial counseling services throughout the country.

Meanwhile, our poll results were loud and clear: Half of our members wanted UP to focus on advocacy. In response we are undertaking a number of initiatives including launching a healthcare advocacy campaign, a directors’ blog, and a forum.

I look forward to building United Professionals with you into a strong defender of our shrinking middle class.

Sincerely,

Bill Holland
UP Board Chair

 Dear Friends,

Vivendi Universal, Borders Books would like to invite you to join me  at Borders Westwood June 7 at 7:30 p.m. to celebrate the dvd release of the “Fired” documentary. The dvd goes on sale that day and we’ll be signing copies at the store. Borders Westwood is at 1360 Westwood Blvd. (Westwood and Rochford)

Jeff Garlin (from Curb Your Enthusiasm), Harry Shearer (from The Simpsons and Spinal Tap), Rabbi Mel Gottlieb (featured in the film) and I will show a few clips from the film and we’d love to raise a toast to you . So many of you have participated in the film, live shows, book and been supportive, this promises to be the last big Fired gathering and I’d love to see you there.

“Fired” has connected with many people and groups all over the country having been screened at festivals around the country, premiered on Showtime and has had special showings sponsored by AFL-CIO and other labor unions as well as Human Resource Groups and  Labor and Employment Lawyers across the country.

Oprah Magazine has called the film “entertaining and slyly subversive,”  Newsday deemed it “Funny, Poignant, and Smart” and The Nation Magazine said “it’s hilarious and important. ” It’s been praised by Forbes, Talk of the Nation, Businessweek, and CNN, amongst others.

We’d love to have you there for this gathering and won’t you invite friends in the LA area? We hope to see you there!

Best wishes and much gratitude,

Annabelle