Workers lose while bosses gain as downturn drags on
'These are the sort of guys Bruce Springsteen would sing about,' an economist says.
The U.S. economy's anemic rebound from the worst recession in six decades is pummeling workers while leaving bosses almost unscathed, and neither President Barack Obama nor Republican challenger Mitt Romney is captivating these disaffected voters five months before the national election.
Between 2007 and 2010, working-class people -- those in nonprofessional occupations who lack college degrees -- saw their median earnings fall 4.6 percent, according to a study of U.S. census data prepared for Bloomberg News by Sentier Research of Annapolis, Md. Over the same period, earnings for college-educated professionals or managers rose 1.9 percent.
Working-class males were hit especially hard, with median annual earnings falling 6.6 percent, more than three times the 1.9 percent loss suffered by all employees, according to the study, an effort to quantify the recession's impact on labor.
"These are the sort of guys Bruce Springsteen would sing about," said Paul Ashworth, the chief U.S. economist at Capital Economics Ltd. "These guys have had a bad time."
The struggles of working-class Americans are having an impact on the presidential election race, shaping discussions on trade with China, immigration policy, and the automobile industry bailout. Republican Mitt Romney is seeking to capitalize on workers' dissatisfaction in his bid for the White House, while President Barack Obama tries to brand his rival as a financier focused more on profits than people.
In 2008, white, working-class voters went for Arizona Senator John McCain over Obama by a margin of 58 percent to 40 percent.
Yet now both presidential candidates' appeals to this group are handicapped by biography and personal style. Harvard-educated Romney, a former private-equity executive who is worth as much as $250 million, has drawn criticism for saying he likes "to fire people." Obama, another Harvard graduate with a taste for arugula, is shadowed by his 2008 comment that "bitter" working-class voters "cling to guns or religion."
"Neither of them is going to resonate very well with the working class," says Sean Trende, the author of "The Lost Majority," an account of both parties' electoral challenges.
According to the Sentier analysis, median earnings for professional males rose to $68,820 in 2010 from $68,558 three years earlier. Over the same period, earnings for working-class males fell to $32,677 from $34,981.
Working-class individuals of all races suffered income reversals between 2007 and 2010. With Obama, the nation's first black president, expected to capture an overwhelming majority of minority voters, much of the political skirmishing will be over the white vote.
For Romney, mobilizing blue-collar victims of the recession is essential to victory in November. In 2008, non-college-educated whites -- key players in every successful Republican presidential campaign for four decades -- accounted for 39 percent of the electorate, exit polls showed. And white working- class voters potentially make up more than half the electorate in states such as Ohio, Minnesota, Wisconsin and Michigan.
"This is his base. He needs to turn them out in large numbers," says Henry Olsen, a political analyst at the Republican-leaning American Enterprise Institute in Washington. "He needs large numbers and large margins."
Romney's promises to designate China as a currency manipulator and crack down on illegal immigration are pitched at these voters. Obama, trying to minimize the scale of his working-class losses, counters with reminders of the administration's financial support for General Motors and Chrysler and attacks on Romney's tenure as chief executive officer of private-equity firm Bain Capital for having eliminated jobs at some companies.
Working-class households, lacking a financial cushion, require steady employment, Olsen says. "What Obama is doing is striking at exactly that fear, saying, 'You need a job to survive; this guy doesn't care about you getting one,'" he adds. "That's the message."
Three years after the recession's end, the dueling appeals find the working-class straining to regain lost ground. Globalization has placed millions of American workers in competition with lower-paid laborers in other countries while employers increasingly place a premium on education, even for many factory jobs.
In May, 8.1 percent of workers with a high school degree were unemployed compared with 3.9 percent of college-educated Americans, according to the Bureau of Labor Statistics.
Standing in front of Columbus Castings in Columbus, Ohio, John Snyder, 44, says he wishes he'd attended college after graduating from high school. "I'd probably be better off," he said before a crane-operator shift at the plant, once run by President George W. Bush's great-grandfather.
The former Democrat says he's undecided between Obama and Romney. "I don't agree with either side anymore," he adds. "All they do is bicker and fight."
Even before the end of the housing boom tipped the economy into recession in December 2007, these workers had been under assault by economic forces over which they have little control. Since 1980, job growth has been weakest in the mid-skill occupations that once enabled workers without college degrees to earn a decent income, according to a 2011 Federal Reserve Bank of New York analysis.
Likewise, from 2007 to 2010, the largest U.S. employers created three times as many jobs overseas as in the U.S., according to the Bureau of Economic Analysis. U.S. multinational corporations added 600,000 jobs at their foreign affiliates during that period compared with 200,000 at home.
Almost half of all Americans describe themselves as members of the working class. In the 2010 General Social Survey, a government-funded questionnaire that began in 1972, 47 percent of respondents said they were in the working class while 42 percent chose middle class. So the economic distress of this segment of American society carries political and financial implications.
Still, economic changes have shrunk the white, blue-collar vote, which in 2008 was 15 percentage points smaller than in 1988, according to Ruy Teixeira, an analyst at the Century Foundation in Washington. In 2008, voters with at least a bachelor's degree were four times as likely to vote as those with a high school degree, according to a May 2010 Census Bureau report.
Working-class financial stress is reflected in the operations of consumer-oriented companies. Wal-Mart Stores Inc. (WMT) last fall brought back a layaway program to help customers defer spending.
Amid high unemployment and flat-lining incomes, consumers' heightened cost-consciousness has lifted shares of discount retailer Family Dollar Stores Inc. (FDO) Since the December 2007 onset of the recession, its shares have posted an annual 26.2 percent gain compared with the Standard & Poor's 500 Index annualized loss of 3.2 percent.
"Our core customer is stressed and continues to be stressed," Howard Levine, chief executive officer of Family Dollar Stores, told investors in a March 28 earnings call.
Standing in the parking lot outside a Family Dollar store in Manassas, Virginia, Vicki Tucker agrees. Asked how the last few years have been for her family, Tucker spits out a one-word answer: "Struggling."
Tucker, a school bus driver, and her husband, who works in construction, scrimp to keep their son in college. She resents what she sees as the president's support for "the illegals" at the expense of working Americans.
"I'm voting for Romney," Tucker says, loading groceries into her white Jeep. "It's not what I like about him. It's what I don't like about Obama."
Between 2005 and 2010, income losses were especially severe for white working-class males in states scarred by the housing bust or erosion in manufacturing. The roster of hardest-hit states looks like an electoral college road map to the White House.
In Michigan, ravaged by the auto industry's near collapse in 2008, the income loss was almost 17 percent, according to the Sentier Research analysis. In seven other states -- Oregon, Florida, California, Ohio, Nevada, Indiana and Arizona -- white male workers lost about 10 percent of their annual earnings.
"Opportunities have really disappeared. It's more a matter of trying to keep what you have," says Clay McNeely, 28, a third-generation electrician in Mims, Florida.
"It seemed that at one point in the 2000s that everywhere you looked there was a construction site and everything was booming," he adds. "Now, it certainly feels like only the most educated and most skilled people can even manage to hang on to these jobs part time."
Exceptions to the downward trend were energy-rich states such as North Dakota, where male working-class earnings rose almost 19 percent, and Louisiana, which saw an 8 percent gain.
The Sentier Research study was prepared for Bloomberg by Gordon Green and John Coder, two former Census Bureau officials. They divided the nation's 107 million 25- to 60-year-old wage and salary workers into two groups: those without a college degree working in nonprofessional occupations, and professionals, including college-educated managers.
Income data came from the bureau's annual American Community Survey of about 3 million households. State-level detail was available only for 2005 and 2010.
Ashworth says the working class has likely regained little lost ground since 2010, even though nonfarm payroll employment has increased for 20 consecutive months.
"I haven't had a pay raise in almost five years," said Tim Kirk, 47, an installer of home audio-video systems in Gainesville, Virginia.
The percentage of high school graduates employed is 54.7 percent, virtually unchanged since the end of 2010 and well below the 61 percent peak in July 2006. Economist Dean Baker of the Center for Economic and Policy Research in Washington blames weak demand for goods and services, arguing that the "people who disproportionately bear the brunt of that are lower-end workers: retail clerks, assembly line workers."
In Gainesville, about five miles from the site of two major Civil War battles, Kirk says his employer laid off almost two- thirds of his audio-video system installers when the housing bubble burst.
As the stock market has struggled to recover, Kirk's 401k savings account has lost about $10,000.
"I don't think I'll ever be able to retire. It's just impossible. The cost of living's too high," he says. "I'm way behind where I should be."
More from Bloomberg
On top of the issues concerning Greece, Spain, and Europe we still have monopolistic banks and corporations controlling access to stimulus capital. Small business is being squeezed out of the picture by these monopolies. This eliminates jobs as well as competition for business which in turn lets corporations set the priceon goods and services. As jobs from competitors are eliminated peoplebecome dependent on these corporations for their source of income and commodities. The ability to earn a decent wage through the demand for your skills is eliminated or limited to what the corporation is willing to pay as they become the only game in town. This is akin to the days of old when people could only find work at the mine and were payed by company currency which could only be spent at the company store. As these large companies force smaller businesses out and destroy jobs they destroy the economy and as their profit margin dwindles they close up and liquidate assets leaving people with no place to turn for work and creating a virtual ghost town in their wake. Competition between many small businesses is what helps to keep prices in check and promotes job creation. Monopolies were once illegal in this country for good reason. Instead of stimulus money going to big corporations who are reaping large profits and banks that are useing stimulus and clients cash in risky stock ventures the money should be invested in small businesses that can create jobs and help drive the economy into recovery.
All these idiots complaining about American workers not getting a fair shot...
Are democrats too stupid to start their own business? They run them anyway they want... I just think the whiners are clueless. Typicall democrats. Go do the exact same job poorly day in day out and expect a raise every year. Absolutely clueless and zero work ethic.
The moral here is DO NOT HIRE democrats. Avoid the problem. If you think they are democrats, put them at the top of the list of people to lay off first. These are not your friends. Socialists are the enemy. Treat them as such.
Ok... I am an employer, 177 to be exact. I have a few comments. I am not hiring even though business is good. Why should I hire? I don't want to be caught with any more employees than the minimum under this anti-business administration. I am the owner and boss. I am very old school. "Work or get fired". That said, we have a71% national HS graduation percentage. And the students turned out are clueless about the work world. The educational establishment has turned HS into college prep. We have plenty of over educated art majors. We need people trained in skilled trades.
Years ago HS's offered many vocational classes that taught skills EMPLOYERS wanted.
Now as to the economy, it will either get better quickly if Obamacare is struck down (we will know by next Thursday), or we will head into a second, deeper recession.
For some reason Democrats view allowing someone to KEEP their MONEY as a tax break. The idea that government should confiscate wealth is pure socialism. If America wants socialism, they should vote for Obama, if they want jobs, he has to go.
It really is that simple.
The huge problem is that this country now favors those who went to college.And treats everyone else like second class citizens they feel this is there right because they went to school.I see these pukes everyday at work getting handed jobs as part of a college recruit program.And they are clueless on anything but they say they will get it they went to school.Job experience means nothing anymore!When these wastes of space get a fraction of a clue they get promoted as part of the program and spend another year or so destroying that job.Maybe someday these people will realize that constant learning curve positions are hurting them.But the way things have been going for the last five years doudt it.Get your heads out of your a**** people promote within with people who know the difference of right and wrong not just do and ask no questions from shady people who got where they are by screwing everyone to get there's.
"I'm voting for Romney," Tucker says, loading groceries into her white Jeep. "It's not what I like about him. It's what I don't like about Obama."..Oh, cool, such a good reason to vote for a president of this nation."
Bet these same types of folks will vote for the same politicans most of the time and then complain about their not doing their jobs,,,which none of them have done for way too many years.
I have to assume this particular person has not listened to anything Romney has said..including the cuting of education and anything else he can get by with . Some one explain to me just what the republicans have done over the past 4 years...other than block anything that might have benefited this nation as a whole. Both of these parties were elected to work together for the nation..not their own particular party. Our constitution states.."WE THE PEOPLE" not we the wealthy few.
A very select group continues to push for far more share of income than is needed, than is healthy, and than is ethically reasonable. When you have 40+% of the income in 1% of hands, you have unbalance. Because these earners do not put that money to work in as many fundamental transactions as the other 99% will.
They will put it to work in transactions that are largely absent even venture capital, mainly, financial instrumentation transactions, which are simply not having an impact on the working economy globally. Time to be reasonable.
People (everyone) deserves reasonable compensation to live, by goods and services, homes, in accordance with their level of work, skill, etc. If you don't have this, how do you expect to organically grow your corporation? If this generation, and future generations are less well off? You can't. It's not possible. Especially as it's happening on a global level.
Starting to have second thoughts about voting for the lesser of two evils....why not vote for the most evil, obama and crash this system faster to arrive at a cleansing quicker. Romney will just prolong the agony time wise...with obama, things will move downward faster....rock bottom awareness is what we need...we need that depression and stop kicking the can....obama and his financial team can give us that.
From the article=Between 2005 and 2010, income losses were especially severe for white working-class males in states scarred by the housing bust or erosion in manufacturing.
The above statement from the article cannot be true. Repubs claim Obama is the cause of working class white males losing there good mfg. jobs. Could it be possible, that the Repubs, have a short memory and cannot remember past Jan. 2009, when Obama was sworn into office.
"as downturn drags on"
Say I thought we were right in the middle of the great obama recovery!
American voters have only themselves to blame for what they are currently suffering (being envious of OTHER PEOPLE's MONEY).
They allowed themselves to believe that just because they exist, they deserve something for nothing. Just think about it...how many of these idiots would get up in the morning and go to work at their jobs making whatever it is they are paid to make, and not expect to get a paycheck for doing their work???
Yet, these same idiots expect that something that someone else got up in the morning and went to work and made be GIVEN to them for free...! Only a useless unionized democrat would...
These idiots allowed themselves to believe that joining a "union" and turning over a significant part of their pay to union bosses who MAKE NOTHING would provide them with something that a solid, productive citizen, standing on his/her own two feet, using his/her own common sense could earn on his/her own and provide for themselves as REAL, PRODUCTIVE, AMERICAN citizens should...
If only these union idiots would contribute to his/her own pension like the rest of us standing on our own two feet do, maybe then they wouldn't be belly-aching like children about things that they think that they are entitled to, but whom haven't earned and don't really deserve to have any of it.
A+B=FREE...that is the only math these brainwashed idiots learned. Their puny brains couldn't quite grasp the world of mathematics and the honest workings of the financial world.
The young and brainless, they are the fodder for what those idiot, LIBERAL, PROGRESSIVE teachers used to create this world-wide, financial chaos. This is what the left wanted. This is what the left got. One might expect that the democrats would be happy about this mess that they have on THEIR hands. But like one would expect from a spoiled, obnoxious and incorrigible child, these democrats, starting with their clueless, over-educated, idiot president on training wheels and working on down from there, they will be crying and kicking and screaming into an oblivion of their own making...!
These same half-baked, useless cry-babies, who can't seem to find happiness and satisfaction in the land of opportunity wouldn't possibly be better on any other land found in this universe. No need to waste any compassion on democrat lost causes.
In this country, they CHOSE their useless, non-productive way of life. They chose to overpay their union bosses. NO one put a gun to their heads and forced these consequences it on them. They voted for their president. They made their own beds. Now, they have what they wanted.
Are they "intelligent" enough to learn from their own mistakes? Will we see them once again perform the "definition" of INSANITY in this November's election?...trying the same thing again and expecting different results??? Personally, I don't believe that democrats are intelligent at all. They can't think on for themselves. They can't add or subtract. They can't spell worth a darn...
You can hand a stupid pig a university degree, but he/she is still a stupid pig...
Thieves and Mafia have always prospered, regardless of how bad the economic situation is.
Corporations have their own Mafia organization and their bosses make money nomatter what, they just look for the short term profit, they can care less if the rest of the country and the workers can even get the crumbs of the pie.
They buy off politicians and justices, what do you expect ?
And they're closing all the factories down
Out in Bethlehem they're killing time
Filling out forms
Standing in line
Well our fathers fought the Second World War
Spent their weekends on the Jersey Shore
Met our mothers in the USO
Asked them to dance
Danced with them slow
And we're living here in Allentown
But the restlessness was handed down
And it's getting very hard to stay
Well we're waiting here in Allentown
For the Pennsylvania we never found
For the promises our teachers gave
If we worked hard
If we behaved
So the graduations hang on the wall
But they never really helped us at all
No they never taught us what was real
Iron and coke
And chromium steel
And we're waiting here in Allentown
But they've taken all the coal from the ground
And the union people crawled away
Every child had a pretty good shot
To get at least as far as their old man got
But something happened on the way to that place
They threw an American flag in our face
Well I'm living here in Allentown
And it's hard to keep a good man down
But I won't be getting up today
And it's getting very hard to stay
And we're living here in Allentown
....Lyrics by Billy Joel - Allentown -
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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