Public policy professor at UC-Berkeley and former U.S. Secretary of Labor, Reich answered questions from national AFL-CIO members in a one-hour session.
Median income in the U.S. has consistently declined, shrinking the middle class to its lowest point in history, participants noted, and Reich agreed.
“The biggest factor, I think, is the declining power of ordinary workers to get better pay, coupled with high unemployment that further reduces their bargaining power. Corporate profits today are soaring largely because payroll costs are dropping. So we need a stronger union movement.”
The benefits would go both ways, too, Reich said.
“History does provide valuable lessons here. We know, for example, that the rich would do better with a smaller share of a rapidly-growing pie – growing rapidly because a prosperous and expanding middle class has the money to spend – than a large share of a pie that’s barely growing, as is the case today.
“We also know that when the vast majority becomes cynical and angry because they work hard and get nowhere, they’re more prone to listen to demagogues – on the extreme left as well as the extreme right – who endanger the economy and society. In other words, it’s in the long-term interest of the wealthiest people in America to reverse the trend toward widening inequality.”
The extreme right, though, has been more harmful to middle-class America, Reich insinuated, especially through its media avenues.
Specifying Fox News and radio-show host Rush Limbaugh, he said “these rightwing mouthpieces have done huge damage to America, causing many working-class people to believe the opposite of what’s true, and the opposite of what they need.”
Participants attributed some of American job insecurity to the change in national economy from an industrial base to one of service-industry focus, alluding to a trade of skilled jobs for lower income employment. Reich agreed, but doesn’t think the change in industry dominance requires acceptance of poor wages.
“We can’t bring back the old assembly line because technology is replacing with computerized machine tools and robotics, nor can we bring back the old industrial economy that generated millions of jobs. But we can bring back job security and good wages,” he offered, along with an example pertaining to global trade.
“America is still the largest market in the world. Every global company wants to come here to sell its goods and services. So suppose we conditioned market entry on a corporation agreeing that it would hire Americans in proportion to its sales in the U.S., and that the median pay of its U.S. employees would not be lower than 10 percent of the average pay of its top five executives?”
He acknowledged a gender inequality in income (females earn 19 percent less than males in full-time, year-round earnings), but “the pay gap between men and women isn’t the largest inequality problem,” Reich said.
“The biggest widening gap is between the richest one percent of Americans and the bottom 99 percent – and even between the richest one-tenth of one percent and everyone else. The 400 richest Americans have more wealth than the bottom 150 million of us, the bottom half of the American population, put together.
“This wild distortion is not only bad for the economy,” he said, “but it’s also terrible for our democracy, because it means that democracy can be bought.”
Recent questionable court rulings add to the dilemma of a government-for-sale, too, Reich offered. “The biggest source of corruption is unlimited campaign contributions. We need to reverse Citizens United [a U.S. Supreme Court decision that provides corporations and organizations with an avenue of unlimited spending in political campaigns](.)”
Meanwhile, there are multiple routes organized labor can take simultaneously in its efforts to correct income disparity and protect U.S. jobs.
“I’d recommend three things,” he said. “A major educational outreach to the public about what the labor movement has accomplished and what it could accomplish for average working people in the future, (like) paid sick leave, for example; a major fight with Wal-Mart or any other huge and irresponsible employer that dramatizes the struggle – and a win; and a set of demands that any candidate for office must agree to if they are to receive union support, such as commitment to sponsor and vote for (the) Employee Free Choice Act.”
Reich also recommended worker co-ops and worker ownership as means to protect jobs from moving overseas, and agreed that a substantial increase to minimum wage is necessary for the economy. (See Reich's video on minimum wage below.)