This current pandemic has laid bare structural weaknesses of this economy that have long been here, but ignored. The basic, most glaring weakness is the increasing disparity of income and wealth between the wealthiest fractions of 1% of Americans, and those at the bottom of the income scale.
This problem relates to disparities in access to health care, immigration issues, and interruptions of the farm-to-market food chain. More broadly, it has ominous implications for the overall viability of American style capitalism as it has been practiced during recent decades.
After the Great Recession of 2007-08, the economy gradually, but steadily recovered through the remaining seven years of the Obama administration, and the first three years of the Trump administration. Obama’s critics complained that the recovery was too slow. However gradual the recovery, it continued in spite of recalcitrant Republican opposition to the Obama proposals.
But that’s another story. The economy did recover with good macroeconomic numbers, including job growth, GDP growth with relatively stable prices, and reduced unemployment. This was the economy that Trump inherited, even as he claimed that it was “in a shambles.” Under Trump, the trend of the good macroeconomic numbers continued, given a kick by the fiscal stimulus of the 2017 tax bill and cooperation of the Fed by raising interest rates ever so gradually — even lowering them when that action was questionable. Continuing low interest rates were one factor responsible for high-flying financial markets that Trump myopically insisted was the primary measure of the economy.
The troubling disparity of income and wealth that has been increasing since the 1980s has continued to worsen. Although previously recognized by many critics, this pandemic has laid bare the vulnerability of this economy to this situation as never before.
It has long been recognized that many Americans live from pay check to pay check. But what happens when that paycheck stops, for whatever reason?
It’s easy enough for politicians and those with money and steady incomes to criticize and reprimand workers for not having saved for such a contingency. But realistically, with real wage growth having been stagnant for decades, and costs of health care, housing, and education significantly rising, added to the day-today demands on family budgets — not to mention any savings for retirement — it is unrealistic and totally wrong to condemn and punish low income families for not having provided for this contingency.
This pandemic has laid bare the importance of an economic safety net and the importance of all workers in this economy, including, and especially those who are not adequately financially compensated, for the absolutely essential work that they do.
The consequences of unequal access to health care are even more visible now. Some people are sick but go to work for fear of losing their health benefits, while risking their own health and that of others. This should be a wakeup call to the public and politicians to the consequences of lack of affordable health care. But we still have politicians fighting to abolish the Affordable Care Act, with nothing to replace it.
This pandemic has caused interruptions in the food chain with the sorry spectacle of producers euthanizing pigs and chickens, dumping milk, and plowing under crops, all while there are shortages and rising prices of eggs, milk, and meat at supermarkets, and shortages at food banks. This combination of low wages, inadequate access to health care, and immigration issues all come to a head in this sorry spectacle. Low wage workers, many of them immigrants, continue doing the essential work in our dairy and meat packing plants.
The hard, often dangerous, working conditions in packing plants have been there all along, as has the low pay. But when illness of these workers causes packing plants to cease operations, and the supply chain of live pigs to back up, the importance of these low-paid workers is starkly revealed. And the significance of immigration is put in another light. Whether it’s picking strawberries, processing meat on a rapidly moving assembly line, or laundry and cleanup work in hospitals, this work is absolutely essential.
We too often hear anti-immigrant politicians condemn Mexican immigrants, for example, as “not the finest people,” or worse. It is disgraceful and foolhardy to not recognize the work ethic and ambition of immigrants, and their importance to this economy.
There have been experiments in California of employing high school athletes to meet shortages of farm labor. Hey, this was an opportunity for them to get outdoors and “get in shape.” These experiments turned out to be a real fiasco. These supposedly fit athletes didn’t last till noon. The idea was ludicrous to begin with. Backbreaking work of picking strawberries for hours under the hot sun is a lot different than doing calisthenics and running wind sprints.
Producers of fruit and vegetables have long complained of a lack of domestic farm labor, and the importance of immigrant labor. With the crucial importance of immigrant labor starkly laid bare by this pandemic, it is time for policy makers to get to work, address immigration in a constructive way, and to make sure that those who do this work have access to health care and are decently rewarded.
Along the same lines, many other low paid workers such as those in grocery and retail stores, truck drivers, sanitation workers, and many others struggle to make ends meet and pay their bills. There is something amiss in American style capitalism when full time workers have to rely on public assistance such as the Supplementary Nutrition Assistance Program — commonly known as food stamps — to get by. And that was true before this pandemic.
If capitalism is to continue to flourish, it comes down to making capitalism work for all.
The current belated recognition of the crucial role that essential low-income workers play in making this economy function should be backed up by public policy to compensate them.
— John Waelti of Monroe, a retired professor of economics, can be reached at jjwaelti1@tds.net. His column appears Saturdays in the Monroe Times.
