United States: Suffering lies behind recovery

May 21, 2011

The United States' gross domestic product (GDP) has returned to its pre-financial crisis levels of about US$14.3 trillion. However, this figure obscures a grim social reality.

Fareed Zakaria reported in a May 19 Time.com article that while the economy is “producing the same amount of goods and services as in 2007”, it is doing so “with 7 million fewer workers”.

Zakaria said: “Usually, productivity gains translate into higher economic output, higher incomes and thus rising employment. That was the experience in the 1990s.

“This time, we’ve achieved productivity gains almost entirely by cutting jobs, finding ways of making the same products with fewer people. At many major companies, profits have returned to 2007 levels but with thousands fewer workers.”

Andy Kroll said in a May 8 Tomdispatch.com article that McDonald’s first-ever national hiring day in the US, on April 19, was a stark example of the toll being paid by US workers for the new economic reality.

Kroll said: “On April 19th, McDonald's launched its first-ever national hiring day, signing up 62,000 new workers at stores throughout the country.

“For some context, that's more jobs created by one company in a single day than the net job creation of the entire U.S. economy in 2009.

“And if that boggles the mind, consider how many workers applied to local McDonald's franchises that day and left empty-handed: 938,000 of them.

“With a 6.2 percent acceptance rate in its spring hiring blitz, McDonald's was more selective than the Princeton, Stanford or Yale University admissions offices.

“It's worth pointing out that the 1 million people who lined up for work at McDonald's were hoping for a job that doesn't even pay a living wage.”

As Kroll noted, “the average hourly wage in the fast food industry is $8.89, barely half the average of $15.95 across all industries”.

Professor David McNally said in a May 3 DavidMcNally.org post: “This is no more a normal economic recovery than the Great Recession of 2008-9 was an ordinary downturn.

“Instead, we are in the midst of a much more complex period ― one of deep recessions, shallow upturns, high unemployment, government debt crises, renewed recessions and an ongoing era of austerity.”

McNally’s latest book Global Slump: The Economics and Politics of Crisis and Resistance describes the “global financial meltdown as the first systemic crisis of the neoliberal stage of capitalism”.

Pointing to US growth figures for the first quarter of 2011, which managed a rate of only 1.8%, McNally said in his article: “Austerity measures ― deep cuts to public spending and layoffs of public-sector workers in order to rein in government debt ― are driving a number of major economies back into recession or, what is effectively the same thing, into zero-growth scenarios.”

McNally said: “Very real pressure from global markets compels governments to implement austerity even though this is damaging to the economy.

“Here we are reminded that capital's primary concern is not, and has never been, with the 'economy,' but with profits and the stability of the system. If those are best achieved in ways that damage jobs and incomes for the majority, so be it.

“This is why austerity fits the logic of capital even if it means economic stagnation and mounting unemployment.

“In addition to serving as a reminder that the interests of capital have nothing to do with economic growth and well-being, it also underlines why the only economics and politics capable of effectively resisting are anti-capitalist ones.

“Only sustained processes of political education, mobilization and resistance will determine whether this insight will become widespread in a context of austerity and global slump.”

Meanwhile, the fightback by workers and students against austerity measures in the US continued on May 12 with protesters converging on Wall Street.

Labornotes.org reporter Mark Brenner said on May 13: “Sick of bankers, billionaire politicians, and corporate honchos making out like bandits, 15,000 people marched through the caverns of Wall Street yesterday.

“They aimed much of their fury at Mayor Michael Bloomberg. He plans brutal cuts to education and services for the poor, while millionaires will pay even less tax next year and banks continue to rack up huge tax breaks.

“If Bloomberg’s budget passes, teachers could see 4,100 layoffs. Meal services and housing assistance for low-income people living with HIV could be eliminated. Childcare and senior centers are on the chopping block.

“Eight separate marches converged on Wall Street, as unions and community groups rallied together to demand the city end corporate property tax exemptions and renegotiate contracts with big banks that the city pays to manage payments.”

The protests in New York took place as thousands of teachers took to the streets in California between May 9 and May 13.

Labornotes.org said on May 19: “The California Teachers Association declared a state of emergency and launched statewide actions May 9-13 to dramatize the threat to schools and public services posed by the state’s deep budget crisis.”

It said: “A week of lobbying and community outreach was capped on Friday by five regional rallies ― in Sacramento, San Francisco, San Bernardino, Los Angeles, and San Diego ― that brought together 15,000 teachers and education supporters.”

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