State of the Union, Part 1

The teachers of Chicago’s Public Schools returned to the classrooms yesterday. The first lesson those students deserve is one of history, as this month has seen a poignant confluence of economic events.

Just two weeks ago, we all sauntered back to work on a Tuesday having just celebrated a national holiday that honors the achievements of organized labor. Ever since, the plight of our nation’s unions has occupied every section of our newspapers. Certainly, the teachers’ strike in Chicago rippled through national politics as Mayor Rahm Emanuel, former chief-of-staff to President Obama, pressed hard to implement the reforms advocated by Education Secretary Arne Duncan, himself a former head of Chicago’s Public Schools. As the strike concluded its first week, with an agreement between the two sides apparently nigh, a Wisconsin judge struck down Act 10, a law that all but crippled the rights of public employees in that state to organize. The ruling echoed a Federal court decision issued just months after the law’s passing made its champion, Governor Scott Walker, a national hero among conservatives. Walker is appealing both decisions, and oral arguments before the US Seventh Circuit Court of Appeals are scheduled for next Monday in, wouldn’t you know it, Chicago.

Unions have occupied the sports page, too. Members of the National Football League Referees Association have been locked out since last June. Replacement officials have been managing games through the first two weeks of the season, and they’re getting at least as much press as the league’s premier athletes. The day after the ruling in Wisconsin, the National Hockey League locked out its players, threatening the October start to their season. The breakdown of negotiations in sports now seems an annual rite: the NFL and National Basketball Association both gave its players the same lockout treatment in the Summer of 2011, with the latter chopping nearly a full two months from its season before finally settling on a contract.

Seems odd that the bargaining rights of millionaire athletes might occupy the same essay alongside educators who are considered “highly paid” if they average $70,000 a year, but as any effective teacher will tell you, you just need to add one critical transition to coalesce the audience’s understanding of seemingly disparate data points. 

Monday was the anniversary of Occupy Wall Street.

Notice that we’re discussing percentages again in the Presidential campaign? Governor Romney’s comment about the 47% of Americans who pay no income tax actually harkens back to a conservative rebuttal of Occupy. “We are the 53%” was a populist retort to the squatters in Zuccotti Park who, it is still argued, were not actively contributing to our economic health as much as those with a paycheck. Even before Romney’s critiques became public, his campaign has regularly chastised the left for “attacking success” while the President touts “shared prosperity.” With or without the numbers, both campaigns are speaking the language of Occupy. Despite the resurgence of percentage rhetoric, the fundamental rage that ignited hundreds of protests remains to be addressed. Both campaigns have focused on job creation and neglected (or avoided?) the issue of job conditions.

Obama and Romney both embrace the assumption that if unemployment goes down, the economy will prosper and the middle class will benefit. The solutions offered by each boil down to a chicken-and-egg conflict of what needs to occur first before the jobs appear. Romney advocates freeing businesses from stifling taxes and regulations so they can see more profits and hire more workers. Businesses are seeing more profits, though. The nation’s Gross Domestic Product has seen a net increase of $1 trillion since 2008 despite the nearly 9% shrinkage experienced when the Great Recession bottomed out in the first quarter of 2009. Production has improved, so have the jobs followed? Unemployment hovered around 5% as 2008 began and ended at 6% that year. For most of 2012, it’s lingered just above 8%. That’s an improvement over the 10% jobless rate we saw two years ago, but it’s still a net decrease in the job market despite the net increase in production. More business isn’t necessarily creating more jobs.

The President believes government investments in infrastructure, energy, and technology will generate the jobs that kick-start the economy. Create the jobs first, then the businesses and the middle class will thrive.  My first concern is that some of these ideas seem more like temp work. I’m all for upgrading our infrastructure, but eventually, the bridge is built and the potholes are filled. At that point, don’t the jobs disappear? Relying on contract-style jobs seems, at best, a stagnant approach in terms of building middle class income. Historically, we haven’t seen an increase of middle class wages even for people who are drawing a consistent salary. Let’s adjust the Gross Domestic Product so it reflects just how much real money is available and usable to each citizen. Since 1980, the GDP per capita adjusted for purchasing power parity, has quadrupled from roughly $12,100 in available income per person to $48,400 in 2012. But has our actual paycheck seen a reciprocal growth? Hardly. The median income earned by nine out of ten citizens has increased just 30% from 1980 to 2007, and CNN reported earlier this month that wages for most Americans have decreased in the last year while those at the highest end of the salary scale saw a raise. In sum, the pool of money from which we all should be drawing our wages has ballooned by 300% in the last thirty years, yet the paycheck most of us actually bring home has only increased by 30%. Here’s where the Democrats also miss the point: I’m hard pressed to believe that simply creating more jobs will automatically create more wealth for most of us. By “most of us”, I mean the 92% who already have jobs and the 99% who don’t average $1.8 million a year.

Where do Americans turn for a return to social mobility? Who will bring us a prosperity we can feel if we cannot trust any chief executive in the head office or the Oval Office?

In September 2012, I think we found the answer. Not in Washington or on Wall Street, but in the Windy City. 

(to be continued)