Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
DOUBLE YOUR DONATION!
We don’t run corporate ads. We don’t shake our readers down for money every month or every quarter like some other sites out there. We provide our site for free to all, but the bandwidth we pay to do so doesn’t come cheap. A generous donor is matching all donations of $100 or more! So please donate now to double your punch!
FacebookTwitterGoogle+RedditEmail

Can Re-Industrialization Save the Middle Class?

Saint-Cyr, Coëtquidan, France.

Most economists agree that the “Great Recession” of 2008 ended sometime around the summer of 2009. This is surely great news to the 47.6 million Americans who are eating thanks to the Supplemental Nutrition Assistance Program (SNAP), more commonly known as “food stamps.” And no doubt the 43 million Americans who are living below the poverty line (latest data from 2007-2011) will be comforted by the fact that the worst economic crisis in almost 80 years ended over 3 years ago.

The chairman of the Federal Reserve Bank, Ben Bernanke, has shown his concern for all of this by indicating that he will keep interest rates low to support the economy and further assist the recovery. He had better. The Commerce Department reported that personal income dropped 3.6 percent this past January, the largest drop in 20 years.

And while the economy has been slowly recovering, unemployment still appears to be a nagging problem. The headline rate is just under 8%. This translates into over 12 million Americans out of work, with 4.8 million of them having been out of work for 27 weeks or longer, and therefore considered as “long-term” unemployed.

An alternative measure of unemployment, and one that is reported less, shows an even more disturbing picture. U6, which measures the total number of people out of work, plus all the people who are working part time for economic reasons, plus all the people who are only marginally attached to the labor force, stands at an incredible 14.4%.

Income inequality is also at its highest point since just before the Great Depression. In 2010, the top 1% of earners received 93% percent of the growth in incomes for that year. The people in the middle, taking into account the effects of inflation, have lower household incomes today than they did in 1996. Your average male made $32,986 in 2011. In 1968 he made $33,880 (again, adjusted for inflation).

Aggravating all of this would be the findings of a study done by the National Employment Law Project (NELP). It found that most of the job losses during the recession were in what we would consider to be mid-wage occupations. Unfortunately, most of the jobs that were created during the (tepid) recovery have been in sectors considered as lower-wage occupations (primarily service jobs). Data from the US Census Bureau paints an even bleaker picture, showing that 25% of American jobs pay below the federal poverty line for a family of four ($23,050) and that one-third of adults who live in poverty also work.

Consumer spending accounts for roughly two thirds of the US economy. Stagnating wages, combined with a lack of good paying jobs and high unemployment in general, does not bode well for a sustained and robust economic recovery anytime soon.

Historically speaking, manufacturing jobs have, on average, paid better wages than service jobs (with the former usually providing better benefits as well). But manufacturing, as a percent of the economy, has been on the decline for decades now. Over 5 million manufacturing jobs have been lost since 2000 alone.

But is this an irreversible phenomenon? A new study out of the Massachusetts Institute of Technology (MIT) gives encouragement to those who believe that revitalizing American industry would not only be good for the economy, it would also create high skilled and high paying jobs. Researchers at MIT suggest that efforts be made to maintain, and rebuild, the country’s manufacturing base.

The report also calls for a new way of looking at manufacturing. Instead of thinking of it as some tired old relic that can only be found in the country’s rust belt, it should be viewed as a dynamic and evolving group of industries that are a source of new ideas and new skills. Moreover, manufacturing is not something that is automatically at odds with the knowledge based economy of the 21st century.

The researchers call for efforts to be made to develop the country’s capacity for innovation, which they see as being closely interconnected with manufacturing.

One finding might give pause to people who have been promoting outsourcing and the conversion of the US into primarily a “knowledge based” economy. What was found was that when companies separated the design elements of their products from the actual manufacturing, that is to say, they kept the high value adding activities in the States and sent the actual production to some low wage country like China, the opportunities for improved efficiencies and better design were lost.

President Obama, for his part, says that he is committed to revitalizing manufacturing and using it as a platform to create more middle class jobs. The Obama administration has said it wants Congress to approve a $7 billion package – $6 billion in federal tax credits for factory towns that are in need of help and $1 billion to create innovation hubs.

The President’s program, if implemented, would include:

* Creating a network of 25 manufacturing Innovation Institutes

* Lowering the tax rate for manufacturers to 25 percent and expanding, and making permanent, the research and development tax credit

* Promoting and building new partnerships with communities to attract manufacturing companies and their associated supply chains

* Increasing efforts to open new markets for American-made goods

All of the above proposals would tie in nicely with the findings of the MIT report, which calls for new types of collaboration and risk-sharing, primarily through joint public-private partnerships and industry-university agreements. But in this age of “sequestration,” one wonders what the chances are of anything being done.

Since 2001, the US has spent at least $1.4 trillion on its undeclared and unfunded wars in Afghanistan and Iraq. Since the recession of 2008, the Federal Reserve has pledged $7.77 trillion to rescue the financial industry, loaning at least $1.2 trillion to banks and financial companies affected by the crisis–a crisis, it is important to note, of Wall Street’s own making. If only a fraction of these sums were invested in the economy, manufacturing could be revitalized and we might very well witness a second version of the industrial revolution.

If we treated saving the Middle Class with the same gravity that we treat national defense, or with the same speed with which we give taxpayer backed government bailouts to support our “free market” capitalist system, the pain and suffering that millions have endured these past few years probably could have been avoided.

Tom McNamara is an Assistant Professor at the ESC Rennes School of Business, France, and a Visiting Lecturer at the French National Military Academy at Saint-Cyr, Coëtquidan, France.

More articles by:

Tom McNamara is an Assistant Professor at the ESC Rennes School of Business, France, and a former Visiting Lecturer at the French National Military Academy at Saint-Cyr, Coëtquidan, France.

Weekend Edition
October 19, 2018
Friday - Sunday
Jason Hirthler
The Pieties of the Liberal Class
Jeffrey St. Clair
A Day in My Life at CounterPunch
Paul Street
“Male Energy,” Authoritarian Whiteness and Creeping Fascism in the Age of Trump
Nick Pemberton
Reflections on Chomsky’s Voting Strategy: Why The Democratic Party Can’t Be Saved
John Davis
The Last History of the United States
Yigal Bronner
The Road to Khan al-Akhmar
Robert Hunziker
The Negan Syndrome
Andrew Levine
Democrats Ahead: Progressives Beware
Rannie Amiri
There is No “Proxy War” in Yemen
David Rosen
America’s Lost Souls: the 21st Century Lumpen-Proletariat?
Joseph Natoli
The Age of Misrepresentations
Ron Jacobs
History Is Not Kind
John Laforge
White House Radiation: Weakened Regulations Would Save Industry Billions
Ramzy Baroud
The UN ‘Sheriff’: Nikki Haley Elevated Israel, Damaged US Standing
Robert Fantina
Trump, Human Rights and the Middle East
Anthony Pahnke – Jim Goodman
NAFTA 2.0 Will Help Corporations More Than Farmers
Jill Richardson
Identity Crisis: Elizabeth Warren’s Claims Cherokee Heritage
Sam Husseini
The Most Strategic Midterm Race: Elder Challenges Hoyer
Maria Foscarinis – John Tharp
The Criminalization of Homelessness
Robert Fisk
The Story of the Armenian Legion: a Dark Tale of Anger and Revenge
Jacques R. Pauwels
Dinner With Marx in the House of the Swan
Dave Lindorff
US ‘Outrage’ over Slaying of US Residents Depends on the Nation Responsible
Ricardo Vaz
How Many Yemenis is a DC Pundit Worth?
Elliot Sperber
Build More Gardens, Phase out Cars
Chris Gilbert
In the Wake of Nepal’s Incomplete Revolution: Dispatch by a Far-Flung Bolivarian 
Muhammad Othman
Let Us Bray
Gerry Brown
Are Chinese Municipal $6 Trillion (40 Trillion Yuan) Hidden Debts Posing Titanic Risks?
Rev. William Alberts
Judge Kavanaugh’s Defenders Doth Protest Too Much
Ralph Nader
Unmasking Phony Values Campaigns by the Corporatists
Victor Grossman
A Big Rally and a Bavarian Vote
James Bovard
Groped at the Airport: Congress Must End TSA’s Sexual Assaults on Women
Jeff Roby
Florida After Hurricane Michael: the Sad State of the Unheeded Planner
Wim Laven
Intentional or Incompetence—Voter Suppression Where We Live
Bradley Kaye
The Policy of Policing
Wim Laven
The Catholic Church Fails Sexual Abuse Victims
Kevin Cashman
One Year After Hurricane Maria: Employment in Puerto Rico is Down by 26,000
Dr. Hakim Young
Nonviolent Afghans Bring a Breath of Fresh Air
Karl Grossman
Irving Like vs. Big Nuke
Dan Corjescu
The New Politics of Climate Change
John Carter
The Plight of the Pyrenees: the Abandoned Guard Dogs of the West
Ted Rall
Brett Kavanaugh and the Politics of Emotion-Shaming
Graham Peebles
Sharing is Key to a New Economic and Democratic Order
Ed Rampell
The Advocates
Louis Proyect
The Education Business
David Yearsley
Shock-and-Awe Inside Oracle Arena
FacebookTwitterGoogle+RedditEmail