The problem of alienation is far from solved. Only one in three American workers say they feel “engaged” with their work. But in terms of material conditions of life, across the broad sweep of economic history, capitalism has delivered pretty well for most workers. Wages rose, hours fell, life (mostly) got better. Global poverty halved. As an economic system, socialism fell from grace, and, by and large, and in spite of recent rhetoric on the American political left, continues to fall.
There are many variants of capitalism, of course, from welfarist Scandinavia through Anglo-Saxon laissez-faire to Chinese market statism. But the trend seemed pretty clear. Capitalism works. And it works, most importantly, for workers.
But now? Over the last decade, the logic of markets and the workings of capitalism have been intensely questioned and challenged, both from the populist right and the socialist left. Young Americans and supporters of the Democratic Party are now more enthusiastic about socialism than capitalism (by 6% and 10% margins, respectively). Leading candidates now proudly describe themselves as socialists – unthinkable just a few years ago. (Whether they are in fact socialists by any sensible definition of the term is of course another matter.)
Future history books may begin the chapter on the current era with the events of 15 September 2008, when Lehman Brothers filed for the biggest bankruptcy in history, with $639bn in assets and $619bn in debt. Or perhaps the starting date will be three years later, when on 17 September 2011, two years after the official end of the recession, hundreds of protesters gathered in Manhattan’s Zuccoti Park to “Occupy Wall Street”. Or 8 November 2016, when Donald Trump ascended to the highest office in the land. It all depends whether, in hindsight, our crisis comes to be seen as economic or political in nature.
Certainly, the Great Recession was a massive economic shock. Nine million jobs were lost and 4m homes foreclosed on. Average household income dropped by 7%. Black families saw their already limited wealth stock cut almost in half. And the recovery has been painfully slow, in what some economists have labeled a “zombie economy”.
But the Great Recession also shone a light on trends long predating the downturn, not least in terms of stagnant wage growth for so many workers. By comparison with the postwar years, economic growth has been slow for the last few decades. At the same time, the transmission mechanism linking economic growth to the wages of workers appears to have broken. The share of income going to workers has dropped sharply, from 64% in 1974 to 57% in 2017.
In the last few years, as the zombie gradually wakes up, household incomes and wages have begun to nudge upwards – but families are still having to work more hours to get the income they need. Women are working more, and earning more (though the pay gap remains). But as men work less, and earn less, many families are simply standing still in economic terms. Since 1979, the median male wage in the US has dropped by 1.4% for whites– and by 9% and 8% for black and Hispanic men, respectively. Workers at the top of the earnings and education distribution have seen their paychecks continue to fatten: not so on the middle and bottom rungs of the labor market. Wage growth remains torpid in the middle of the distribution.
At the same time, the volatility of incomes at the bottom of the distribution has grown, in part because of shifts towards the so-called “gig economy”, intrinsically episodic, and in part because of the rise of unpredictable schedules. Most American workers are still paid by the hour, and half of them have no formal control over their schedules. Two in five hourly-paid workers aged between 26 and 32 know their schedules less than a week in advance. Hard to arrange childcare on that notice. Many American workers are fighting, like the trade unions of old, on two fronts: for money, and for time.
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