WV Center on Budget and Policy > Press > OpEds > Rick Wilson: Working for Peanuts

Rick Wilson: Working for Peanuts

October 12, 2013

Charleston Gazette – West Virginia is going through some challenging economic times. However, I’m convinced that the changes that lie ahead will be less traumatic than some that have already occurred in the lives of most West Virginians. Read

Recently, I worked with folks from the West Virginia Center on Budget and Policy on The State of Working West Virginia. Each year, we look at a different aspect of how working families are faring. This year’s version looked at how job quality has changed over time.

The title tells it all: From Weirton Steel to Wal-Mart. The former was once our top private employer; the latter is today. And thereby hangs a tale. The full version is available online at wvpolicy.org but here are some key findings:

In the late 1970s, West Virginia outperformed the nation on several indicators, including productivity, average wages, pensions and employer-provided health care. While there were pockets of severe poverty, many working families enjoyed a solid middle class life.

All that came to a crashing end in the 1980s from a series of blows we still haven’t recovered from.

While our mines increased production from 112 to 151 million tons over that decade, employment dropped by more than half as new technologies such as long-wall mining reduced the need for workers. Coal jobs dropped from nearly 63,000 in 1978 to 23,000 in 1989.

Competition from foreign steel producers, often subsidized by their governments and made under wretched conditions not only hurt firms like Weirton and Wheeling-Pittsburgh, they also devastated state metallurgical coal production.

If there ever was a war on coal miners, it took place in the 1980s. And the miners lost.

Manufacturing jobs declined by over 1/3 between 1970 and 1994, with most of that drop occurring in the 1980s, a decline that has continued. In 1979, there were over 233,000 goods-producing jobs, a number that dropped to 118,000 by 2012. Service sector jobs increased from 65 to 85 percent of jobs in the same period.

During the Great Depression, New Deal jobs and relief programs helped people weather the storm. Poverty programs were even expanded in the more prosperous decades of the 1960s and 1970s. That didn’t happen in the 1980s. President Reagan’s priorities included tax cuts, corporate deregulation, increased military spending, and hostility to organized labor.

As economist Dean Baker put it, these priorities “had the effect of weakening the bargaining power of workers in the middle and at the bottom of the wage distribution, thereby improving the relative situation of those at the top. The cumulative effect of the new policies was a massive upward redistribution of income.” Inequality began to grow.

In the new era symbolized by the retail giant, firms such as Wal-Mart undoubtedly provided low prices for things like food, clothing and household goods. However, the shares of expenditures for these items has declined over time, while the cost of things you can’t get from big box retail — housing, health care, higher education and transportation — has gone up. As the Economic Policy Institute put it: “The real pressures on family income are coming from items that can’t be bought at Wal-Mart. These products and services can, however, be bought with higher wages.”

Low prices can be expensive. Weirton Steel workers earned more in wages and benefits in 1979 dollars than the average Wal-Mart worker earns in 2013 dollars. Many workers in such establishments earn wages so low that they have to depend on public programs like SNAP (food stamps), the Earned Income Tax Credit, child-care subsidies, free or reduced school meals for children, housing assistance, Medicaid, CHIP, energy assistance and other programs just to get by.

The scandal isn’t that so many people rely on these programs; rather it is that they need them to start with. Such programs are only partial compensation for declining job quality. As is often the case, the costs of low-wage jobs are socialized while the profits remain private.

People have coped with these seismic changes in many ways, positive and negative. Many people left the state. Our population peaked at over 2 million in 1950. According to one estimate, it would have been over 2,6 million with the normal increase of population if no one had moved in or out. The current census estimate is 1,855,000.

Some people left the workforce, because of disability or seeking early retirement. Others worked several jobs or lived in households where more women entered the labor force. This can be a positive step but it can lead to what has been called a “two-income trap,” in which both adult earners are working full time but still not making ends meet. They are then worse off than single-income families of more prosperous times.

On the positive side, over this period West Virginians have increased their levels of educational attainment. On the other hand, many — including new college graduates — have higher levels of debt.

Finally, some people have coped with a changing landscape in more negative ways, by participation in the underground or informal economy, including illegal activities. It is probably no accident that some of the hardest hit counties have major substance abuse problems — or that our prison population grew dramatically in the years in which good jobs declined.

That’s the bad news. The good news is that our state’s economy once supported a thriving middle class and may do so again. In fact, we have recently taken several positive steps in that direction. In this year alone, state leaders have acted to expand health coverage, combat substance abuse and prison overcrowding, expand early childhood education, and improve child nutrition.

There is also a new ground game as ordinary citizens across the state are building people power to work for a better future through the Our Children Our Future campaign to end child poverty in West Virginia.

There is a lot more to be done to broaden the middle and raise the bottom. Given the uncertainties of economies based on resource extraction, we should learn from our past and create a Future Fund from severance taxes. This should be invested and the interest from the fund could provide a permanent source of wealth from non-renewable resources.

We need to maintain and improve investments in physical and human infrastructure — including ensuring the affordability of higher and vocational education; protect the quality of life, including our natural beauty; and embrace economic diversity and sustainability.

Finally, we need to rebuild our sense of community. As Harvard sociologist Robert Putnam, author of “Bowling Alone,” recently put it, “The crumbling of the American dream is a purple problem, obscured by solely red or solely blue lenses. Its economic and cultural roots are entangled, a mixture of government, private sector, community and personal failings. But the deepest root is our radically reduced sense of ‘we.'”

To thrive in an uncertain future, we need to realize that democracy isn’t a spectator sport. It is — or needs to become — a verb.