Stagnant wages are the country’s biggest economic trouble spot, said former Labor Secretary Robert Reich, who will speak in South Florida on Thursday.
BY SCOTT ANDRON
To hear former U.S. Labor Secretary Robert Reich tell it, huge as the current recession is, there’s a bigger problem facing America’s middle class: wages that have seen little real growth for decades.
Reich, secretary of labor under President Bill Clinton and a popular intellectual and speaker, will talk about both problems Thursday at a private fundraiser for the Jewish Federation of Greater Miami.
”I wish I could be upbeat,” he said in a telephone interview last week. “You try to look for every silver lining you can find. This is going to be a very deep recession.”
Reich, a professor at the University of California at Berkeley, said the stimulus package making its way through Congress will help turn things around, but it may prove insufficient.
”My concern is that the stimulus is not large enough” to make up for the size of the shrinkage the economy has been undergoing, especially in consumer spending. ”Consumers are going on strike,” he said. “. . . That’s why government has to step up to the plate. Government is a purchaser of last resort when consumers have stopped buying.”
Reich said reduced consumer spending is a symptom of a broader problem: The relative stagnation of middle-class wages. Globalization and technological advances have destroyed a host of jobs, from gas-station attendants to bank tellers, Reich said. But the jobs that have seen growth don’t pay so well.
“What all this means is median wages have not increased very much, adjusting for inflation, for many decades.”
In part to make up for this, more women entered the workforce. Then everyone started working longer hours. Then people increased borrowing.
”But when the housing bubble burst, many middle-class people had to cut spending,” he said. “The problem is if the middle class stops spending . . . we have a problem.”
Reich said he will talk about possible ways to reverse the trend.
One move he supports: the proposed Employee Free Choice Act, which would allow workers to form unions by collecting signed union cards instead of holding an election.
But while this provision is the most talked-about in the proposed law, Reich said the more important feature is increased penalties for employers who break existing labor laws — for instance, by harassing or firing union supporters.
”The current penalty is the equivalent of a slap on the wrist,” he said. “Surveys show a lot of workers would like to have a union if they could have one, but most workers are fearful of trying to form one for fear of harassment.”