A Social Compact for Working People

For decades, America maintained and honored an implicit social compact with its working people. Federal and state governments, employers, and labor unions all helped working people join the mainstream and enjoy a middle-class way of life. They could live the American dream of owning a home and a car, sending their kids to college, taking an occasional vacation, and retiring in dignity with reasonable economic comfort.

But in recent years the federal government has been rewriting the social compact in ways that threaten working people. More than one in four working families earn wages so low they can barely survive financially, according to “Working Hard, Falling Short,” a report issued last month by the Annie E. Casey, Ford, and Rockefeller Foundations.

It is time that nonprofit groups, supported by the nation’s foundations and big philanthropists, mobilize a new movement to help those families and to make America work for working people. In addition to focusing on single issues like housing or hunger, nonprofit groups urgently need to concentrate on the overarching conditions holding back workers.

The activism awakened by organizations like MoveOn.org in this year’s election campaign is a sign that such a movement could indeed be mobilized. It is not enough just to provide services to the needy; nonprofit groups need to speak out loudly and advocate insistently for change.

The recent massive federal tax cuts in recent years that are tilted blatantly toward the wealthy, coupled with the costs of the war in Iraq, have created staggering long-term budget deficits that strip the federal government of its ability to do much to help working people. These days governments at every level are virtually paralyzed fiscally.

Lack of affordable housing and health insurance, costly college tuition, evaporating pensions, stagnant wages, and economic insecurity are among the key problems caused by these government policies, as well as decisions made by many of the nation’s major employers. Among the most distressing developments:

Economic insecurity. Severe economic insecurity threatens more Americans than ever; a catastrophic expense or the loss of a job has become harder to recover from in recent decades, as Jacob Hacker, a Yale University political scientist, has observed. Employee benefits, such as health insurance and pensions, have been on the chopping block. Fourteen million more Americans lack health insurance today than two decades ago. The number of uninsured rose to 45 million last year, up by 1.4 million from the year before.

Meanwhile employers increasingly rely on part-time, contingent, and contract workers — all of whom enjoy precious little security.

Earnings are under siege. Today’s minimum wage of $5.15 per hour is worth 30 percent less than it was in 1968, adjusted for inflation.

More than 28 million people, about a quarter of the work force age 18 to 64, earn less than $9.04 per hour. That translates into full-time salaries of $18,800 per year, which is slightly less than the federal poverty line for a family of four.

Nor are many of the new jobs being created much of a prize. The jobs that were lost from 2001 to 2003 will be replaced by jobs paying 20 percent less, according to the U.S. Conference of Mayors.

A disproportionate amount of new hiring is concentrated in industries that depend largely on low-wage workers. Such industries employ 22 percent of the work force yet accounted for 44 percent of new hires from March to June of this year.

Jobs with restaurants, temporary hiring agencies, and building services accounted for 25 percent of growth in nonfarm jobs from March to June of this year even though they are only about 10 percent of all jobs.

Pretty much the same is true of jobs in clothing stores, courier services, hotels, grocery stores, trucking businesses, hospitals, and many other industries.

Housing. The gulf between family income and rent is widening. While incomes have stagnated or worse, housing costs have nearly tripled since 1979. That has triggered a surge in what is called the working homeless. Charities that work with such people can see the problem firsthand. In many cities, the demand for shelter has risen especially quickly in the last several years.

Higher education. One of America’s noblest attributes is its historic commitment to make higher education widely accessible and affordable. While a college degree doesn’t guarantee the good life, it is a time-tested passport to success.

Lowly economic status isn’t supposed to be an obstacle to higher education. Yet soaring college costs are pricing talented young people from working-class families out of colleges and universities, even the state institutions. Tuition rose 47 percent at public four-year colleges in the past decade and 42 percent at private colleges. Last year alone the cost of public colleges jumped 14 percent.

The proportion of low-income youngsters who earn college degrees stood at less than 5 percent in 2001. The ratio has barely budged in 30 years. Only 5 percent of high-achieving students from high-income families pass up college. But for high achievers from low-income families, the loss ratio is five times that, a shocking 25 percent.

While higher education isn’t for everyone, it is a colossal waste of human potential for so many students to lose out on educational opportunities, and it mocks everything America stands for to let cost get in the way.

Some of these developments are the results of cyclical phenomena that ebb and flow with short-term economic boom-bust cycles. But most reflect a secular shift in the way our economy works and where working people fit into the overall scheme of things.

Politicians have been talking a lot about the dawn of an ownership society where individuals play a much greater role, for instance, in their own health care and retirement. But what they really mean is that if you have a problem, you own it, and government, employers, and society will start to shed their shared responsibility for the common good.

That mind-set is what a nonprofit movement on behalf of America’s working people will need to change. More important, the movement will need to make it clear that real change costs a lot of money and could be unpopular with many of the people whom elected politicians depend on for support.

The solutions will involve big-ticket items like raising the minimum wage or cutting employee portions of payroll taxes, providing health coverage for the uninsured, increasing tuition assistance, perhaps even limiting the deluge of illegal immigrants that undercuts wage levels.

Mounting a movement on behalf of working people will not be easy. The steep federal deficits will lead opponents to argue that the policy prescriptions simply aren’t affordable. Well-organized conservatives will rail against big government even as they run up even more crippling deficits. What’s more, the traditional methods of progressive movements, like marches and news conferences, are tired and appear not to move people much any more.

Another obstacle is the reality that class-based appeals seldom resonate in American politics. Notice how the working poor themselves have don’t anyone to call attention to their plight. Only 40 percent of them vote, versus 74 percent of what might be called the investor class.

A movement to help the working poor won’t blossom overnight.

The conservative movement that is so potent today took 40 years to gestate and grab hold after Barry Goldwater’s crushing defeat in the presidential election of 1964. It took bushels of money donated by millionaires and generated by evangelical television stations. It took a coherent set of first principles that were propelled forward by a cunning combination of military-style war-gaming and Madison Avenue marketing. It took grass-roots organizing in living rooms and kitchens and churches. It took like-minded news-media outlets and publications. And it took a resolute and, as witnessed this year, ruthless determination to win.

Now is the time for a new vision and a new movement to reawaken our sense of shared responsibility and to cure America’s acute case of conscience deficit disorder.

Hugh B. Price co-chairs the Nonprofit and Philanthropy Practice Group in the New York office of the law firm Piper Rudnick. He previously served as chief executive of the National Urban League.