Changing How America Works

[Dardedar]

Changing How America Works
By Andy Stern
AlterNet.org

Thursday 02 November 2006

Something's wrong when only the rich are getting richer, and average folks are feeling the squeeze. The answer isn't more education, or simply electing better leaders. We need widespread change.

AlterNet Editor's Note: On October 18th, SEIU leader Andy Stern was in the Bay Area on a book tour,... The following is a transcript of Stern's talk.

Ercilia Sandoval is one of the people in this country who did exactly what she was supposed to do. She worked hard every day sweeping floors, cleaning toilets, and taking out the garbage in some of Houston's most elegant office buildings. She is willing to work hard to raise her two girls. She tried to save what she could, but on a little more than $5 an hour, it's hard to find enough money to pay the bills.

Then she was diagnosed with breast cancer. Ercilia was already a fighter and a leader among her co-workers, but she was probably going to die. And her problem was that she was having problems with her health over a long period of time, but she couldn't afford to go to the doctor, couldn't afford to get healthcare and is now worried about what this means for her kids, and her work is dedicated to all the mothers in Houston, Texas, who are janitors, who she never wants to have live through the same thing. She happens to be on the Glamour magazine website right now, she's up for nomination as one of the five women of the year for Glamour.

I wrote this book because people like Ercilia should not work a day and be poor in the richest country on the face of the Earth, and certainly not to be dying in this country because they're poor. I wrote this book because I love this country, and I think America is a gift. Its greatest gift is this: people have come here from all over the world, and all they expected to do was work hard. And what they hoped was that their work would be rewarded. What they dreamed about was that their kids were going to do better than they were. That was the American Dream. And despite a civil war, two world wars, recessions, depressions, the American Dream has survived. Until now.

Fifty-two percent of all parents say that their kids are going to be worse off than they are. And the facts now are beginning to bear that out. That's not the America I want; I don't think that's the America we all need. I wrote this book because I think there are answers all around us. But in order to get to the answers, we have to understand the context of the discussion.

This is not our fathers' and grandfathers' economy. We've gone from an economy that's 9-to-5 to 24/7. We're living through the third economic revolution in the history of the world: the first was the agricultural revolution, which took 3,000 years; second was the industrial revolution, which took 300 years; this revolution is going to take 30 years. As we move from a national to an international economy, from muscle- to mind-work, no generation of people has ever witnessed so much change in a single lifetime.

This revolution is televised, it's Googlized, it's digitized, it's in your face, on your screen, 24/7. It is relentless and it's unending and is far from over. But it's not our fathers' and grandfathers' economy. The amount of transistors that were produced this year in the world was greater than the number of grains of rice that were grown. The Furby - that kids' toy - has four times the computing power of the Apollo spaceship that landed on the Moon. The world is going to send 84 billion emails today. In the late 1980s, there was no such thing as email.

We are as far today from the New Deal, as the New Deal was from the Civil War. I'm sure Roosevelt admired Lincoln, but he built an economy for 1935. And we need to build an economy for the 21st Century. Thomas Friedman is partially right, the world is flat - we now have a much more integrated global economy, particularly as we digitize things all around the world.

We now understand the facts about blue-collar jobs. Those that have white-collar jobs are increasingly going to see them go overseas by 2008. In China, America has its first real economic competitor. Last year, half of the concrete that was poured in the world was poured in China. America has 65,000 Intel Science Fair finalists last year, a record number. China had a million.

If you go to Beijing, where some of us have been ... if you think Washington's a cool place to be with one beltway, Beijing has six beltways. And while we were there last time, they announced they were going to build 110 hotels in Beijing by 2008. China owns a trillion dollars worth of the foreign currency, and they're not just neutral bankers when it comes to policy. We have real competition.

Companies - not countries - are making the rules in the global economy. Of the hundred largest economies in the world, 52 are companies, and only 48 are countries. The sales of Wal-Mart are greater than the GDP of Ireland, or Singapore, or Venezuela. The companies are beginning to put pressure on the countries like France about their employment policies. Companies, not countries, - global trade, global finance, global companies. We've got to create global regulation and global government instead of allowing companies to make the rules.

We've now seen employers and employees getting a divorce. We're separated and getting divorced. The "one job in a lifetime" economy that I grew up in, where people went to work in a mine or a mill or a factory or driving a truck, and you worked there for your whole life, and then you got a gold watch from IBM and you went home, is over. My son is 20 years old, and will have 9-12 jobs by the time he's 35. Only one-third of the companies that exist right now will be economically viable in 25 years, and 25 percent of the America workforce today is contingent - they have no full-time employer.

When you think about constructing an economy, we need to think about - and I talk about them in the book - all of those factors and what they mean. And then we need to understand what the greatest thing we can see now going on in our economy is, as a result of those changes.

There are two major themes: one is we see growing inequality in America. John F. Kennedy said, "A rising tide lifts all boats," but right now we're only raising the luxury liners. The rest of the boats are on pretty rocky water, and wondering if they're going to be able to survive. Seven out of ten middle-income Americans say that they live paycheck-to-paycheck. Last year, America had negative savings for the first time since the Great Depression. Most Americans can't live through one medical emergency, which averages $3,300. More women went bankrupt than graduated college in 2005 and for the fifth straight year, American workers didn't get a raise.

Alan Greenspan, my new revolutionary hero, said that the gap between the rich and the rest of the population was so growing so wide and so fast that it could wreck democratic capitalism. Warren Buffett says the market's not working for poor people.

We now live in a time in America where the rich are richer than any time in history. There is more money going into corporate profit than any time in history, and less money going into wages. So America is growing apart, not growing together. It's not about growth, it's about distribution. It's about how we share the wealth. This is not Rwanda, this is not Bosnia. This is the richest country on Earth. We are not without resources: we have eight of the top ten research institutions in the world, we've won the Nobel Prize for science and economics, and yet we can't seem to figure out that America doesn't have a plan.

Clearly people are anxious. They're worried about their kids, they're worried about their future, and they have every reason for it. We have two parties that don't seem to get it. We can talk more about that, but clearly, people say, "What's the matter with Kansas?" That book says, "Why are workers voting against their interest?" And it says, here's the problem: People perceive the Democratic party as chardonnay-sipping, latte-drinking, Volvo-driving, Harvard- and Yale-educated liberals.

I'd say that I agree, with everything but the "perceive." Because that, too much, reflects the Democratic party. And I write about the 2004 convention, in which you had the opening night for Hillary and Bill Clinton's reception, which they didn't know, hosted by a person who broke our union. We had at the box, at the time John Kerry introduced himself to the world, the moment where George Bush or Bill Clinton put their son or daughter up, or a soldier, or firefighter or someone from 9/11, who did Democrats put in the box with John Kerry? None other than Bob Rubin. Not necessarily the most attractive person for middle-class working Americans in Ohio trying to figure out, is this guy on my side or not?

We have a Democratic party that doesn't get it, we certainly have a Republican party that wants to redistribute wealth, but they just want to redistribute it up, not down with America.

What are we going to do about it? Three things we shouldn't do.

One is that we shouldn't count on the market. If we've proven anything, we've proven that the market is not going to work. We actually conducted for 20 years with the IMF an experiment in South America, seeing if the market would work. And we ended up with even greater disparity of wealth in South America than we have in the US, although we're getting closer - and every economist now says the market is not the answer. As growth goes up and productivity goes up, wages are supposed to go up. They haven't. Five years in a row, and there's no end in sight.

Two, we're not going to solve this by doing what George Bush says. He likes to say, "well, average wages are going up in America" when the problem is ... here's the problem. Imagine three nurses sitting together in a nursing station. Two of them make $50,000, and one of them makes $80,000. The average wage is $60,000. One of the nurse gets a call button, and they go down the hall, and Ray Irani, the CEO of Occidental Petroleum sits down. Now the average wage is $21,111,000 - and there wasn't one nurse that got a raise. [Laughter, applause.] But it is true that the average wage is now $21 million, so we should not measure the wrong thing in America.

The last thing I say, because I think it's important and I don't want to be misunderstood, is that education is not going to be the answer to our economic crisis. It is clearly an answer to every single individual - they should get every piece of education, we should pay for it, give our kids the skills, the training, the college education. But here's the problem: only 1 percent more of all jobs by 2012 will require a college education. So if everybody went to college, and only 1 percent more require a college education, that's going to be a problem. Only eight of the 30 fastest-growing jobs in America require a college education.

On top of all of that, college-educated kids in the last five years have lost the same amount of money in wages as blue-collar people. So if college education was the answer to America's problems - yes, we need it, but we should not be fooled by people that say, "Well, if everybody just gets an education, then America will redistribute its wealth." It will not do that. So what's the answer?

The horse-and-buggy healthcare system is over, it's a relic of the industrial economy. We cannot build an American economy and be the only country on Earth that puts the price of healthcare on the cost of our products, and then tries to compete with every other country in the world.

Toyota was just thinking about building a plant in the US. They went to every state, they begged them, they gave them concessions to build the plant in the United States, and then they realized, "We can go to Ontario, and build the same plan, and have no healthcare costs." No healthcare costs! They could save more money, so that's where they took the plant. We cannot compete in the global economy and be the only country that puts the price of healthcare on the cost our products.

We need a new universal system quality affordable healthcare for every American. [Applause.] Some people say it has to be Canadian or Scandinavian, I'll take any system where everyone's covered, we get everyone in the system and then we can fix it up. But I don't want Ercilia Sandoval waiting any longer to go to the doctor because she can't get any healthcare.

Also, we have a retirement system in the private sector that's not going work well. We're down to 18 percent of all private sector workers having any kind of defined-benefit pension plan. Only 50 percent of private sector workers have anything but Social Security. The average IRA is only $23,000, and I don't think anybody's going to retire on that. The saddest part is that people are now saying that over 35 percent of Americans are now going to work until they die, and they can't figure out any other plan.

the rest...

[Barbara Fitzpatrick]

Andy makes a good speech and most of the time he has a point, but like anybody trying to persuade people to do something, he slants stuff his way. Toyota HAS plants in the U.S. I'm sure they also have plants in Canada, but healthcare isn't going to be the reason. Toyota workers are mostly not unionized, so they wouldn't get healthcare anyway. (Toyota also keeps a saner ratio of worker to CEO salary that Andy should have been mentioning.) Also, unless you are getting a mega salary, company retirement plans are not as good as social security - especially considering what Andy noted earlier - a 20-year-old today can expect to work for 9 different companies in the next 15 years (company retirement plans don't go with you from company to company & if you didn't work long enough at any one of them to "vest" all you get back is what you put in - no interest even.

[Dardedar]

Toyota HAS plants in the U.S.

DAR
Yes, they make ten Toyota models in the US.

I'm sure they also have plants in Canada, but healthcare isn't going to be the reason.

DAR
They have at least two and I don't doubt that healthcare IS a big part of the reason. Consider this article from the CBC:

***
Toyota to build 100,000 vehicles per year in Woodstock, Ont., starting 2008

12:09 AM EST Nov 04

New President of Toyota Motor Corp. Katsuaki Watanabe said that the automaker plans to build a new plant in Canada. (AP/Shizuo Kambayashi)

STEVE ERWIN

WOODSTOCK, Ont. (CP) - Ontario workers are well-trained.

That simple explanation was cited as a main reason why Toyota turned its back on hundreds of millions of dollars in subsidies offered from several American states in favour of building a second Ontario plant.

Industry experts say Ontarians are easier and cheaper to train - helping make it more cost-efficient to train workers when the new Woodstock plant opens in 2008, 40 kilometres away from its skilled workforce in Cambridge.

"The level of the workforce in general is so high that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the southeastern United States," said Gerry Fedchun, president of the Automotive Parts Manufacturers' Association, whose members will see increased business with the new plant.

Acknowledging it was the "worst-kept secret" throughout Ontario's automotive industry, Toyota confirmed months of speculation Thursday by announcing plans to build a 1,300-worker factory in the southwestern Ontario city.

"Welcome to Woodstock - that's something I've been waiting a long time to say," Ray Tanguay, president of Toyota Motor Manufacturing Canada, told hundreds gathered at a high school gymnasium.

The plant will produce the RAV-4, dubbed by some as a "mini sport-utility vehicle" that Toyota currently makes only in Japan. It plans to build 100,000 vehicles annually.

The factory will cost $800 million to build, with the federal and provincial governments kicking in $125 million of that to help cover research, training and infrastructure costs.

Several U.S. states were reportedly prepared to offer more than double that amount of subsidy. But Fedchun said much of that extra money would have been eaten away by higher training costs than are necessary for the Woodstock project.

He said Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment.

"The educational level and the skill level of the people down there is so much lower than it is in Ontario," Fedchun said.

In addition to lower training costs, Canadian workers are also $4 to $5 cheaper to employ partly thanks to the taxpayer-funded health-care system in Canada, said federal Industry Minister David Emmerson.

"Most people don't think of our health-care system as being a competitive advantage," he said.
...

LINK

BARB
Toyota workers are mostly not unionized, so they wouldn't get healthcare anyway.

DAR
I am quite certain you are mistaken. Americans often get their health care through non-union employment. I had a health plan when I worked at Sigler Music (a local Music store) from 1987-1992. They had probably less than 20 employees. The Canadians are cheaper to employ because healthcare is covered already and has a far lower net cost to society because of single payer efficiency. No doubt Toyota does have a health plan of some sort for their US employees and the cost is very substantial. As the CEO of GM has often pointed out, GM spends more on healthcare for it's employees than it does on steel for it's vehicles. I think about $600-$800 per vehicle.

D.

[Barbara Fitzpatrick]

Darrel - your own post shows education/trainability is the number one primary reason Toyota went to Canada. Healthcare is a perk - a side issue. (Seigler is a national chain. Most national chains, especially ones headquartered in union states, offer some form of healthcare. Whether or not it is a plan where the employer pays any part is another matter.) Both healthcare and education in America are great for the wealthy and range from sort of OK to sucky for the rest. This is what Dems like B. Clinton are talking about when they say education is the answer. It isn't the complete answer, of course, but Toyota deciding to go to Canada shows that education is a significant part of the solution. We HAVE to get off this NCLB b.s. - it does nothing but "teach the test" and leads to nothing but the best generation of cheaters America has ever seen. (Yes, addressing our healthcare issues is another piece of the pie, but not that significant relative to education. Detroit says American automakers are going under because of cost of healthcare, but reality is they aren't making cars that sell well enough to pay for factory changes to make better cars, much less healthcare.) Should the U.S. stop subsidizing the petroleum industry, we'll find a whole lot of manufacturers will "come home" since it will be less expensive to build a product in the country of proposed sale - but only if we have the educated workforce who can do the jobs.

[Dardedar]

Darrel - your own post shows education/trainability is the number one primary reason Toyota went to Canada. Healthcare is a perk - a side issue.

DAR
$4 to $5 per hour per employee saved on medical expense is a pretty darn good perk. My main disagreement was when you said:

"Toyota workers are mostly not unionized, so they wouldn't get healthcare anyway."

They do get healthcare.

BARB
(Seigler is a national chain. Most national chains, especially ones headquartered in union states, offer some form of healthcare.

DAR
Sigler Music is not a national chain. Mr. Sigler used to live around here (maybe Ft. Smith). When I started in 1987 they had just opened their second little store in Springdale (main store is in Fort Smith). As I said, they had maybe 20 employee's total. Probably 15 and that is counting everybody. I think they have recently added a store in Little Rock. They might have tried one in Russellville.

Detroit says American automakers are going under because of cost of healthcare, but reality is they aren't making cars that sell well enough to pay for factory changes to make better cars, much less healthcare.)

DAR
I think the cost of healthcare is giving American companies a very big hit. Watch for a movie from Michael Moore on this topic next year (or certainly before the '08 election). Should be a doosey.

D.

[Barbara Fitzpatrick]

OK - the music store I was thinking of in San Francisco may not have been named Siegler (I haven't lived there since 1983 and my memory is a bit dim). Small, usually non-corporate, businesses who try to do right by their employees are a separate category. Those are the ones who truly get slammed by our current healthcare situation, because even group insurance to small businesses is horrendous. I know I sure couldn't afford it when I was a small business owner (end of '83 through early '85) and it's a whole lot worse now. When I said Toyota people weren't getting insurance, I meant paid for by the company. Chartwells people "get insurance" as in the corporation offers it to its employees but the company doesn't pay any part of it, so many employees opt not to get it (as I did when I worked for Chartwells). We make up the group the Rs point to when they try to say the 46 million uninsured people in America are uninsured by choice.

The cost of healthcare is a problem for ANYBODY who pays for it. Corporations and individuals are both getting the shaft - who's getting the worst depends on what percentage is paid by whom - and what percentage of income that premium is, no matter who pays for it. I can't afford it, so I am uninsured, even though the University offers insurance and I think actually picks up a piece of it (I didn't get any further than looking at the premium). Excess profits and consumer fraud is not restricted to the petrochemical industry.

Since America not longer puts much money into training/education, preferring high turnover until they hit it lucky, they try to find any reason but that for why someone would go elsewhere with their factories. Yes, we need to do something about healthcare - but we need to do much more, and sooner, about education.