Trumka: Time for a new economy

Remarks by Richard L. Trumka, president of the AFL-CIO, National Press Club, Washington, D.C.

January 11, 2010

Good morning and thank you, Donna (Lienwand). I am delighted to be here at the National Press Club. I want to thank the officers of the Press Club for the invitation to be with you today, especially President Lienwand and speakers’ committee member Bob Carden.

Ten days into the new decade, and one year into the Obama Administration, our nation remains poised between the failed policies of the past and our hopes for a better future. This is a moment that cries out for political courage – but it is not much in evidence.

I spent the first week of this year traveling on the west coast. In San Francisco, I was arrested with low-wage hotel workers fighting to protect their health care and pensions from leveraged buyouts gone bad. In Los Angeles and San Diego, I talked with working Americans moved to tears by foreclosure and unemployment, outsourcing and benefit cuts.

Everywhere I went, people asked me, why do so many of the people we elect seem to care only about Wall Street? Why is helping banks a matter of urgency, but unemployment is something we just have to live with? Why don’t we make anything in America anymore? And why is it so hard to pass a health care bill that guarantees Americans healthy lives instead of guaranteeing insurance companies healthy profits?

As I travelled from city to city, I heard a new sense of resignation from middle class Americans, people laid off for the first time in their lives asking, “What did I do wrong?”

I came away shaken by the sense that the very things that make America great are in danger. What makes us unique among nations is this: In America, working people are the middle class. We built our middle class in the 20th century through hard work, struggle and visionary political leadership. But a generation of destructive, greed-driven economic policies has eroded that progress and now threatens our very identity as a nation.

Today, on every coast and in between, working women and men are fighting to join the middle class and to protect and rebuild it. We crave political leadership ready to fight for the kind of America we want to leave to our children and against the forces of greed that brought us to this moment. But instead we hear a resurgence of complacency and political paralysis. Too many people in Washington seem to think that now that we have bailed out the banks, everything will be okay.

In 2010, our elected leaders must choose between continuing the policies of the past or striking out on a new economic course for America-a course that will reverse the damaging trend toward greater inequality that is crippling our nation.

At this moment, the voices of America’s working women and men must be heard in Washington-not the voices of bankers and speculators for whom it always seems to be the best of times, but the voices of those for whom the New Year brings pink slips and givebacks, hollowed-out health care, foreclosures and pension freezes- the roll call of an economy that long ago stopped working for most of us.

Today I want to talk to you about the labor movement’s vision for our nation.

Working people want an American economy that works for them-that creates good jobs, where wealth is fairly shared, and where the economic life of our nation is about solving problems like the threat of climate change rather than creating problems like the foreclosure crisis. We know that growing inequality undermines our ability to grow as a nation – by squandering the talents and the contributions of our people and consigning entire communities to stagnation and failure.

If we are going to make our vision real, we must challenge our political leaders, and we must also challenge ourselves and our movement.

Workers formed the labor movement as an expression of our lives- a chain of responsibility and solidarity, making millions of people here in America and around the world into agents of social change – able to accomplish much more together than as isolated individuals. That movement gives voice to the hopes, values and interests of working people every day. But despite our best efforts, we have endured a generation of stagnant wages and collapsing benefits-a generation where the labor movement has been much more about defense than about offense, where our horizons are shrinking rather than growing.

But the future of the labor movement depends on moving forward-on innovating and changing the way we work, on being open to all working people and giving voice to all workers, even when our laws and employers seek to divide us from each other. And that is something we are working on every day.

The AFL-CIO is building new ways for working people to organize themselves, and new models for collective bargaining. We have created Working America, a 3 million member community-based union growing in working class neighborhoods-that is one of the signal accomplishments of my predecessor John Sweeney, who I’m so happy is here today. 

We are very proud of our alliance with the workers’ center movement that links the unions of the AFL-CIO with hundreds of grassroots organizations. We are also working with community allies to strengthen the voice and bargaining power of low-wage workers in Los Angeles’ car washes – some of the worst-paid and worst-treated workers in this country.

Next week, AFL-CIO Executive Vice President Arlene Holt Baker will lead the labor movement’s commemoration of the 50th anniversary of the lunch counter sit-ins in Greensboro, North Carolina – continuing the great work she has done over so many years on behalf of the most vulnerable in our society. Not far from Greensboro, we have been working with unemployed African American day laborers and their workers’ center, desperately trying to keep alive the dream launched in those sit-ins.

In San Diego last week, I visited a pre-apprenticeship program formed by the local labor movement to create career paths for at-risk youth. In Los Angeles, I saw a remarkable community-based labor-management training program created by the Electrical Workers that is focused on green jobs. These programs demonstrate the tremendous benefits that are possible when labor and business come together to solve problems jointly.

I met people who had been homeless who were about to become journeymen electricians. A young man named Nakayah said to me, “The union gave me a chance to go from no life to the hope for a middle-class life. It didn’t just teach me to get a job, it taught me how to be a man.”

As I talked to hotel workers-members of Unite Here, many of them immigrants-on strike to keep hotel jobs from falling back into poverty and to union members with PhD’s fighting to prevent California’s budget catastrophe from cratering not only their jobs but the education of their state’s children, I thought of my father on strike in the coal fields when I was a boy. And I was reminded of this basic truth: A job is a good job because workers fight to make it one-it doesn’t matter if the job is in a coal mine or a classroom or a car wash. And that is why unions are needed today, more than ever.

I grew up in a small town in western Pennsylvania, and I was surrounded by the legacy of my parents and grandparents. My grandfather and my father and their fellow workers went into mines that were death traps, to work for wages that weren’t enough to buy food and clothes for their families. They and the union they built made those jobs into middle class jobs. When I went into the mine, it was a good job. A good job meant possibilities for me-possibilities that my mother moved heaven and earth to make real-that took me to Penn State and to law school and to this podium.

What is our legacy-the legacy of those of us who are shaping the world our children and grandchildren will inhabit? Is our government laying the foundations young people need? Do workplaces offer hope? Do they even offer work? Are we building a world we will be proud to hand over to our children? Are the voices of the young, of the future, being heard?

In September, I was elected President of the AFL-CIO together with Secretary Treasurer Liz Shuler and Executive Vice President Arlene Holt Baker, both of whom are here today. Liz Shuler is the youngest principal officer of the AFL-CIO in our history, and I asked her to lead a program of outreach to young workers. As part of that effort, the AFL-CIO conducted a study of young adults between the ages of 18 and 34, comparing their economic standing, attitudes and hopes with those from a similar survey conducted 10 years ago. The findings are shocking. They reveal a lost decade for young workers in America. Lower wages. Education deferred. Things are so bad that one in three of these 18-34-year-olds is currently living at home with their parents.

The desperation I heard in this survey and in the voices of proud, hard-working Americans fills me with an enormous sense of urgency, an urgency that should be shared by every elected official here in Washington and across this country.

As a country and a movement, our challenge is to build a new economy that can restore working people’s expectations and hope. If you were laid off because of what Wall Street did to our economy, it’s not your fault. A dead end job with no benefits is not the best our country can do for its citizens.

What went wrong with our economy? You could say it is as simple as we built a low-wage, high consumption economy and tried to bridge the contradiction with debt. And there’s a lot of truth in that simplicity. But if we are going to understand what is wrong in a way that will help us understand how to fix it, we need a little more detail.

A generation ago, our nation’s policymakers embarked on a campaign of radical deregulation and corporate empowerment – one that celebrated private greed over public service.

The AFL-CIO warned of the dangers of that path — trade policies that rewarded and accelerated outsourcing, financial deregulation designed to promote speculation and the dismantling of our pension and health care systems. We warned that the middle class could not survive in such an economy, that growing inequality would inevitably shrink the American pie, that we were borrowing from the rest of the world at an unsustainable pace, that busts would follow bubbles and that our country would be worse off in the end.

These policies culminated in the worst economic decade in living memory-we suffered a net loss of jobs, the housing market collapsed, real wages fell and more children fell into poverty. And the enormous growth in inequality during that decade yielded mediocre growth overall. This is not a portrait of a cyclical recession, but of a nation with profound, unaddressed structural economic problems on a long-term, downward slide.

Our structural problems pre-date the crisis that hit in 2007 and they are not going to go away by themselves in 2010.

First, we have underinvested in the foundations of our economy-including the transportation and communications infrastructure that are essential to a middle-class society and a dynamic, competitive high-wage economy.  But the most important foundation of our economy is education and training. We simply cannot continue to skimp on the quality of education we provide to all of our children and expect to lead in the global economy. Likewise, we need to provide opportunities for lifelong skills upgrading to workers – through both private and public sector initiatives.

Second, we have failed over a long period of time to create enough good jobs at home to maintain our middle class – and we have allowed corporate hacks to whittle away at workers’ bargaining power to undermine the quality of the remaining jobs.

Finally, the structural absence of good jobs means a shortage of sustainable demand to drive our economy.

We want an entirely different kind of economy. Let’s talk about what we need to do.

We must directly and immediately take on what is wrong- by creating millions of good jobs now, rebuilding our economic foundations and giving working people the freedom to form a union again and make all our jobs good jobs.

We must pass genuine health care reform and reregulate our financial system-so that finance is the servant of the real economy, and not its master; so that we have an independent Consumer Financial Protection Agency; and so that we never again take the public’s money and use it to rescue bank executives and stockholders. I’d like to commend President Obama’s leadership in insisting on a viable, strong and independent consumer protection agency – which is crucial to real financial reform.

The AFL-CIO’s five-point program will create more than 4 million jobs-extending unemployment benefits, including COBRA; expanding federal infrastructure and green jobs investments; dramatically increasing federal aid to state and local governments facing fiscal disaster; direct job creation where feasible; and finally, direct lending of TARP money to small and medium sized businesses that can’t get credit because of the financial crisis.

And we need to adopt a tax on financial speculation so that we can fund the jobs effort as the economy recovers.

Some in Washington say when it comes to jobs: Go slow-take half steps. These voices are harming millions of unemployed Americans and their families — but they are also jeopardizing our economic recovery. It is responsible to have a plan for paying for job creation over time. But it is bad economics and suicidal politics not to aggressively address the job crisis at a time of double-digit unemployment. In fact, budget deficits over the medium and long term will be worse if we allow the economy to slide into long job stagnation — unemployed workers don’t pay taxes and they don’t go shopping; businesses without customers don’t hire workers, they don’t invest and they also don’t pay taxes.

Our economy does not work without good jobs, so we must take action now to restore workers’ voices in America. The systematic silencing of American workers by denying our right to form unions is at the heart of the disappearance of good jobs in America. We must pass the Employee Free Choice Act so that workers can have the chance to turn bad jobs into good jobs, and so we can reduce the inequality which is undermining our prospects for stable economic growth. And we must do it now-not next year, not even this summer. Now.

Each of these initiatives should be rooted in a crucial alliance of the middle class and the poor. But today, as I speak to you, something different is happening with health care.

On the one hand we have the House bill, which asks the small part of our country that has prospered in the last decade-the richest of the rich-to pay a little bit more in taxes so that most Americans can have health insurance. And the House bill reins in the power of health insurers and employers by having an employer mandate and a strong public option.

But thanks to the Senate rules, the appalling irresponsibility of the Senate Republicans and the power of the wealthy among some Democrats, the Senate bill instead drives a wedge between the middle class and the poor. The bill rightly seeks to ensure that most Americans have health insurance. But instead of taxing the rich, the Senate bill taxes the middle class by taxing workers’ health plans-not just union members’ health care; most of the 31 million insured employees who would be hit by the excise tax are not union members.

The tax on benefits in the Senate bill pits working Americans who need health care for their families against working Americans struggling to keep health care for their families. This is a policy designed to benefit elites-in this case, insurers, hospitals, pharmaceutical companies and irresponsible employers, at the expense of the broader public. It’s the same tragic pattern that got us where we are today, and I can assure you the labor movement is fighting with everything we’ve got to win health care reform that is worthy of the support of working men and women.

These great struggles over health care, good jobs, the freedom to organize and financial reform are just the first steps.

Beyond the short-term jobs crisis, we must have an agenda for restoring American manufacturing-a combination of fair trade and currency policies, worker training, infrastructure investment and regional development policies targeted to help economically distressed areas. We cannot be a prosperous middle class society in a dynamic global economy without a healthy manufacturing sector.

We must have an agenda to address the daily challenges workers face on the job – to ensure safe and healthy workplaces and family-friendly work rules.

We also need comprehensive reform of our immigration policy — based on shared prosperity and fairness, not cheap labor.

And we must take on the retirement crisis. Too many employers have replaced the system of pensions we used to have with underfunded savings accounts fully exposed to everything that is wrong with Wall Street. Today, the median balance in 401K accounts is only $27,000 – nowhere near enough to fund a secure retirement. We need to return to a policy of employers sharing responsibility for retirement security with employees, while also bolstering and strengthening Social Security.

President Obama campaigned on a platform of boldly taking on these challenges. He has spoken often about the need to refound our economy on doing real things, rather than dreaming of financial pots of gold. He has asked Vice President Biden to lead the effort to restore the middle class. For the first time I can recall, we have an Administration that sees manufacturing – making things here — as central to America’s future and that speaks clearly about the positive role for workers and their unions in that future. President Obama has laid out an aggressive agenda for structural change and has appointed people like Secretary of Labor Hilda Solis who believe in that vision.

Of course, President Obama inherited a terrible mess from his predecessor-a journey of stolen elections, ruinous tax cuts for the rich, dishonest wars, financial scandal, government-sponsored torture, flooded cities and finally, economic collapse.

President Obama’s administration began – out of necessity and vision — with an act of political courage-the enactment of a broad and substantial economic recovery program. Despite Republican opposition, the stimulus was big enough to make a real, positive impact on our economy, saving or creating more than a million jobs already.

But the jobs crisis has escalated, the foreclosure crisis continues and Wall Street appears to have returned to its old ways. This is Bonus Week on Wall Street – watch and see how much discipline they show, with the nation watching.

Now more than ever, we need the boldness and the clarity we saw in our president during the campaign in 2008, when he outlined the scope of the economic problems facing our nation — unencumbered by the political cross-currents weighing us down today. One year into the Obama Administration and one year into a Congress with strong Democratic majorities, we need leadership action that matches the urgency that is felt so deeply by working people.

Too often Washington falls into the grip of ambivalence about the fundamental purpose of government. Is it to protect wealthy elites and gently encourage them to be more charitable? Or is it to look after the vast majority of the American people?

Government in the interests of the majority of Americans has produced our greatest achievements. The New Deal. The Great Society and the Civil Rights movement — Social Security, Medicare, the minimum wage and the forty-hour work week, the Civil Rights Act and the Voting Rights Act. This is what made the United States a beacon of hope in a confused and divided world.

But too many people now take for granted government’s role as protector of Wall Street and the privileged. They see middle-class Americans as overpaid and underworked. They see Social Security as a problem rather than the only piece of our retirement system that actually works. They feel sorry for homeless people, but fail to see the connections between downsizing, outsourcing, inequality and homelessness.

This world view has brought Democrats nothing but disaster. The Republican response is to offer the middle class the false hope of tax cuts. Tax cuts end up enriching the rich and devastating the middle class by destroying the institutions like public education and Social Security that make the middle class possible.

But no matter what I say or do, the reality is that when unemployment is 10 percent and rising, working people will not stand for tokenism. We will not vote for politicians who think they can push a few crumbs our way and then continue the failed economic policies of the last 30 years.

Let me be even blunter. In 1992, workers voted for Democrats who promised action on jobs, who talked about reining in corporate greed and who promised health care reform. Instead, we got NAFTA, an emboldened Wall Street – and not much more. We swallowed our disappointment and worked to preserve a Democratic majority in 1994 because we knew what the alternative was. But there was no way to persuade enough working Americans to go to the polls when they couldn’t tell the difference between the two parties. Politicians who think that working people have it too good – too much health care, too much Social Security and Medicare, too much power on the job – are inviting a repeat of 1994.

Our country cannot afford such a repeat.

President Obama said in his inaugural address, “The state of the economy calls for action, bold and swift, and we will act — not only to create new jobs, but to lay a new foundation for growth.” Now is the time to make good on these words – for Congress, for President Obama and for the American people.

These are big challenges. But it is long past time to take them on. And for those members of Congress who think maybe taking on big challenges is not their job, and who want to keep offering working people tokenism while they govern in the interests of the people who trashed our economy, I have a suggestion for how to spend your weekends.

Go sit with the unemployed. Talk to college students looking at tuition hikes, laid-off professors, and no jobs at graduation. Talk to workers whose jobs are being offshored. Ask what these Americans think about their future. Ask them what they think of Wall Street, of health insurance companies, of big banks. Ask them if they want a government that is in partnership with those folks, or a government that stands up for working people.

Then think about the great promise of America and the great legacy we have inherited. Our wealth as a nation and our energy as a people can deliver, in the words of my predecessor Samuel Gompers, “more schoolhouses and less jails; more books and less arsenals; more learning and less vice; more leisure and less greed; more justice and less revenge; in fact, more of the opportunities to cultivate our better natures.”

This is the American future the labor movement is working for. Our political leaders have a choice. They can work with us for a future where the middle class is secure and growing, where inequality is on the decline and where jobs provide ladders out of poverty. Or they can work for a future where the profits of insurance companies, speculators and outsourcers are secure. There is no middle ground. Working America is waiting for an answer. We are in a “show me” kind of mood, and time is running out.

Photo: AFL-CIO leader Trumka meets National Press Club staffer Andrew Price, a 42-year union member. Terry Hill/National Press Club