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Wed

24

Jun

2009

Employers are Undermining the Economic Stimulus Program
Wednesday, 24 June 2009 05:00
by Dave Lindorff

Reports are starting to appear suggesting that laid-off or underemployed Americans, and the long-term unemployed, are losing patience with the Obama administration’s and Congress’ economic stimulus plan, which thus far has not done anything to arrest the growth of unemployment, now at close to 20 percent of the US workforce, at least as unemployment used to honestly be counted in the 1970s and early 1980s.

While millions of jobs have been lost since the beginning of this year alone, the number of jobs that have been created as a result of the Obama administration’s signature $780-billion stimulus spending package is under 150,000—a far cry from the 3.5 million that were promised when the bill was being put before Congress.

There has been a lot of hype from Washington sources, dutifully reported with little analysis or criticism in the corporate media, suggesting that the recession is bottoming out. One example was a report last week that the number of people receiving unemployment had, for the first time in six months, dropped slightly. Unmentioned was the hard reality that the reason for this drop was that many laid-off workers are now reaching the end of their 26 weeks of unemployment benefits in states that do not offer any extended benefits program. On inspection, that is hardly good news.

There is also a mantra, trotted out regularly by administration officials, that unemployment figures are a “lagging indicator,” and thus are no indication that the recession is continuing to worsen. The problem with this sleight-of-hand is that unemployment itself, when it is rising rapidly as it has been now for a year, is a cause of deepening recession. When one in five workers is unemployed or unwillingly underemployed, that represents not only a huge drop in consumer demand for everything from basic necessities to luxuries, but also a huge dark cloud of anxiety that hangs over most of the rest of the public, leading everyone to cut back on their spending, thus dragging down the economy further.

But there is another factor at work, which is not getting much attention, and that is the negative role being played by employers, both public and private, in worsening the recession and undermining the stimulus effort, such as it is, by actually using economic crisis as an excuse to further attack and undermine workers and their incomes.


Take Temple University, near where I live. The university, a largely publicly-funded institution, has received $10 million in federal stimulus funds, largely replacing the state funding that it lost when the state cut back on its educational budget, and though those funds were specifically intended by Congress to be used to improve student achievement and to put people to work quickly, Temple, which has also seen student admissions and tuition revenues increase during the recession, has done the opposite—laying off staff, including departmental staff and other personnel. The university for the past year has also been engaged in a classic union-busting campaign against one of its staff unions, which has been working 0n an expired contract for a year, and its faculty union, which has been working on an expired contract since last October. The school last year hired an outside law firm, Ballard Spahr Andrews & Ingersoll, that on its website touts its expertise in “union avoidance,” to handle the school’s “bargaining” with faculty.

In this, Temple is hardly alone. Across the country, companies and public institutions have been taking brutal advantage of the economic crisis as an opportunity to attack their workers, slashing employment, demanding pay cuts (the New York Times, for example, has cut employee paychecks by 5%), reducing long-held benefits, and generally contributing to the impoverishment and insecurity of the broader American workforce. Reports one worker at a small multi-national corporation based in Ohio, "Our particular division is unionized. We've heard many rumor since our labor contract expires this September. The company has made it clear in no uncertain terms they intend to `break' us by using the economic downturn to force us to take massive wage and benefit cuts. Our company is also one who receives a great deal of federal funding for training, and other things. . Amazing how they can flaunt thing with such impunity."

Amazing is right. If companies are getting taxpayer funds to boost or support jobs, turning around and doing the opposite should be considered nothing short of fraud.

Nor are layoffs and pay cuts the only way companies are attacking workers. According to a recent report, one-quarter of employers who had historically been offering their employees a match for their own contributions to 401(k) retirement plans have eliminated that matching money since last September.

These cutbacks and layoffs are bad enough when made by private firms, many of which are still quite profitable and which have benefited over the years and recently from tax incentives aimed at boosting employment, but they are particularly obscene when they are made by institutions that are receiving public stimulus money, like schools, public transit agencies, and state and local governments. Indeed, it’s probably the case that much of the potential stimulus of the taxpayer-funded stimulus plan has been negated by job cuts and pay cuts being made by the state and local entities that have received the bulk of that money. If a state, for example, uses $50 million in stimulus funds to repair a bridge, in the process providing jobs to perhaps 100 construction workers, and then lays off 200 state workers, that stimulus money is completely wasted in terms of boosting the economy.

So far, most of the frustration and anger over this undermining of the economic stimulus program is coming from the unemployed. Taxpayers, who will end up paying for this stimulus (all of which was borrowed money) in future years, have so far not raised a fuss, perhaps because they have not gotten the news that employers are busy undermining the program. That could change if unemployment, as expected, keeps rising inexorably. Maybe at that point people will start demanding that their taxes be used by the federal government to directly employ people, instead of trusting employers to pass it through to their workers, or that at a minimum, organizations receiving stimulus program funds be barred from laying workers off or cutting their pay.

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