Job Cuts Continue to Hammer Workers and Communities
Stock Market Cheers Rising Profits
San José, CA – Layoffs continued to hammer workers and their communities in July and August. Job losses are leading to more and more home foreclosures. State and local governments are losing tax revenues and making more cuts to education and social services. At the same time the stock market has been on a tear, as the profits of big businesses have benefited from layoffs, furloughs, wage cuts and benefit cuts.
Businesses cut almost 250,000 more jobs in July, bringing the total number of job losses to more than 6.5 million since the recession began in December of 2007. The unemployed continued to have a harder and harder time finding jobs, as the number of people out of work for more than six months rose by more than a half million in July, to a total of 5 million. By August there were more than 9 million Americans either collecting state unemployment insurance benefits or the federal extended benefits.
The rising tide of cuts to jobs, hours and wages are causing the home foreclosure rate to rise to record highs. In the second quarter (April through June) of this year, more than 13% of all home mortgages where late or in foreclosure, the highest since records began in 1972. Leading the way was Florida, where the housing boom and bust and double-digit unemployment have led to almost a quarter of all mortgages to be late or in the foreclosure process. While so-called subprime mortgages are still the most likely to be in trouble, the fastest growing group of late mortgages are prime mortgages that were made to households with better credit and income, but which are now falling behind due to loss of income and falling home prices.
State governments are estimated to have a total budget shortfall of $350 billion over the next two years as job losses (and the resulting loss of income and sales) cut state tax revenues. Local governments are also feeling the pain as sales tax revenues fall, states cut back on local spending and the housing bust cuts into property taxes. Here in California, which has one of the worst fiscal situations of all the states, state workers have been furloughed three days a month, which is almost a 15% pay cut. Colleges and K-12 schools are laying off instructors and staff while cutting wages and benefits. College students face higher fees, with community college and California State University fees up by almost one-third from a year ago and the budge cuts mean many are able to get the classes that they need to graduate. Health care, welfare and aid to disabled and seniors are also getting chopped.
The growing economic pain has been most intense for African Americans, Latinos, Asian Americans and other oppressed nationalities. Black unemployment is almost twice that of whites, while the unemployment rates for Latinos and Asians have been increasing most rapidly. Foreclosures are concentrated in African American and Latino communities, which were targeted by banks and mortgage lenders for risky subprime loans. Service and education cuts are hitting oppressed nationality and immigrant communities the hardest as the right wing tries to scapegoat them for causing state and local government’s budget problems.
For the last few months, the corporate media and government officials have been talking about the ‘green shoots’ of economic growth and the ‘end of the recession.’ The stock market has bounced back from its lows of earlier this year. The grain of truth in the ‘green shoots’ claim is based on the rebound in corporate profits. Big businesses have cut their costs and boosted their profits by cutting jobs, hours and pay, while getting more work out of their remaining workers. This has showed up in higher labor productivity and boosted the bottom line. Big banks have responded by giving out thousands of millions of dollars in bonuses and raising the pay of their chief executives.
But much of the ‘good news’ on the economy has a downside. The unemployment rate dropped slightly – from 9.5% in June to 9.4% in July. But this was because so many jobless workers gave up looking for work, as the official unemployment rate only counts those without work and who are actively looking for work. The increase in home sales this year has been largely due to investors snapping up foreclosed properties at low prices, and it is estimated that as much as 90% of sellers are either foreclosures or other sales due to economic distress. State and local governments who thought that they balanced their budgets over the summer are staring in the face of hundreds of billions of dollars in deficits.
Government programs designed to soften the blow of the recession are being overwhelmed by the sheer size of the economic downturn. Despite the total of about a year and half of benefits available to workers who lost their jobs in higher-unemployment states, up to a 1.5 million unemployed workers could lose their benefits by the end of this year. The federal government mortgage programs have helped more than 200,000 households, but that was only 10% of those borrowers who are eligible. More and more home buyers who are falling behind on their mortgages are not eligible, as falling home prices and job losses prevent them from refinancing with the government programs. Even conservative economist Martin Feldstein, a former economic advisor to President Reagan, worries that the economy could tank again as the federal stimulus spending winds down next year.
With economic pain rising and government programs failing to help or being cut back, there are more and more outbreaks of people fighting back, demanding to put the burden of the crisis back on the big banks and corporations. In Chicago, the plant occupation by the Republic Window and Door workers won a better layoff package and was an inspiration to the labor movement. Homeowners such as Rosemary Williams in Minneapolis are fighting the banks who profited from the mortgage boom and are now trying to put the burden on home buyers and their communities. Students across the country are organizing against the cuts in their schools and against higher fees. Many of these struggles involve and/or are led by African Americans and Latinos who are being hardest hit by the crisis. This grassroots fight back needs to grow and become more organized as it becomes more and more clear that there is no economic recovery for working people.