Sunday, January 26, 2014

THE CHANGING INDIANA ECONOMY IN A CHANGING NATIONAL ECONOMY



Harry Targ

When East Coast executives open The New York Times’ business section Sunday morning, they’ll be greeted with a full-page advertisement hawking Indiana as a good place to do business (Journal and Courier, January 25, 2014). 

…the number of Hoosier’s living in poverty reached more than one million, unemployment in Indiana has remained above the national average…low wage jobs and income inequality are both on the rise, and; post-secondary educational attainment continues to present challenges to high-growth job creation (Indiana Institute for Working Families, “Status of Working Families in Indiana, 2012,” July, 2013).

Economic Change in the United States

Fred Magdoff recently published an article in Monthly Review (January, 2014) aptly titled “The Plight of the U.S. Working Class.” In it he describes the historic process of capital accumulation of the wealth produced by workers. He points out that since the industrial revolution numerous ways have been developed to expropriate more and more of the value of what workers’ produce. These methods included cutting wages, increasing hours of work, paying workers just enough to have energy to return to the workplace to produce more, speed-up on the line, and using technology to get more labor out of fewer and fewer workers. Over time exploitation has included the use of police power to crush demands from workers for increased public services, including education, health care, housing, and transportation, that would “cost” the wealthy taxes, and the right to form trade unions. During the worst of times workers’ ability to resist increased exploitation was compounded by the existence of a desperate pool of unemployed and underemployed workers who would be forced to accept lower wages and unhealthy working conditions just to get employment. 

As this process unfolded historically rates of profit grew, capital accumulated, corporations and banks expanded, economies became more concentrated in fewer hands, and corporate/banking political influence grew. Periodically workers and their allies organized, traditional sources of division around race and gender were broken down (particularly in the 1930s), and the working class broadly defined gained some political power. For a time reforms (such as the New Deal in the 1930s and the Great Society in the 1960s) were carried out to lessen the pain and suffering of workers. As movements grew, they inspired others to make demands on the economic and political system that began to change the fabric of society. The most radicalized workers, often through socialist organizations, talked about worker controlled economic and political systems which were likely to improve the human condition for the vast majority of the population.

Magdoff argues that workers in the United States are currently under the most extreme pressure since the Great Depression. Since the imposition of the neoliberal agenda during the 1980s--deregulation, promotion of markets, cutting government programs for the many, establishing global trade agreements, and increasing financial speculation--“capital has squeezed labor ever harder.”

Magdoff presents data which describes major features of the U.S. economy:

-a decline by more than half the average rate of growth per year of GNP (from 4 percent in the 1950s and 1960s to 1.8 percent today)
-a decline in job growth from about 2 percent per year in the 1970s and 1980s to 0.3 percent per year over the last decade
-a dramatic increase in joblessness among those 25-54 from 5 percent in 1968 to 18 percent in 2013
- a jobless rate for women 25-54 from 31 percent in 1990 to 27 percent in 2000 to 28 percent in 2012
-for 18-24 year olds joblessness has risen among men from 28 percent in 1990 to 44 percent in 2012 and from 38 percent to 46 percent among women
-in all worker categories there has been an increase in part-time over full-time work and growing numbers of discouraged workers who have given up looking for work
-to reach a full-employment economy an additional 29.2 million jobs would be needed
-approximately 18.9 percent of Hispanics are unemployed and 22.4 percent of African Americans

These long-term trends are correlated with deteriorating health, stagnating wages, and rising poverty (46 million people, 15 percent of the population, lived below the poverty line in 2013)

And for the ruling class Magdoff says:

During the economic recovery from the Great Recession the top 1 percent of income earners in the United States has captured 95 percent of the total growth of income in the economy. In 2002-2012 the bottom 90 percent of the population saw their average family income (excluding capital gains) drop by 11 percent, while those in the top 0.01 percent, that is, one in every ten thousand people, enjoyed a 76 percent increase in average family income (excluding capital gains).

Indiana’s Political Economy

Indiana is one example of a state in which local economic trends mirror the accumulation of wealth on one side and poverty on the other. In fact, Indiana has been one of the worst states in terms of providing for its population. Almost 16 percent of the state’s population lives in poverty, including over 22 percent of its children, 17 percent of women, 33 percent of African Americans, 29 percent of Latinos, and 25 percent of Native Americans. One-third of Indiana residents are low-income and for a decade have experienced a decline in median household income. Even with a recent slight decline in the rate of poverty, the number of low income Hoosiers (earning less than 200% of the Federal Poverty Guideline (FPG) has risen since 2011. (Indiana Institute for Working Families, 9/19/13; cited in “Slight Decrease in Poverty Offset by Increase in Low-Income Hoosiers,” Lafayette Independent, October, 2013).

To quote the Indiana Institute for Working Families:

“…more than 1 in 5 children live in poverty and 47 percent are low-income (more than all neighbor states, including Kentucky); more than 1 million Hoosiers over the age of 18 are in poverty and 2.24 million are low-income; more than 70% of Hoosier jobs are in occupations that pay less than 200% of the Federal Poverty Guidelines – that’s less than $39,060 for the same family of three.... we have a larger share of jobs in occupations that pay at or below poverty wages ($19,530 for a family of three) and jobs that pay at or below minimum wage than all neighbor states, including Kentucky; and wages have declined for lower- and middle-income Hoosiers over the past decade, while worker productivity has soared.” (Derek Thomas, “Cato Study Disingenuously Presents Molehills as Mountains,” Indiana Institute for Working Families, August 23, 2013).

As to economic inequality in Indiana:

-over the last thirty years the poorest twenty percent of the population experienced an income  decline of 6.7 percent and the income of the richest twenty percent rose by 57.2 percent
-the richest five percent of households have average incomes 11.9 times larger than the average incomes of the bottom 20 percent
-average income of the poorest twenty percent is $19,100; the richest five percent averages $228,200

The immiseration of workers in Indiana has largely paralleled the national trends described by Magdoff. Since the 1980s, the Indiana economy has experienced significant deindustrialization--radical reductions in the production of steel, automobiles, electronics; and increases in wholesale and retail trade; finance, real estate and insurance; and services. The changing economy was reflected in declining union membership which peaked at 21 percent of the work force in 1989 and declined to 9.1 percent of wage and salary workers in 2012. (Indiana union membership as a percentage of the total work force exceeded national membership from 1989 until 2001 and since then has declined compared to the national figure by 3 percent).

Currently, Indiana Republicans control the governor’s office, both state legislative bodies, one of two US Senate seats, and have 7 of nine House seats. Forty-six percent of Hoosier voters have registered as Republicans and 32 percent as Democrats. Although Indiana is largely a Republican state (voting for Democratic candidates for president only four times between 1900 and 2012), half of the state’s governors were Democrats in the 20th century. Historically Democrats have been strongest in Northwest Indiana and bigger cities such as Gary, Fort Wayne, South Bend, and Indianapolis (where union members and minorities were larger proportions of the population than in rural areas and smaller cities in the Southern part of the state). Republican strength is greatest in rural areas, central parts of the state, and south of the capital city of Indianapolis to the Kentucky border. Democrats controlled the Governor’s office from 1988 until 2004. Popular governor, Evan Bayh served two terms as the state executive before moving on to the Senate.

Until 2010 redistricting, Democrats controlled the Indiana House of Representatives. Since the 2010 election and redistricting, Republicans control the Governor’s office and both Indiana legislative chambers. Without the check of a Democratic controlled House, state government escalated draconian legislation (some already in place) affecting working people: charter schools, cutting property taxes and resources for public schools, establishing (after a long public battle) a new right-to-work law, and privatizing public facilities, particularly highways. Governor Daniels (2004-2012) and now Governor Pence have served during the period of economic decline reflected in the data reported above. Cities, particularly in areas where minorities and unions have been strong, have been particularly devastated. Gary, Indiana has experienced economic decline on a scale paralleling Detroit.

Finally, state and local Democratic party organizations, with a few exceptions, have been weak and most of those Democrats elected to public office have been more conservative than the national party. One significant exception was the mobilization of independent Democrats (in Tippecanoe County they called themselves ‘Yes We Can Tippecanoe’) in 2008 to achieve extraordinary victories for primary and presidential candidate Barack Obama. Many YWCT activists continue to work in local progressive organizations today.

In addition, with declining union membership, the state AFL-CIO has been considerably weakened: paid staff has declined in numbers, national labor support has declined, and the traditionally strong Indiana University Labor Studies Program, defended by the labor movement, was closed down early in the new century.

Progressive Politics in Indiana Today

In short, the Indiana economy has experienced deindustrialization, joblessness, growing economic inequality, rising poverty and misery, and declining support for public institutions and minimal standards of well-being for the working class. These long-term changes have been occurring parallel to the changing national economy, only in more extreme form. The once vibrant labor movement in the state has been weakened dramatically. The long-term trajectory of economic decline and worsening conditions for workers has continued under periods of leadership of both political parties. From 2004 to the present growing Republican strength and introduction of rightwing policies has exacerbated the pain and suffering of workers referred to above.

Despite the long period of economic decline and the weakening labor movement in Indiana, progressives, small in number but vigorous in energy, have continued to fight back against reactionary state governance. Activists around the state are mobilizing around economic issues such as Medicaid expansion and raising the minimum wage; women’s reproductive rights; saving public education; and fighting efforts to restrict marriage equality.

(A future essay will examine political movements in Indiana).