- The Washington Times - Sunday, September 21, 2008


Denial rather than fear beset many of my baby-boomer friends this week as almost every conversation revealed them burying their heads in the sand rather than facing the Wall Street tsunami that threatened to wash out their retirement savings.

“I’m afraid to look to see how much I have left,” was a familiar refrain as repeated by one 50-ish friend who was laid off from a media company earlier this year. She has not been able to find full-time employment, so she’s been living on a loan from her 401(k) retirement account since this summer.

“I don’t even want to see how much money they’ve stolen from me,” said another media colleague who assumed his retirement paycheck was safely grounded in General Electric stock.

However, as much as the spotlight shines on Brooks Brothers professionals, who lost their financial-services jobs last week, as well as on baby boomers, who now face a more uncertain retirement, can you imagine the devastating, long-term financial impact on working-class people, who were teetering on the ledge of ruin before the Perfect Storm hit Wall Street?

My affinity for the army of invisible service workers, who wear their salt-of-the-earth first names on their shirts, is well-known. My father, Earl, an electrician, was such a working-class man. Politicians, like presidential candidates Republican Sen. John McCain and Democrat Sen. Barack Obama, refer to these forgotten folks as “Main Street” or “the American people” or even the amorphous “middle class” come election time.

“This is the waitress who pours your coffee, the bus driver who drives the candidates around, the maid and janitor, and the factory worker worried about losing his job,” said Michael Zweig, director of the Center for Study of Working Class Life at the State University of New York at Stony Brook, of today’s “economically distressed” workers who he contends will bear the brunt of the Wall Street collapse and have a much harder time recovering.

Mr. Zweig argues that the focus of the financial crisis should be on working families because “after all, they have more to lose,” as he said to Odile Weissenborn in the Huffington Post. “With each foreclosure, these families lose more than stock value. They very literally lose their homes, and - just as hurtful - their equity.”

In spring 2009, long after this wacky presidential campaign season ends, one million families will face foreclosure as their predatory subprime-mortgage loans reset. Yet, these are the “taxpayers” who must now foot the bill to bail out the very same greedy and unscrupulous loan sharks let loose to prey upon these unsuspecting workers.

Not only is the loss of their equity and their homes a prospect, many in this economic stranglehold face further job losses as businesses delay startups or expansion as well as continue layoffs.

“The bizarre good news is that businesses are not looking to expand,” said Josh Bivens, economist with the Economic Policy Institute. With eight months of steadily increasing unemployment we are in a “labor market recession,” where the financial crisis “hits home for most people.”

A study conducted by one of his colleagues indicates that in 2006, there were 16 applicants per 10 jobs, but in 2008 that number is 26 applicants per 10 jobs.

“The chaos in the credit markets” also hits working families harder.

A credit crunch - made worse by the fallout - will make it nearly impossible to secure loans for cars, education or debt consolidation. Home equity loans have all but dried up. Already, many tapped out their lines of credit to pay for basic necessities like gas and food, which weakens their credit scores, and worsens their overall financial status.

In a study to be released next week, “Economic Stimulus and Economically Distressed Workers,” Mr. Zweig looked at families in the bottom quarter of the housing market based on Census Bureau data and housing standards, which states that families should not spend more than 30 percent of their income on housing costs. His calculations indicated that 20.9 percent of American households are “economically distressed,” which is almost twice the official rate of poverty.

Mr. Zweig proposes a “fair” economic-stimulus plan that includes initiatives such as raising the minimum wage, providing universal health care for adults as well as children and extending unemployment benefits aimed at helping the working class. But conservatives and corporations general loathe these ideas.

Mr. Bivens, who said the federal bailout package should be fair and not allow for golden parachutes for CEOs, suggested a second stimulus package would be good for the country and particularly for working families.

Mr. Zweig and Mr. Bivens agreed that Mr. Obama proposes an economic plan that provides more relief for families at the bottom end of the economic scale. Mr. Zweig also said Mr. Obama’s proposals include some he suggests for assisting working-class families.

Both candidates, however, Mr. Bivens noted, would offer tax cuts to almost everyone across the board, but Mr. McCain’s provide less for those earning less than $75,000.

Snapshot polls taken last week indicated that voters had more confidence in Mr. Obama to handle the country’s financial affairs. Mr. McCain first stated that the economy was fundamentally sound but later said that he meant that the “American worker,” the best in the world, is fundamentally sound.

Not so, if the politicians listen to the experts. While the working-class work ethic is stronger than ever in the face of the economic turmoil swirling above their heads, their American way of life is in peril, and they cannot be ignored or served up as political pabulum.

While the country’s well-heeled leaders meet overtime to bail out their Brooks Brothers’ buddies and their bad business deals and play to the middle-class baby boomers, they would do well to remember the average “American workers,” especially those that are already “economically distressed.”

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide