The dominant voter belief in America is that the private sector produces both jobs and adequate wage income as the essential foundation for opportunity to realize aspirations of all citizens. Social Welfare, originally designed to insure against deficiencies in this private function, and now vastly expanded as a social welfare system, makes it and government, easy targets thus diverting public attention, and understanding, from the root causes of economic discontent. It is essential that future social welfare strategy change its target by addressing the root causes of inequity, including the defects in functioning in the private economic sector. Some facts pointing in this direction:
• For the past 20 years, the real incomes of family wage earners have declined either in nominal terms or through erosion by inflation for between 25% and 50% of the working population. For up to half the middle class, which has either kept up with income or gained slightly (through two income families, on the job promotion, or upgraded skill improvement), the grasp on a middle class life has become increasingly threatened by feared loss of job, or unemployment, or transfer to lower paying work, as industry has gone through a major reorganization and reduction in work force at all levels – blue collar, white collar, and executive level. For at least half the population, life has become less and less rewarding, or secure, or hopeful (Krugman, the Economist, and many other sources). Downward mobility now, or for children in the future, has become a common fear. The unanticipated growth in single parent families with only one wage earner, usually a woman, has exacerbated the situation by further depressing average family and children incomes.
• The work place has become divided. The new electronic and information age has a relatively few very good paying jobs and many, many modest or low paid jobs which are constantly changing, too.
• Industrial organization relies less on a stable core of workers and more on contingent workers, hired for short terms and with minimal benefits.
• As technology raises productivity (more output with less or the same labor force) the gains are badly distributed.
• The loss of jobs with adequate wages, the shift to lower paid work, the risk of repeated disemployment, and long-term unemployment threaten what has historically been the prime means for ensuring personal dignity and self respect and creating a personal identity in a market economy.
• Both political parties accept the private marketplace as the main engine to produce jobs. The reported increase in new jobs has occurred mainly in low paying service jobs, or in highly competitive small enterprises where the failure rate is very high and work is either short term, part time, or contingent on temporary contracts between primary and secondary employers.
• The failure of policy makers to hold the private sector responsible for this eroding economic base, or for taking action to reverse recent trends, presents the most serious dilemma. In all fairness, the growth in tax financed employment (e.g., defense industries, larger numbers of police and fire fighters, growth in public education and health care), an expanded social welfare system, and public goods construction, have obscured the weakening of the market economy during this period, and its declining ability to produce sufficient good paying jobs. This failure to lay the responsibility where it belongs leads to the charge that government is to blame followed by the urge to reduce government efforts and to privatize. Neither political party has found ways to see to it that adequate jobs are produced by the private sector. Vigorous efforts to this end appear to threaten other aspects of the network of interlocking interest groups on which each depends.
(Source: Excerpts from: A Paper Prepared by Dr. Robert Morris and John E. Hansan, Ph.D., July 19, 1995)