Photo credit: Joe Loong via Flickr Creative Commons
Without a comprehensive budget deal, Obama’s grand bargain for the middle class may yield only low-wage work
In Chattanooga last Tuesday, Mr. Obama once again took hold of the bully pulpit, this time to lay out his vision of a “grand bargain for the middle class.” In an attempt to break the endless stalemate with Republicans, he offered up what looked like lucrative bait: a cut in corporate tax rates from 35 to 28 percent in return for investments in programs to boost the middle class.
This idea is hardly new – it draws upon the vision outlined in his 2012 campaign, and Republicans, led by John Boehner, were quick with their criticism. “This proposal allows President Obama to support President Obama’s position on taxes and President Obama’s position on spending, while leaving small businesses and American families behind,” said Boehner through a spokesman.
The remarks capped a concerted effort by Mr. Obama to shift from “phony scandals” to the economy. Lest we forget, this speech was all about jobs. Indeed, Mr. Obama used the word 69 times in his prepared remarks, and returned to refrains he used in his speeches in Warrensburg and at Knox College. As he wends his way through the country, we are likely to hear it again and again: American businesses have created 7.2 million jobs over the last 40 months.
But as Mr. Obama continues to remind the nation that the American dream is not dead and buried, he will have trouble shaking the pesky reality that all jobs are not created equal. As the National Employment Law Project recently noted, the majority of jobs added during the recovery are not the sort upon which to build a middle class. According to their study, lower-wage occupations (paying between $7.69 and $13.83) made up 21 percent of recession losses, but represent 58 percent of recovery growth.
Mr. Obama need only have looked around the cavernous Amazon warehouse that served as venue for his speech to be reminded of that fact. Amazon announced this week they would be adding more than 5,000 full-time jobs to their “fulfillment centers” across the country, but by many accounts, the work will be anything but fulfilling. Workers have complained of enduring low wages, unsafe conditions, and unreliable schedules, as well being pushed to exhaustion—not for the prospect of a promotion—but simply the hope of a permanent position.
While Amazon touts its commitment to full-time employment with its latest hiring announcement, the company has increasingly come to rely on temporary workers. Amazon defends the practice as necessary to manage spikes in demand. It’s also true that temporary workers provide added benefit as a cheap source of labor and a hedge against future uncertainty.
Amazon is not alone. Across the economy, from Wal-Mart to Nike, the number of temporary workers has jumped more than 50% since the end of the recession. Three-quarters of the 37 economists surveyed by the AP in May felt the rise of temporary workers was part of a longer-term economic trend.
That trend is companies, wary of the sluggish recovery, no longer seeing the value in investing in long-term employment, and it should give Mr. Obama pause. A grand bargain for the middle class is a perfectly American endeavor, and certainly many of the proposals he outlined are the investments in infrastructure and education necessary for a strong economy.
But if Obama truly wants to jumpstart hiring and re-build the middle class, he must redouble his efforts at much more difficult task: striking a grand bargain with Republicans to defuse the looming budget battle before it starts, restoring the nation’s long-term fiscal health and giving companies reason to invest in their employees and the future once again.