3 Ways to Create an Economy That Works for All of Us, Not Just the Rich

Corbyn Hightower was doing everything right. She worked long hours selling natural skin care products, flying between cities to meet customers, staying in posh hotels. She pulled down a salary that provided her family of five with a comfortable home in a planned community, a Honda SUV, health insurance, and regular shopping trips for the best natural foods, clothes, shoes, and toys.

Then the recession hit. Her commissions dried up, and the layoff soon followed. Life for Corbyn, her stay-at-home husband, and three children changed quickly.

First the family moved to a low-rent house down the street from a homeless shelter. They dropped cable TV, Wi-Fi, gym membership, and most of the shopping. Giving up health insurance was the most difficult step--it seemed to Corbyn that she was failing to provide for her young daughters. Giving up the car was nearly as difficult.

As our economy goes through tectonic shifts, this sort of adaptation is becoming the new normal. Security for our families will increasingly depend on rebuilding our local and regional economies and on our own adaptability and skills at working together. At the same time, we need government to work on behalf of struggling families and to make the investments that create jobs now and opportunities for coming generations. That will require popular movements of ordinary people, willing to push back against powerful moneyed interests.

Where Are the Jobs?

How did we get to an economy in which millions are struggling?

Officially, the "Great Recession" ended in the second quarter of 2009. For some people, the recovery is well under way. Corporate profits are at or above pre-recession levels, and the CEOs of the 200 biggest corporations averaged over $10 million in compensation in 2010--a 23 percent increase over 2009.

But for most Americans, there's no recovery, and some are confronting homelessness and hunger. Twenty-five million are unemployed, under-employed, or have given up looking for work. Forty-five percent of unemployed people have been without a job for more than 27 weeks, the highest percentage since the Bureau of Labor Statistics started keeping track in 1948. There's a growing army of "99ers," people who have been unemployed for more than 99 weeks and have exhausted all unemployment benefits.

Fifty-three percent of Americans say jobs and the economy are the most important issues facing the country; just 7 percent say the deficit is the most important. Yet budget cuts and austerity have replaced job creation in the national dialogue.

American workers have become expendable to many of the corporations that run the economy; NAFTA and other trade laws opened the floodgates of outsourcing to low-wage countries. Many of the jobs that can't be outsourced are being eliminated, or hours, pay, and benefits are being cut.

As corporations amass greater power, wealth, and influence, they successfully lobby for tax breaks and federal subsidies and set the national policy agenda. As long as the giveaways continue, along with massive military spending, governments have to cut education, public services, and infrastructure investments--and the jobs that go with these public benefits.

Real Solutions

Leaders in both parties tell us growth is what's needed, but the evidence suggests growth alone won't help most Americans. GDP has grown steadily and is now back to pre-recession levels.

But since the official end of the recession, virtually all of the new income--92 percent as of the first quarter of 2011--has gone to corporate profits, according to a May report by the Center for Labor Market Studies at Northeastern University. None of the increased GDP has gone to boost wages and salaries.

More importantly, since World War II, growth has been built on cheap energy--particularly petroleum--and low-cost dumping of the effluents of a wasteful global economy. Now the easy-to-pump oil is nearly used up, and the cost of extracting petroleum is rising. At the same time, we've used up the Earth's capacity to absorb climate-changing gases and other forms of pollution. Changes in the delicate balance of atmospheric gases are already disrupting the climate, and extreme weather events are happening with increasing frequency. Growth has failed to yield prosperity, and the planet cannot bear more of it.