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Economy

Andy Stern: Changing How America Works

Something's wrong when only the rich are getting richer, and average folks are feeling the squeeze. The answer isn't more education, or simply electing better leaders. We need widespread change.
Editor's note: On Oct. 18 SEIU leader Andy Stern was in the Bay Area on a book tour and gave a talk at a crowded event at Lukas Restaurant in Oakland. The event was sponsored by Drinking Liberally, a group started by Justin Krebs that brings together progressives in a number of cities to hear quality speakers and to connect over a beer. The following is a transcript of Stern's talk.

Ercilia Sandoval is one of the people in this country who did exactly what she was supposed to do. She worked hard every day sweeping floors, cleaning toilets and taking out the garbage in some of Houston's most elegant office buildings. She is willing to work hard to raise her two girls. She tried to save what she could, but on a little more than $5 an hour, it's hard to find enough money to pay the bills.

Then she was diagnosed with breast cancer. Ercilia was already a fighter and a leader among her co-workers, but she was probably going to die. And her problem was that she had experienced problems with her health over a long period of time but couldn't afford to go to a doctor, couldn't afford to get health care and now she's worried about what this means for her kids. Her work is dedicated to all the mothers in Houston, Texas, who are janitors, whom she doesn't want to have live through the same thing. She happens to be on the Glamour magazine website right now; she's up for nomination as one of the five women of the year for Glamour.

I wrote this book because people like Ercilia should not work a day and be poor in the richest country on the face of the earth, and certainly not to be dying in this country because they're poor. I wrote this book because I love this country, and I think America is a gift. Its greatest gift is this: People have come here from all over the world, and all they expected to do was work hard. And what they hoped was that their work would be rewarded. What they dreamed about was that their kids were going to do better than they were. That was the American Dream. And despite a civil war, two world wars, recessions, depressions, the American Dream has survived. Until now.

Fifty-two percent of all parents say that their kids are going to be worse off than they are. And the facts now are beginning to bear that out. That's not the America I want; I don't think that's the America we all need. I wrote this book because I think there are answers all around us. But in order to get to the answers, we have to understand the context of the discussion.

This is not our fathers' and grandfathers' economy. We've gone from an economy that's 9-to-5 to 24/7. We're living through the third economic revolution in the history of the world: The first was the agricultural revolution, which took 3,000 years; second was the industrial revolution, which took 300 years; this revolution is going to take 30 years. As we move from a national to an international economy, from muscle to mind work, no generation of people has ever witnessed so much change in a single lifetime.

This revolution is televised, it's Google-ized, it's digitized, it's in your face, on your screen 24/7. It is relentless, and it's unending and it's far from over. But it's not our fathers' and grandfathers' economy. The number of transistors that were produced this year in the world was greater than the number of grains of rice that were grown. The Furby -- that kids' toy -- has four times the computing power of the Apollo spaceship that landed on the Moon. The world is going to send 84 billion emails today. In the late 1980s, there was no such thing as email.

We are as far today from the New Deal, as the New Deal was from the Civil War. I'm sure Roosevelt admired Lincoln, but he built an economy for 1935. And we need to build an economy for the 21st century. Thomas Friedman is partially right, the world is flat -- we now have a much more integrated global economy, particularly as we digitize things all around the world.

We now understand the facts about blue-collar jobs. Those that have white-collar jobs are increasingly going to see them go overseas by 2008. In China, America has its first real economic competitor. Last year, half of the concrete that was poured in the world was poured in China. America had 65,000 Intel Science Fair finalists last year, a record number. China had a million.

If you go to Beijing, where some of us have been ... if you think Washington's a cool place to be with one beltway, Beijing has six beltways. And while we were there last time, they announced they were going to build 110 hotels in Beijing by 2008. China owns a trillion dollars' worth of the foreign currency, and they're not just neutral bankers when it comes to policy. We have real competition.

Companies -- not countries -- are making the rules in the global economy. Of the hundred largest economies in the world, 52 are companies, and only 48 are countries. The sales of Wal-Mart are greater than the GDP of Ireland, or Singapore or Venezuela. The companies are beginning to put pressure on the countries like France about their employment policies. Companies, not countries -- global trade, global finance, global companies. We've got to create global regulation and global government instead of allowing companies to make the rules.

We've now seen employers and employees getting a divorce. We're separated and getting divorced. The "one job in a lifetime" economy that I grew up in, where people went to work in a mine or a mill or a factory or driving a truck, and you worked there for your whole life, and then you got a gold watch from IBM and you went home, is over. My son is 20 years old, and will have 9 to 12 jobs by the time he's 35. Only one-third of the companies that exist right now will be economically viable in 25 years, and 25 percent of the America work force today is contingent -- workers have no full-time employer.

When you think about constructing an economy, we need to think about -- and I talk about them in the book -- all of those factors and what they mean. And then we need to understand what the greatest thing we can see now going on in our economy is as a result of those changes.

There are two major themes: One is, we see growing inequality in America. John F. Kennedy said, "A rising tide lifts all boats," but right now we're only raising the luxury liners. The rest of the boats are on pretty rocky water and wondering if they're going to be able to survive. Seven out of ten middle-income Americans say that they live paycheck to paycheck. Last year, America had negative savings for the first time since the Great Depression. Most Americans can't live through one medical emergency, which averages $3,300. More women went bankrupt than graduated from college in 2005, and for the fifth straight year, American workers didn't get a raise.

Alan Greenspan, my new revolutionary hero, said that the gap between the rich and the rest of the population was so growing so wide and so fast that it could wreck democratic capitalism. Warren Buffett says the market's not working for poor people.

We now live in a time in America where the rich are richer than any time in history. There is more money going into corporate profit than any time in history and less money going into wages. So America is growing apart, not growing together. It's not about growth, it's about distribution. It's about how we share the wealth. This is not Rwanda, this is not Bosnia. This is the richest country on earth. We are not without resources: we have eight of the top ten research institutions in the world, we've won the Nobel Prize for science and economics, and yet we can't seem to figure out that America doesn't have a plan.

Clearly people are anxious. They're worried about their kids, they're worried about their future, and they have every reason for it. We have two parties that don't seem to get it. We can talk more about that, but clearly, people say, "What's the matter with Kansas?" That book says, "Why are workers voting against their interest?" And it says, here's the problem: People perceive the Democratic party as chardonnay-sipping, latte-drinking, Volvo-driving, Harvard- and Yale-educated liberals.

I'd say that I agree with everything but the "perceive." Because that, too much, reflects the Democratic Party. And I write about the 2004 convention, in which you had the opening night for Hillary and Bill Clinton's reception, which they didn't know, hosted by a person who broke our union. We had at the box, at the time John Kerry introduced himself to the world, the moment where George Bush or Bill Clinton put their son or daughter up, or a soldier, or firefighter or someone from 9/11, who did Democrats put in the box with John Kerry? None other than Bob Rubin. Not necessarily the most attractive person for middle-class working Americans in Ohio trying to figure out, is this guy on my side or not?

We have a Democratic party that doesn't get it, we certainly have a Republican party that wants to redistribute wealth, but they just want to redistribute it up, not down with America.

What are we going to do about it? Three things we shouldn't do.

One is that we shouldn't count on the market. If we've proven anything, we've proven that the market is not going to work. We actually conducted for 20 years with the IMF an experiment in South America, seeing if the market would work. And we ended up with even greater disparity of wealth in South America than we have in the United States, although we're getting closer -- and every economist now says the market is not the answer. As growth goes up and productivity goes up, wages are supposed to go up. They haven't. Five years in a row, and there's no end in sight.

Two, we're not going to solve this by doing what George Bush says. He likes to say, "Well, average wages are going up in America" when the problem is ... here's the problem. Imagine three nurses sitting together in a nursing station. Two of them make $50,000, and one of them makes $80,000. The average wage is $60,000. One of the nurse gets a call button, and they go down the hall, and Ray Irani, the CEO of Occidental Petroleum sits down. Now the average wage is $21,111,000 -- and there wasn't one nurse that got a raise. [Laughter, applause.] But it is true that the average wage is now $21 million, so we should not measure the wrong thing in America.

The last thing I say, because I think it's important and I don't want to be misunderstood, is that education is not going to be the answer to our economic crisis. It is clearly an answer to every single individual -- they should get every piece of education, we should pay for it, give our kids the skills, the training, the college education. But here's the problem: Only 1 percent more of all jobs by 2012 will require a college education. So if everybody went to college, and only 1 percent more require a college education, that's going to be a problem. Only eight of the 30 fastest-growing jobs in America require a college education.

On top of all of that, college-educated kids in the last five years have lost the same amount of money in wages as blue-collar people. So if college education was the answer to America's problems -- yes, we need it, but we should not be fooled by people that say, "Well, if everybody just gets an education, then America will redistribute its wealth." It will not do that. So what's the answer?

The horse-and-buggy health care system is over, it's a relic of the industrial economy. We cannot build an American economy and be the only country on earth that puts the price of health care on the cost of our products, and then tries to compete with every other country in the world.

Toyota was just thinking about building a plant in the United States. They went to every state, they begged them, they gave them concessions to build the plant in the United States, and then they realized, "We can go to Ontario, and build the same plan, and have no health care costs." No health care costs! They could save more money, so that's where they took the plant. We cannot compete in the global economy and be the only country that puts the price of health care on the cost our products.

We need a new universal system quality affordable health care for every American. [Applause.] Some people say it has to be Canadian or Scandinavian, I'll take any system where everyone's covered, we get everyone in the system and then we can fix it up. But I don't want Ercilia Sandoval waiting any longer to go to the doctor because she can't get any health care.

Also, we have a retirement system in the private sector that's not going work well. We're down to 18 percent of all private sector workers having any kind of defined-benefit pension plan. Only 50 percent of private sector workers have anything but Social Security. The average IRA is only $23,000, and I don't think anybody's going to retire on that. The saddest part is that people are now saying that over 35 percent of Americans are now going to work until they die, and they can't figure out any other plan.

The saddest story I read in the paper the other day is about a guy who went in a month ago, robbed a bank, turned the money over to the security officers, and they arrested him. He went in front of the judge and the judge said, "What in the world are you doing?" He said, "Well, I worked my whole life, I'm 62 years old, for the same employer, and they went out of business. I cannot find anything but a minimum wage job. I can't pay my rent, I can't live and I can't eat. For my financial plans, put me in jail for three years because when I'm 65, I'll get Social Security. And then I'll be able to eat."

What kind of country says to someone who has worked his whole life, did everything right, and now he has to go to jail to get a roof over his head, three square meals, until he can get Social Security? So this retirement system is not working. Why don't we give everyone a personal account, not paid for by Social Security -- that should be kept separate -- but paid for by your employer? Why don't we have it accumulate during your whole life? Just one account so you don't have to find your ten 401Ks by the time you retire.

Let's not let people take the money out during that period of time because we all know we say we're going to borrow it and we're going to give it back, we're not going to give it back. Let's have it professionally managed by nonprofit organizations, so no one's trying to take a cut off the top of our money. And let us turn our retirement savings into a guaranteed pension plan, an annuity, with a defined benefit at the end of life, which you can do very cheaply if you do this as a country. You know what? We can call this TIAA-CREF, which is what happens for professors, or we can call this Australia, we can call this the Netherlands, because that's what other countries around the world are able to do. We can do that in America. [Applause.]

America made a good decision in the 1950s, you can see it up and down California -- we built, as a country, the interstate highway system. It was the basis of commerce whether you're rich or poor, small businessperson or entrepreneur, everybody could use the interstate highway system. Commerce in the 21st century is the internet. And yet we haven't built it, as a country, so that we all can use it, rich or poor, entrepreneur or individual. Our kids could have the greatest access to equalizing in terms of knowledge. Everyone could have access to every piece of knowledge in the world and yet our country charges huge tolls, clogging up the internet highway, and yet the interstate system is something America shared. We can do that again.

We all have to deal with some of our educational issues, and it isn't just about college, because it seems to me that we don't want our kids getting out of college, spending their first ten years of life paying off their debt. We'd like them to spend the first ten years buying a home, getting married, raising a family, and not worry. Plus, some of us would like to get our kids out of the home, [laughter] which is pretty hard, it's harder to do with debt as an issue. We need to think about different college education financing systems.

Here's why I love what the Army does in terms of education. They say if you serve your country, we will invest in your education. Part of the problem is, why is it the only way to serve our country by going into the military? Why can't I serve my country in a disaster relief force, so that when the next forest fire burns in California, we don't send a group of young kids to do that, or the next time we have a Katrina, our kids don't go down there. Why can't I serve my country by assisting in an urban school? Going to a rural health care facility where no one has access to health care? We should trade service to our country on many different levels, so our kids can have an education they can use and take with them. [Applause.]

America needs a plan. We don't have one now. We need a different kind of leadership. I'll end by talking about this: If we think about how change is made in America, I think we have the wrong idea right now, and I don't know how we got here. Because somehow we're all waiting until after this election to figure out who we're going to elect to be the captain of the American ship in 2008. You can just see it waiting to break out. Hillary, Obama, Bill, John ... I'm not sure who else is left in the race. Mark, Mayor Bloomberg, I mean, everyone wants in -- this is the new spectator sport.

If you think about America as a sailboat, and you think about electing someone who has their hand on the tiller. If you've ever sailed a sailboat, and there's no wind, all you can do is push back and forth on the tiller, you just go around in a circle. It's the wind that fills the sail and allows the boat to go forward so someone can steer.

I grew up in a time of life where the wind was blowing in America. We had a civil rights movement not because someone passed a law in Washington, D.C., but because Rosa Parks and John Lewis stood up -- people we never would have heard of -- stood up for themselves and for civil rights. We blew America in a different direction, where the Lyndon Johnsons and the racists in the South weren't have to do with any more. America changed.

We had a women's movement starting as Betty Friedan and Gloria Steinem and consciousness-raising groups stood up at their jobs, in their communities, in their unions and said they wanted change. And America did change. We had a young consumer activist named Ralph Nader that started a consumer movement, environmentalists that started Earth Day, students who started and led an anti-war movement. The winds of change were blowing in America, and we blew America in a different direction.

So we can not just think about who we're going to elect for president. That is not how change is going to happen alone in America -- we have to be the winds of change. And what I write about in my book is, our union, I'm really proud of it. I think it's become a very powerful voice for change. I think the labor movement has huge potential, but it's not big enough. America needs to stop thinking about Democrats and Republicans and left and right, and think about kids and our communities and our families.

I don't want to be the parent, and I don't think any of you want to be the parent or grandparent or aunt or uncle who sees that you were the ones who let your kids and grandkids be the first generation of Americans to do worse than their parents. That's not the America we want, that's not the America we need, that's what is at stake. We can put this country back on track and make this an America that works if we all lift our voices and become the winds of change. Thank you very much.
Andy Stern is president of the Service Employees International Union (SEIU).
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