I met a man about forty years ago and caught up with him on three more occasions. These four scenes, spanning four decades of his life, should have been enough for me to predict the Great Recession. But I didn’t put it together till now.
In the late 1960s I worked at a coffeehouse near an army base from which soldiers shipped out to Vietnam. A lot of the GIs who frequented our place were putting out antiwar newspapers and planning demonstrations—one group was even organizing a union inside the army.
But I often sat with a young man back from Vietnam who was simply waiting out the time till his discharge. Duane had floppy brown hair, lively eyes, a sweet smile, and was slightly bucktoothed. He was handy and would fix our record player or show up with a part that made our old mimeograph machine run more smoothly.
He rarely spoke about the war except to say that his company stayed stoned the whole time. “Our motto was ‘Let’s not and say we did.’ Me and this other guy painted that on a big banner. It stayed up for a whole day,” he noted with a mix of sardonic and genuine pride.
That was the extent of Duane’s antiwar activism. He didn’t intend to become a professional Vietnam vet like John Kerry. His plan was to return to Cleveland and make up for time missed in the civilian counterculture.
I enjoyed my breaks with Duane because of his warm, self-aware humor, but thousands of GIs passed through the coffeehouse, and I didn’t particularly notice when he left.
In the early 1970s General Motors set up the fastest auto assembly line in the world in Lordstown, Ohio, and staffed it with workers whose average age was twenty-four.
The management hoped that these healthy, young, and inexperienced workers would handle 101 cars an hour without balking the way longtime autoworkers surely would have. But the pace and monotony were just as oppressive to the younger workers. What GM got at Lordstown instead of balkiness, however, was a series of slowdowns and snafus aimed at the speed of the line. The management publicized this as systematic “sabotage”—until it realized that that could hurt car sales.
I visited Lordstown the week before a strike vote, amid national speculation about the generation of “hippie autoworkers” whose talk about “humanizing the assembly line” was supposed to change forever the way America works.
On a guided tour of the plant (how else could I get inside?), I spotted Duane shooting radios into cars with an air gun. We recognized each other, but in the regimented factory environment we both instinctively thought it better not to let on. In lieu of a greeting, Duane slipped me a note with his phone number. At home that evening he summarized life since his discharge.
“Remember you guys gave me a giant banana split the day I ETSed [got out as scheduled]. Well, it’s been downhill since then. I came back to Cleveland, stayed with my dad, who was unemployed. Man, was that ever a downer. But I figured things would pick up if I got wheels, so I got a car. But it turned out the car wasn’t human and that was a problem. So I figured, ‘What I need is a girl.’ But it turned out the girl was human and that was a problem. So I wound up working at GM to pay off the car and the girl.”
And he introduced me to his pregnant wife, of whom he seemed much fonder than it sounded.
The young couple had no complaints about the pay at GM. Still, Duane planned to quit after his wife had the baby. “I’m staying so we can use the hospital plan.” After that? “Maybe we’ll go live on the land.” If that didn’t pan out, he’d look for a job where he’d get to do something “worthwhile.”
To Duane worthwhile work didn’t mean launching a space shuttle or curing cancer. It meant getting to see something he’d accomplished like fixing the coffeehouse record player, as opposed to performing his assigned snaps, twists, and squirts on cars that moved past him every thirty-six seconds.
He also wanted to escape the military atmosphere of the auto plant. “It’s just like the army,” he told me. “They even use the same words, like ‘direct order.’ Supposedly, you have a contract, so there’s some things they just can’t make you do. Except if the foreman gives you a direct order, you do it or you’re out.”
So despite the high pay, Duane and his friends talked about moving on. This wasn’t just a pipe dream. In the early 1970s there was enough work around that if a friend moved to Atlanta or there was a band you liked in Cincinnati, you could hitchhike there and find a job in a day or two that would cover your rent and food.
That made it hard to run a business of course. The GM management echoed many other U.S. employers when it complained about Monday/Friday absenteeism and high turnover among young workers. At just about that time U.S. manufacturers began feeling competition from German and Japanese products, and for the first time in decades they saw a slight dip in profit rates. In retrospect I wonder if this wasn’t the historic moment when many companies determined to do something about their labor problem.
But neither Duane nor I had any premonition of the outsourcing and off-shoring soon to come. For us it was a time when jobs abounded and Americans talked not about finding work but about humanizing it.
In the 1980s I spoke at a university in Michigan and spotted Duane in the audience. When the talk ended, I asked him to come out with us—me and the professors who’d invited me there. But Duane had to collect his children from their schools and drop them with the sitter in time to get himself to his 4:00 p.m. shift. His wife would pick them up when her day shift ended an hour later.
“Complicated logistics,” I said.
“It’s a tighter maneuver than my company in Nam ever pulled off,” he quipped. But he and his family pulled it off every day.
In the minutes we had, Duane told me that he no longer worked in auto. “Too many layoffs.” In order to “keep ahead of it,” he’d become a machinist. And to keep ahead of that, he’d upgraded his skill to the point where “I program the machines that program the other machinists.” His shrug said, “What are you gonna do?”
At that time, computers were being introduced into machine shops in a way that took the planning away from the operators at their benches and centralized it in the office or planning department. Duane was helping to fine-tune the automation that would reduce many of his skilled co-workers to machine tenders. He understood that he was “keeping ahead of it” by rendering other men cheaper and more replaceable. Hence his apologetic shrug.
His wife apparently hadn’t managed to keep ahead of computer automation. She processed data at an insurance company and came home most evenings with a headache from staring into the era’s immobile, blinking CRT screens.
“Office work is getting to be worse than those factories you wrote about,” Duane told me. “By the way, I liked the book.” He meant my book All the Livelong Day, with a chapter on Lordstown in which he appears.
In the summer of 2008 a man called to say that he and his sisters were contacting names in their father’s address book to let them know that he had passed away.
Duane died suddenly in Arizona, where he’d moved a few years earlier to work in a specialized shop that had something to do with industrial lasers. (He “kept ahead of it” till the end, it seems.) The funeral was scheduled for Saturday, and there was plenty of room for out-of-town guests. “Dad built these beautiful built-in sleeping spaces,” his son told me.
Duane’s children (the kids who’d been shuttled between shifts with such split-second timing) were trying to figure out how to keep the house in the family instead of selling it to a stranger who might not appreciate their father’s craftsmanship. But all of that was still “up in the air.”
I didn’t go to the funeral, but I did at least manage to send a timely note of condolence.
Lehman Brothers collapsed two months later, and I began interviewing people who’d lost jobs, homes, or savings in the Great Recession for this book. It took me two years of talking to recession victims to see how Duane’s pre-crash history, the parts I’d been privy to, explained the crisis that hit the rest of us after he died.
Once I realized that Duane and his family belonged in a history of the Great Recession, I tracked his son down. He told me that his sisters, both living in Michigan, had toyed with the idea of moving to Arizona, maybe together, though one was married and the other wasn’t. They’d even begun to explore the employment situation out there. (One of Duane’s daughters is a medical receptionist and the other a delivery truck driver.)
Then came the crash, and who would give up a steady job? Unfortunately, while they’d waited, house values dropped to the point that even if they managed to sell Duane’s house at its post-crash price, they’d still owe the bank over $200,000. The house, with all Duane’s beautiful built-ins, was now “underwater.”
Since their mother was by then off the scene and their father had left no other significant inheritance beyond a $15,000 death benefit and a $6,000 credit card debt, his children couldn’t afford to keep paying the mortgage. So, on the advice of a lawyer, they mailed the keys to the bank and walked away.
“Dad would make some joke,” his son said. “ ‘When I was alive, I once stopped you from running away from home, but I taught you to walk away from a home after I was dead.’ Something like that. Only he’d make it come out funny.”
There is probably some way to make it come out funny, but I can’t work out the wording either.
This is not to say that Duane led a deprived or worthless life. His estate may have fallen victim to the recession, but he himself worked fairly steadily at increasingly skilled and, let’s hope, “worthwhile” jobs. He raised three children who get along with one another and admire their father. And he seems to have retained his self-aware but not self-deprecating humor to the end.
On the other hand: here’s a workingman, part of a two-income family, who kept ahead of off-shoring, kept ahead of automation, worked for four decades, and died with no savings, negative equity in his house, and a $6,000 credit card debt.
Apropos of that credit card, Duane’s son insisted on telling me that his dad derided “consumerism” to the end. While he was growing up, the family never bought a big-screen TV, a new car, or the season’s must-have sneakers on credit. Most of the $6,000 debt, he thought, was left from Duane’s last move from Illinois to Arizona, a career investment, one might call it, that he’d been paying down.
All of this suggests to me that while his skills went up, Duane’s real wages stayed level or may even have gone down over his lifetime. But down is an un-American direction.
From 1820 to 1970, real hourly wages in America rose every decade—even over the course of the 1930s. That extraordinary century and a half (probably unique in history) ended in the 1970s. From then till now—in other words, throughout the course of Duane’s working life—U.S. hourly wages stagnated or declined.*
Duane seems to fall into the high end—the stagnant end, that is—of that income statistic. During the years when so much work was moved abroad and so much industrial skill was transferred from human to computer, Duane was one of the foresighted or fortunate Americans who managed to “keep ahead of it.”
Why, then, do I say that his life predicted the Great Recession?
Over the decades during which Duane’s earnings were close to flat and his less skilled or less fortunate colleagues lost ground, U. S. productivity rose immensely. To put that statistically, between 1971 and 2007, U.S. productivity increased by 99 percent; that is, it nearly doubled. Over those same years hourly wages rose by 4 percent. (That’s not 4 percent a year; it’s 4 percent over thirty-six years.) In other words, the average worker’s productivity rose twenty-five times more than his pay.† People like Duane and his computerized white-collar wife produced more and more per hour even as their wages stayed constant or declined.
But the United States is a consumer economy. Duane used that word “consumer” to chide his children’s craving for the in thing. But to economists “consumer economy” is a neutral term to describe a society that sells most of what it produces internally. In the United States we sell 70 percent of the goods and services we make to each other. But if the majority of Americans was earning less and producing more, who was going to buy all the stuff?
When Henry Ford raised assembly line wages to a fabulous $5 a day in 1914, he explained that his company couldn’t grow unless Americans earned enough to buy the cars it made. When the companies Duane worked for began to cut wages, they reasoned that instead of paying their workers enough to buy stuff, they could lend them the money. Or perhaps they didn’t so much reason as fall into the practice of necessity.
When Duane worked for General Motors in the early 1970s, it was an automaker that had gotten into auto loans to promote sales of its own products. By the time Duane died, General Motors Acceptance Corporation was not only an auto lender but the fourth-largest home mortgage lender in America. The TARP program bailed it out of massive subprime mortgage losses.
Similarly, that other industrial icon, General Electric, established its lending arm, GE Capital, to help midsized manufacturers finance their purchases of GE generators. But as real wages fell and real sales growth slowed, it too morphed into a financial firm. By 2007, the year before the crash, GE Capital contributed half of GE’s profits.
Corporations that didn’t become banks themselves deposited their profits in outside banks or returned them to shareholders who did the same. Thus Main Street money became Wall Street money. To put it another way, our economy became financialized. But what were financial institutions doing with all the money that was accumulating in fewer and fewer hands?
In my book Money Makes the World Go Around, I tried tracing my own bank deposit as it flowed out into the global economy in the mid-1990s. Most of my money, I discovered, coursed round and round through closed circuits for the trading of currencies, securities, and more abstract derivatives. The little that seeped out into what bankers call the “real sector” might be used to buy things like third-world water and power systems (without making any material improvements in them). A lot of the rest was lent to companies, countries, and private citizens who seemed to have no expanding business or rising income with which to pay that money back.
You couldn’t miss the Ponzi-ish smell. If I don’t have $10 this year and my wages aren’t going up, how will I have $15 next year to pay you back with interest? Take out more loans? By the late 1990s it was obvious to anyone but a central banker that this couldn’t go on much longer.
If it sounds as if I’m flaunting my own economic prescience, let me state for the record that while I shook my head over student loans, leveraged buyouts, dot-com stocks, and credit card debt, I did not predict that the ultimate Ponzi scheme of the era would involve selling, securitizing, and betting against home loans made to Americans who couldn’t afford houses.
All I knew was that the United States is a consumer economy. But instead of sharing the productivity growth of the last forty years with our consumers, we divided it so unequally that most of the new wealth went to 1 percent, leaving the other 99 percent, including Duane, too poor to keep buying what they produce. Eventually, it caught up with us.
Yet once I started talking to victims of the Great Recession, I noticed something odd. “Poor” Americans are surprisingly rich. The breadlines of 1929 have been staved off by unemployment insurance. The two-income family, though it may have been a response to declining wages, is another form of unemployment insurance. Most people who are out of work not only eat but stop for take-out coffee. Not a single one of the long-term unemployed you’re about to meet carried a thermos.
I’m aware, of course, that over 15 percent of the U.S. population lives below the official poverty line and that a sizable number face what we now call food insecurity. But I began this study by contacting people who had lost a job, a home, or savings in the Great Recession. That means they had one or more of those “middle-class” accoutrements to begin with.
A couple of people I talked with began to suspect, in the very course of our conversations, that they may “recover” from the recession by landing in a different socioeconomic class. Some have distressing ways of coping with their insecurity. But you’ll also meet people with a real talent for snatching moments of pleasure and creating reassuring small routines, even when they can’t be sure of larger patterns like where they’ll work the next month or, in a couple of cases, where they’ll sleep the next night.
As I talked with people who’ve lost jobs, homes, and savings, I couldn’t help wondering what shape they and the country will be in after we fully emerge from the downturn. I think there are enough clues in their individual histories for us to make some good guesses by the time we’re finished.
In the meantime, I’ve tried to leave these recession vignettes open-ended enough for you to glimpse a lot that’s contradictory or irrelevant to my economic notions. That may be the best reason to travel along with me and see how specific, unique Americans cope with the Great Recession.
* These figures come from Professor Richard D. Wolff, who made this point in his monthly lecture series, Update on the State of Global Capitalism, delivered at the Brecht Forum in New York City. The lectures can be viewed online at brechtforum.org.
† These statistics were collected for me by Doug Henwood, editor of the Left Business Observer. Henwood adds, with his characteristic fairness, that if you count fringe benefits, which were pushed up primarily by the rising cost of medical insurance, then the average employer’s full hourly labor bill went up by almost half (49 percent) between 1971 and 2007. While costly to employers, that money didn’t go to workers in a form they could spend, nor did it generally increase their standards of living. So to be totally fair if inelegant, we might say that between 1971 and 2007 productivity gains were twenty-five times hourly wage gains and two times wage-plus-benefits gains. Either figure is a radical break from the historic U.S. tradition of far more evenly shared productivity gains.