The New York Times
The economic fallout from terrorism is hitting some Americans much harder than others, and we need to respond. Last year, when the slowdown began, layoffs and pay cuts hit hardest at manufacturing workers, white-collar managers and professionals. But since the terrorist attacks, consumers have cut their spending, and now a different group is experiencing the heaviest job losses: the mostly low-paid workers in America's vast personal-service sector.
With retail sales down, there's less need for sales clerks. Half-empty hotels don't need nearly as many cleaners and bellmen. Vacant convention halls have no use for platoons of custodians and staffers. Unfilled restaurants can't keep waiters and busboys busy. And so on through all the workers who attend, drive, pamper, launder, polish, clean, prepare and otherwise make life more pleasant for the people who pay them.
In October 439,000 private-sector jobs were lost the largest monthly decline in more than a quarter-century. Hotels alone lost 46,000; retailers, 81,000; airlines, 42,000. Minority workers, with a disproportionate share of low-wage service jobs, have been especially hard hit. Unemployment among blacks rose to 9.7 percent last month, a full percentage point higher than in September and up 2.3 points from a year ago. Unemployment among Hispanics is 2.2 percentage points higher than it was last year at this time.
There is reason to expect that job cuts at the lower end of the wage scale will get even larger and occur even faster in the months ahead. That's because so much consumer spending is discretionary, turning more on psychological wants than on physical needs. Consumers don't have to dine outside the home, travel, enjoy live entertainment or go on shopping binges. They can choose to spend less on these services as soon as their wallets feel even slightly pinched. And when they do, lower-wage workers feel a bigger pinch. The Fiscal Policy Institute estimates that 48,000 of the 80,000 jobs that New York City will have lost by the end of the year pay an average of $23,000, significantly below the citywide average of about $58,000.
Another vulnerability of lower-income service workers is that they have fewer means of cushioning the blow than they had in prior recessions. Most have no savings and are deeper in debt than they were last time, because their inflation-adjusted earnings never really got off the ground in the 90's. The steady decline in higher- paying manufacturing jobs and an influx of low-skilled immigrants combined to keep wages down.
Government will be less helpful this time around. Safety nets are in tatters. Welfare-to-work programs made sense when work was plentiful, but without work, those no longer eligible for welfare have nowhere else to turn. Even job losers who still qualify will find that welfare payments in most states are worth less than before.
Unemployment insurance is also harder to get. Fewer than 30 percent of people who lose jobs now receive it, down from more than half several decades ago. Eligibility rules have grown steadily tighter. Since part- time workers, temps, the self-employed and people who have moved in and out of employment often don't qualify, a large portion of the lower- wage work force is excluded. Many who don't qualify are women with young children.
Meanwhile, federal programs for job training and low-income housing have been shrunk by budget cuts. State and local governments are in no position to step in. They're already strapped by rapidly declining tax revenues. Rather than beefing up social services, they're starting to cut them.
In short, the fat years of the 90's have left us woefully unprepared for a deep recession that's likely to take a particularly large toll on the poor and lower-wage workers. Given all this, a "stimulus" plan like the one that passed last month in the House of Representatives and is being backed by the White House, which confers most of its benefits on large corporations and upper-income households, seems exactly the reverse of what's needed. Large corporations, already reeling from too much capacity, won't be induced to add more. Wealthier households, already spending whatever they want, won't be inspired to spend more. It's the bottom half who are in trouble. They're most likely to spend whatever extra they get. And they desperately need whatever government can supply.
At a time of national crisis, when the nation must pull together, it seems only logical that we do what we can to avoid pulling further apart.