Breaking the Cycle of Fear

By Gerald W. McEntee

With just a few words, Federal Reserve Chairman Alan Greenspan can send stock markets around the world soaring or crashing. When he speaks, everyone truly listens.

So it came as a shock to observers when Greenspan told the Senate Finance Committee recently that Americans are underpaid, they're nervous about losing their jobs -- and that it's good for the economy.

Speaking in the language of economists, the Fed chairman said, "As I see it, heightened job insecurity ... explains a significant part of the restraint on [wages], and the consequent muted price inflation."

In other words, when workers fear losing their jobs they don't ask for higher wages and that helps keep all prices low.

How bad is worker insecurity? Greenspan reported that almost twice as many workers feared losing their jobs last year -- in a healthy economy -- as did five years earlier at the lowest point in the recession.

Workers are not demanding more money, he continued, because they fear losing their jobs to better-skilled individuals or to foreign competitors. And then he made another extraordinary admission: "[T]he continued decline in the share of the private workforce in labor unions has likely made wages more responsive to market forces ... [and] new competitive realities have in many instances undermined union strength."

Greenspan was making two important points: First, that declining union membership leaves more workers vulnerable to the whims of their employers. Second, those Americans who are not union members are too afraid to ask for a raise and too afraid to unionize.

An American economy whose health is based on keeping working people underpaid and insecure is not a healthy economy at all, no matter what Greenspan might say. It is certainly not an economy to be proud of. Public officials, economists and business leaders should be concentrating on how to raise living and working standards, not how to keep them artificially depressed.

We in AFSCME have always understood that a growing labor movement is necessary to keep standards high for all Americans. That's why we've made organizing a priority and over the past year alone invested the resources it took to win union representation for over 29,000 workers in Maryland, Illinois, Texas and other areas.

Employers have an interest in promoting worker insecurity. The best antidote for their gloom-and-doom picture of the job market are the words of Greenspan himself. Speaking before the Senate committee, the Fed chairman presented a picture of a strong economy. "I think it is fair to say that the overall performance of the U.S. economy has continued to surpass most forecasters' predic- tions," he said. He noted that unemployment is low and workers are in demand.

Greenspan had hopeful words for public employees as well: States and localities have more money in their treasuries than in years past. Soon after the official's testimony, The New York Times reported: "Five years of economic growth has left state governments flush with money." Revenues are up while spending is down. Only three states -- Hawaii, Idaho and Tennessee -- are falling below revenue projections while the rest are matching or exceeding expectations.

During his testimony, the Fed chairman wondered aloud when workers would start demanding their rightful wages in this robust economy.

I say the answer is now.

AFSCME believes that the economy isn't working unless it's working for everyone. We believe that working people should be paid the true value of their work, nothing less. We believe that employees should feel secure in their workplace, not fearful of losing their jobs.

AFSCME and the rest of the labor movement must break the cycle of fear and insecurity in the workplace. We must fight to make sure that Americans are paid what they are worth.

Would you like to read more about economic issues such as this? Send a note to: Editor, Public Employee Magazine, AFSCME, 1625 L St., N.W., Washington, D.C. 20036-5687 or e-mail, JeffRubin@AFSCME.org.