Editor's Note: We asked Just Economics to provide our readers with a breakdown of what's really wrong with the economy. This first part describes some basic issues. In the next Network News, Just Economics will talk about globalization.

People are saying it -- not only in campaign speeches, but on buses and over dinner tables and in grocery lines -- "immigrants are taking our jobs."

As we have seen, the scapegoating of immigrants has a tremendous influence on politics -- the power to win elections and pass legislation. Why has this been such an effective political "strategy" in the U.S.?

People in the U.S. are faced with an uncertain economic future. The job market has changed. We are told that it's because of the global economy -- but there is nothing natural or inevitable about widespread economic insecurity. It is the result of policies made by people. Blaming it on immigrants (especially undocumented immigrants, who represent less than 1.5% of the population and can't vote) shifts the blame away from the real decision makers who determine economic direction. And it hides the real solutions.

UNEMPLOYMENT: THE TRUTH

So how bleak is our economic future? Pretty bleak. Even though the "official" national unemployment rate is 5.5%, many people have had so much difficulty finding work they have stopped looking. These people are not counted in official unemployment statistics. Others are working part-time when they really want and need a full time job. If we counted all these people, the overall unemployment rate would be over 12%. Some of us are doing even worse -- young African American men, for example, have an "official" unemployment rate of 38.2%.

Most of those who do have work are making less than they used to. For 80% of working people in the U.S., hourly wages have fallen 14% since 1973. Three quarters of the new jobs created in the last four years are "contingent" -- that means they are temporary, part-time, on-call, or "self employed". Having contingent work means you can't plan when you will be working or know how much you will make. In fact, you can't count on having work at all.

In this kind of work environment, everyone feels that they are slipping down the economic "ladder". People on the bottom feel intense competition from anyone trying to get onto the ladder. So the belief that immigrants coming into the economy represents competition that can drive wages and working conditions down is not stupid -- it has a desperate logic.

In defense of immigrants, people sometimes say "immigrants take jobs that nobody in the U.S. wants". And why don't people want these jobs? Because they pay low wages and/or have unsafe work conditions. So, the question we should be asking is: why do we tolerate companies that create jobs so bad that no one wants them?

The existence of jobs with low wages and unsafe or intolerable working conditions hurts all workers in the economy by making it more difficult to command better working conditions and better pay. What creates this environment where workers are competing with one another to "win" a low paying job?

We have to look to employers for the answer. After all, corporations are not experiencing the kind of economic insecurity that workers feel. Corporate profits are the highest they have been in 45 years. The average return on investment (profit) of the Fortune 500 companies in the first three months of 1995 was 20%. And corporate executive's wages are up! On average, corporate CEO's make 157 times more than the average factory worker. In 1974 they were making just 35 times as much as the average factory worker.

THE REAL JOB COMPETITION

So, a better way to think about competition over jobs is to think of the competition between corporate owners/managers vs. Workers over who gets to benefit from profits, as competition between "Wall Street" and "Main Street". If workers get more jobs and higher wages, then profits are flowing to them -- and less money is being made at the top. Downsizing, on the other hand, increases corporate profits by cutting jobs and - more importantly -- by increasing the competition among workers for the jobs that are left. Two thirds (2/3) of those who find work after losing their jobs to downsizing end up in jobs that pay less than their old ones. Often they get the same job back -- but as a "consultant" (contingent worker) without benefits.

Clearly, corporations must be held responsible. But wagging a finger at them isn't going to work. And pleading with them isn't going to work either. We have a powerful way to make sure that corporations play a responsible role in the economy -- it's called government, if we can force government to work in our interest. And that's a big "if".

Unfortunately, for the last 20 years, many government policies have worked to encourage competition among workers to lower wages. Some of these policies include:

• Keeping the minimum wage low.
  
• Not funding our government regulatory agencies so that they can't enforce workplace safety laws, overtime laws, etc.
  
• Limiting the rights and power of unions to create job security and raise wages.
  
• Forcing prisoners and welfare recipients into the workforce at low (or no) wages.
  
• Limiting the growth of the economy with high interest rates.
  
• Limiting the growth of the economy and the potential of workers to participate in it by failing to invest in education, social programs, construction and research.

The point is, there are a lot of things we could be doing to create jobs and raise wages that have nothing to do with scapegoating immigrants or building walls at the border.

Just a few policies we might advocate would include:

Raising the minimum wage -- or even requiring a "living wage" as some have suggested in Los Angeles and Baltimore and other cities across the nation.

Cracking down on companies that exploit their workers, especially their immigrant workers. Whether its strawberry growers or high tech companies or the tourism industry, these companies should be creating jobs that pay a decent wage, is a safe place to work, provides benefits and job security.

Government investment in the education for all people in the U.S. -- including immigrants -- so that they will have the skills to command a livable wage -- and create new jobs with new technologies and ideas through their work.

Supporting the rights of workers to unionize and get contracts.

Many of these policies have been implemented in other economies in the world with great success -- places like Germany and Japan for example. One thing we can learn from the success of scapegoating is this -- when a powerful idea sweeps the country it can bring about very rapid political changes in its wake. Government IS still responsive to popular will, and if we create the popular will to support economic policies that address the real reasons for our economic insecurity we can all have the kind of country we want to live in.

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