Finish the job with terror

Immediately following the Sept. 11 terrorist attack on the World Trade Center towers, Congress moved to extend subsidies to the financially precarious airlines. In response to criticisms that many hotel and service workers had suffered job losses, congressional leaders promised new benefits for the unemployed. Six months later, Congress took one small first step by authorizing an additional thirteen weeks of unemployment compensation for eligible workers. Congress now needs to finish the job by reforming the entire unemployment insurance system. Inaugurated during the New Deal, the system reflects compromises with racial, gender, and economic inequities that are intolerable today.

Last fall airline lobbyists argued that events beyond the industry’s control had brought it to the brink of ruin. Yet if industry executives, who by some accounts share responsibility for lax airline security, are innocent victims, an analogous argument holds in spades for many service employees.

What sort of safety net awaited these dishwashers, waiters, waitresses, and bell hops? In most states, those who had worked full time for over a year did qualify for 26 weeks of unemployment insurance. Nonetheless, in most states benefits did not bring a family up even to the poverty line. More significantly, in most states, including Maine, the system systematically discriminates against part-time workers. A waitress working twenty hours a week for years but whose family responsibilities make full time work impossible does not qualify for unemployment insurance.

Unemployment insurance is a joint federal/state program with the federal government setting some very general guidelines and providing part of the funding. States have considerable freedom to establish eligibility and benefit levels. The state role in the program is hardly accidental. Southern Democratic acceptance of the whole Social Security package during the thirties was contingent on two major compromises. Domestic and seasonal workers were excluded from old-age pensions, and states were given broad rights to run unemployment insurance. Southern business and agricultural interests regarded these limits as central to the preservation of the “peculiarities” of their labor market. Their concern was that any form of safety net might deter African American domestics and field hands from accepting the near slave labor conditions imposed on them in the post-Reconstruction South.

Civil rights battles in the fifties and sixties extended Social Security more broadly, but unemployment insurance remains a state prerogative. With changing demographic and labor market patterns, the differential treatment of part time workers takes an increasing toll. In the ’50s, roughly seventy percent of the work force was eligible for unemployment insurance. Only 43.of unemployed workers received benefits in 2001, and women were less likely to receive these benefits than men (40.0 percent and 45.9 percent, respectively). Here in Maine, the figures are 38.6 percent of men and 37.4 percent of women.

Just as in earlier struggles over old age pensions, any fight to extend unemployment insurance coverage to part time workers is a civil rights, economic, and even cultural issue. Historically, many unions, often male dominated, worried more about wage levels and unemployment benefits for full time workers, who were primarily male. In addition, these restrictions make a cultural statement as well: paid work is all that really matters in a human life and persons unwilling to make a full commitment are not as worthy.

The issue of unemployment insurance for part time workers is salient today because many corporations now increasingly use part time workers as a primary strategy to control labor costs. Most companies do not pay part timers benefits and they can lay them off without leading to increases in the taxes they pay to fund state unemployment compensation trust funds.

Just as Southerners wanted the freedom to run their own labor markets, business interests today argue that more flexible, less regulated labor markets foster high employment levels, And just as Southerners vilified “lazy” African Americans who “needed discipline” to work, the business press now bemoans the fate of European peers hamstrung by laws that make it hard to lay off workers. It routinely vilifies leisure-loving Europeans loafing on their generous pensions and benefits.

The trouble with this picture is that European states with the least restrictive laws, such as Spain, have had the highest unemployment rates in Europe. Western Europe as a whole had lower rates of unemployment in the sixties and seventies, when labor market “restrictions” were more extensive than currently. By any reasonable accounting, Europe’s slow growth and high unemployment today are the fault of a central bank that keeps interest rates outrageously high, slowing economic growth throughout Europe.

Even if the United States has avoided a deep recession, the mildest downturn still harms the most vulnerable. If political leaders are serious about welfare recipients’ becoming self-sufficient, reforming unemployment insurance must be a priority. A close accounting of the history and the mindset on which the current system is based should be part of this conversation.

John Buell is a political economist who lives in Southwest Harbor. Readers wishing to contact him may e-mail messages to jbuell@acadia.com.