Vol. 71/No. 36      October 1, 2007

While this crisis affects millions, it hits working people especially hard, given the bosses’ grind on living standards and working conditions.

Prices of many basic necessities are at all-time highs. Food prices jumped 4.2 percent in the 12 months ending in July. A gallon of milk is up 51 cents on average since February. A bushel of wheat is up 60 cents since January; a gallon of gas, 20 cents higher than a year ago.

These trends come on top of the squeeze on wages, benefits, and job conditions for the U.S. working class that began more than two decades ago. Faced with declining profit margins, the employers have pushed—and in many industries, succeeded—in forcing workers to work faster, longer, and with fewer benefits.

Average earnings for workers in the United States have steadily declined from the mid-1970s to today. Real weekly wages do not match levels from 40 years ago. When adjusted for inflation, the median hourly wage dropped 2 percent between 2003 and 2006. This drop is even greater when cuts in benefits are factored in.

A September 3 report by the United Nation’s International Labor Organization said the United States “leads the world in labor productivity.” The report found that workers in the United States work more hours—an average of 1,804 per year—than those in most other advanced capitalist countries. They also produce more per hour than workers in any other country except Norway. At the heart of this “productivity miracle” is the degree to which bosses have succeeded in speeding up production and forcing fewer workers to do the same amount of work at the expense of safety and job conditions.

The capitalists have combined these assaults on the working class with massive financial speculation to stimulate economic growth. But the growth isn’t based on expanding production. The speculation on housing is now beginning to unwind. Working people bear the brunt of the effects of this process. Because of the grind on wages, benefits, hours, and conditions, workers have a much thinner cushion to absorb ups and downs in mortgage payments and grocery bills.

The largest percentage jump in foreclosures and delinquencies comes in the category of home loans known as subprime. Such loans are overwhelmingly extended to individuals with few assets who have previously been denied credit. Banks and other lending agencies have lured thousands of cash-strapped workers into the schemes, raking in massive profits off the high fees and interest rates.

Adjustable rate loans also account for a big share of the delinquencies and foreclosures. Through such loans workers can buy a home with little or no money down and low initial payments. After a couple of years the interest rates—and monthly payments—reset. But there is no accompanying “reset” of wages. An estimated 2.5 million people risk foreclosure in the next 18 months when their monthly mortgage payments jump.

The highest rates of foreclosures nationwide are in Ohio and Michigan—states whose working populations have been deeply affected by capitalist “restructuring” of the steel and auto industries. The percentage of homes in Ohio in serious delinquency or foreclosure is more than twice the national average. Foreclosure proceedings began on one percent of all mortgages in Michigan during the second quarter of this year.

Michigan, the center of the U.S. auto industry for decades, leads the country in unemployment, at 7.2 percent in July. Ohio is fifth, with 5.8 percent. The national unemployment rate in August was 4.6 percent.  
 
 
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