Jan 28 • 6M

Psst: Want to know why Americans are gloomy about the "best" economy since 1984?

Hint: It's not inflation.

Open in playerListen on);

Appears in this episode

Robert Reich
Robert Reich exposes where power lies in our system — and how it's used and abused.
Episode details

How can it be that the U.S. economy grew at its fastest pace since 1984 last year (according to yesterday’s report from the Commerce Department) but most Americans remain gloomy about the economy, and blame Biden and the Democrats? The New York Times declares that the cause of this paradox is inflation: “Biden is suffering in the polls as high inflation saps confidence in the economy, even as growth comes in strong.”

Rubbish. Americans are gloomy about the economy despite its record growth because most Americans haven’t shared in that growth.

If you really want to understand this, a good place to begin is with the corporation often considered the most socially responsible in the nation — Starbucks. (A Pew survey on where Americans would like to live included the following question: “Just for fun: Would you prefer to live in a place with more McDonald’s or more Starbucks?” Among self-described liberals, Starbucks carried the day, 46 percent to 33 percent. And while McDonald’s won among adults 65 and above, Starbucks had a 13-percentage-point edge among 18-to-29-year-olds.)

But in fact, Starbucks isn’t socially responsible. Its brand is built on an edifice of faux social responsibility.

Starbucks is the nation’s first major retailer to backtrack on vaccine-or-test plans for its workers, since the Supreme Court’s absurd January 13 ruling that struck down the Biden administration’s vaccine-or-test requirement. Starbucks is now telling its 200,000 U.S. employees they no longer have to be fully vaccinated or submit to weekly coronavirus testing.

Starbucks calls its workers “partners” — but they’re not real partners. They don’t share in the profits. Between January and September of last year, Starbuck’s revenue soared to $20.9 billion (compared to $17.3 billion in the same period in 2020). Its president and chief executive officer, Kevin Johnson, raked in $14,665,575 in total compensation. But the current average hourly pay at Starbucks is $14 and hour, or $28,000 a year. And Starbucks wants to keep wages in the basement. For years it’s fought ferociously against employee efforts to unionize.

Social responsibility my macchiato.

Now zoom out to the economy as a whole. Could it be that Americans are gloomy despite the economy’s record growth because the super-rich are taking home an ever-larger share of those gains while most people are getting the crumbs? Is it possible they blame Biden and the Democrats for promising to change this but, after a good start, not delivering?

Starbuck’s progressive branding has helped it sell lots of coffee. Yet Starbucks faces a growing dilemma — not unlike the dilemma facing Biden and the Democrats. Starbucks’s young, progressive baristas are no longer willing to tolerate Starbucks’s hypocrisy. Since two Starbucks stores voted to unionize in late August, workers in dozens of other Starbucks stores across the country have filed petitions for elections.

Starbucks can’t have it both ways — promoting itself as the face of socially-responsible capitalism while treating its workers like shit.

Biden and the Democrats may be facing a similar paradox — promising a fundamental change in the power structure of America while allowing big corporations and the super-rich to continue enlarging their wealth and power. Biden and the Democrats can’t have it both ways, either.

Perhaps it was too much to expect Biden and the Dems to alter a trend that’s been growing for four decades as large corporations have steadily gained bargaining power (a handful of big firms now dominate most industries), while hourly wage earners have steadily lost it (the share of private-sector workers in unions has plummeted from over 30 percent to 6.1 percent). This power shift is directly reflected in the increasing share of economic gains going to the top, and decreasing share to everyone else.

But it’s important for Biden and the Democrats to avoid the trap of Starbucks-like hypocrisy. Biden and the Dems need to tell the truth about what’s happening: American workers are not losing ground due to inflation. They are losing ground because they continue to lose bargaining power. The economy grew mightily over the past year but the share going to most American workers continues to shrink.

Starbucks’s workers have had enough corporate hypocrisy. They’re beginning to take power back by organizing at the grass roots. Will most Americans become so fed up with their declining share of the economy’s gains that they too decide to take power back?

Leave a comment