Middle-Income Jobs Vanishing, AFL-CIO Says

The United States is rapidly moving toward “a split-level economy,” with more jobs at the top and bottom rungs but fewer of the middle-income, full-time jobs that have in the past offered the best opportunities for most Americans, says a report issued by the AFL-CIO Executive Council here Tuesday.

The labor federation’s report stressed that a recent congressional study showed that jobs added to the economy between 1979 and 1984 were disproportionately at the low end of the wage scale--six out of 10 paid less than $7,000 a year.

AFL-CIO President Lane Kirkland said this development--spurred by the decline of the nation’s heavy-manufacturing economy--was closing the door of opportunity for many Americans. “It’s a great tragedy to have that door closed and those opportunities wiped out,” he said.

Congress Urged to Act

As part of its efforts to remedy this problem, the 12.8-million-member labor federation Tuesday urged Congress to pursue policies that foster economic growth, increase real income and achieve a fairer distribution of income within American society.

Specifically, the Executive Council said Congress should reject further budgetary increases in defense spending that will come at the expense of economic and social programs, and proposed that the nation’s wealthiest people be taxed at a higher rate to create a more equitable society and raise $7 billion in needed federal revenue.

The AFL-CIO position paper on the economy was based on a congressional report done by economist Barry Bluestone of Boston College and Bennett Harrison of Massachusetts Institute of Technology, on Labor Department data and on other information. The AFL-CIO paper noted that 50% of the 11 million workers who lost their jobs between 1979 and 1984 had worked in basic manufacturing industries such as steel, auto, rubber, transportation equipment and machinery. Two-thirds of those job losers were blue-collar workers and one-third were white-collar.

Earnings Reduced

The average real earnings loss for those displaced workers who subsequently found a job was 10% to 15%, but 30% of the re-employed blue-collar workers and 24% of the re-employed white-collar workers lost one-quarter of their earnings, the AFL-CIO said.

Along the same line, median annual income for all American families--measured in dollars of constant buying power--dropped 4.5% from 1979 to 1985, from $29,029 to $27,735. “The loss in family income would have been far larger if there had not been a big increase in the proportion of two-earner families since 1980,” the AFL-CIO paper noted.

Kirkland and other union leaders here said a number of steps had to be taken to arrest the decline of middle-income jobs. The Executive Council called for strong trade legislation to stem the flow of imports, which it said has resulted in the loss of millions of well-paying jobs in industry. It urged that more federal funds be spent for training and retraining workers and advocated the launching of construction projects to upgrade the nation’s roads and bridges and to create more jobs.

Budget Proposals

The budget introduced by President Reagan last month seeks $980 million to assist laid-off workers in preparing for and finding new employment, including $570 million in new funds and $410 million taken from existing federal employment dislocation programs. However, the budget also would cut $900 million from vocational education programs.

In response to a question, Kirkland said the AFL-CIO would “welcome any increase in funds and resources available for adjustment and training.” But he quickly added that, even with the new funding the Administration has proposed, the resources available for training and other types of assistance for workers who have lost their jobs is “very, very far below” the level available when Reagan came into office.

Kirkland politely, but occasionally tartly, disagreed with several positions taken by Labor Secretary William E. Brock III here Tuesday. Brock met with the council for about 40 minutes and then held a brief news conference.

Subminimum Wage Plan

Brock indicated that, if organized labor continued to push for an increased minimum wage, the Reagan Administration would revive its proposal for a subminimum wage for teen-agers. Earlier efforts by the Reagan Administration to establish a so-called Youth Employment Opportunity Wage were heavily opposed by organized labor, and Kirkland reiterated the federation’s opposition to such a measure Tuesday.

Kirkland also disagreed with Brock’s contention that a law requiring employers to give notice to employees of an upcoming plant closure would have adverse effects. Later in the day, Kirkland issued a statement that sharply criticized President Reagan’s competitiveness proposals announced Tuesday. He made a particularly pointed reference to what he considered the inadequacy of job development proposals in the President’s message. “Retraining for jobs at substantially lower pay levels is hardly a way to build a stronger and more productive society,” Kirkland said.

Change in Strategy Urged

In the same vein, a leading liberal economist said here Tuesday that the United States had to adopt a fundamentally different strategy than it is now pursuing if it is to enhance its competitive position in the global economy.

“Since the mid-1970s, we’ve been following a strategy that has us competing against the world on the basis of lowering wages and lowering living standards,” said Jeff Faux, president of the Economic Policy Institute, a nonprofit Washington think tank that receives 60% of its funding from unions.

Faux said such a strategy is doomed to fail because companies--including a number that are government-subsidized--in countries like Korea and Brazil typically pay workers $1 or $1.50 an hour, giving them a labor cost advantage U.S. companies could not expect to match.

‘High-Quality Exports’

“We’ve got to put our resources into creating high-quality exports like Japan, Germany and Sweden do if we’re going to be competitive,” Faux said. This will require substantial federal spending for training workers and modernizing plants.

Faux contended that it costs more to train a good skilled machinist than it does to educate a Ph.D., and he said the country’s machine tool industry is losing out to Japanese companies because the U.S. government has not expended money to train the necessary workers, in contrast to substantial expenditures of this type by the Japanese government.

Faux said the economic advances made by West Germany, Japan and Sweden demonstrate that there is “nothing incompatible” between government spending to assist industry and improving economic competitiveness. However, he said, many members of Congress are afraid to advocate programs of the type he believes are necessary to revive the American economy because they are afraid of being labeled “big spenders.”