For Ohio’s Jobless Who Receive No Dole, This is a Referendum on the Welfare State

The Guardian, UK - October 26, 2004

The Guardian, UK

by David Teather and Larry Elliott

Theressia Gresham’s unemployment cheques stopped arriving two months ago. Ms Gresham, who lives in Cleveland, Ohio, lost her job as a forklift driver at the beginning of the year and has been unable to find work since. The United States government will pay just 26 weeks of benefits before cutting workers loose to fend for themselves. The Bush administration, convinced that the economy is on the rebound, recently ended a programme extending the payments a further 13 weeks. She can’t afford to be ill because she has no healthcare insurance, although she has developed high blood pressure and diabetes since being unemployed.

Ms Gresham, 42, who has worked all her life, now spends her days at the United Labor Agency, a federally funded organisation that helps people get back to work, sending out job applications, researching on the internet and hoping. America’s flexible labour market is much admired by the International Monetary Fund and the Organisation for Economic Cooperation and Development, but the downside to the dynamism is that for those who fall on hard times life is cruel. There are 93,000 people in Ohio who are now living without unemployment benefits and Theressia is one of them.

“I’ve exhausted everything,” she says, looking close to tears. “I have no income. Sometimes my mother loans me money but she is an elderly woman. I can’t get the medications I need. I didn’t even know the unemployment was going to stop. My rent was due Saturday and I told my landlord I would have it by the end of the week, but I probably won’t. This is just awful.”

The United States treasury secretary John Snow last week told an audience in Ohio that the oft-cited jobs lost under the presidency of George Bush were a myth. He later had to retract the claim: Ms Gresham and millions like her are the reality – a working-class that the government and much of America would rather ignore.

According to the census bureau, another 1.3 million Americans fell below the poverty line last year, taking the total to 35.9 million, around 12.5% of the population. The number of people without health insurance grew by 1.4 million to 45 million. Since Bush arrived in the White House, the number below the poverty line has risen by 4.3 million, the number lacking healthcare by 5.2 million.

Cleveland, in the battleground state of Ohio, was recently judged to be the poorest big city in America by the US census bureau, toppling Detroit. Steve Newman, who runs the United Labor Agency, says the number of people coming through the organisation looking for work has tripled over the past three years.

Bush, he notes, has at least increased the agency’s funding.

Built on manufacturing, Cleveland has suffered the fate of many industrial cities in America’s north-east. With its grand buildings from a more prosperous era, it has the feel of one of Britain’s northern industrial cities, hollowed out by de-industrialisation. The population has steadily fallen as people headed for the new jobs in the suburbs, leaving behind a city with dwindling tax dollars and needy people. Lay-offs have not been confined to manufacturing. The city has shed 700 teachers and in East Cleveland, a lack of money has forced cuts in the numbers of police officers patrolling some of Ohio’s meanest streets.

According to Ohio Policy Matters, a bipartisan thinktank based in the city, any recovery from the recession that began in 2001 has passed the state by.

The state lost jobs for three consecutive years since the peak in 2000. There have been meagre job gains so far this year, but the state still has 217,000 fewer employed than in March 2001 when the nationwide recession officially began, a 3.9% drop. At the same point after the 1991 recession, the state had posted a 1.3% increase. At the current rate it will take Ohio six years to reach pre-recession levels of employment.

“There has been no previous recovery with this little job gain,” says executive director of the thinktank, Amy Hanauer. “Many of the jobs that have left Ohio are not coming back.”

At the same time, wages are getting lower, partly the result of the loss of good paying unionised factory jobs and growth in service sectors, the so-called “Wal-Mart effect”. The median wage last year was $13.14 (£7.15) an hour. Accounting for inflation, the
median Ohio wage in 1979 was $13.44.

Ohio is not alone in suffering. Michigan, with its high concentration of car plants, has had an even tougher time, while neighbouring Pennsylvania has also seen its manufacturing base affected by the double whammy of weak demand and competition from China. Anger over what is seen as Beijing’s illegal manipulation of its currency is palpable. John Kerry’s proposal to review all trade agreements within his first 120 days in office is popular in Ohio, not least because government figures show that between 1995 and 2004 52,265 jobs were lost in the state as the result of international trade. In truth, however, the loss of jobs in manufacturing is not new. Estimates suggest that 40% of the job losses have been the result of higher productivity, but even so the past four years have been especially tough. Manufacturing employment in the US has been cut from 17 million to 14 million and those that have survived have had to become leaner and – in many cases – meaner.

Todd Weddell is president of a steel workers’ local union in Niles, 60 miles south east of Cleveland. He and his 360 members have been locked out for a year after refusing to accept a 15% cut in their compensation package. Their employer, RMI Titanium, said it needed to save $3.5m from of its wage bill. “The whole situation is totally grim,” Weddell says.

How do we compete?

Both Kerry and John Edwards have been on the picket line at Niles in one of their many visits during this knife-edge contest, but some of the steel workers are now looking for jobs that are likely to pay around half as much as the $16 an hour they were previously getting. If Kerry won, Weddell said, there would at least “be someone in the White House who cared about working people in America”.

Disappointment with Bush is not confined to organised labour. Steve Schler, president of Pro-Mold, which makes plastic moulds in Akron and has sales of $1.6m, said the downturn since the boom of the late 90s “has been the worst that I have experienced. Prior to that I thought the early 1980s was the worst.

“We have felt competition from the far east – China, Taiwan, Korea. How do we compete? I haven’t got a clue.”

The other significant issue facing ProMold, as it is facing workers themselves, is healthcare. Premiums are getting ever more expensive. In 2002, ProMold’s premiums rose by 13%. Last year, the cost was 17% higher and this year 18% higher. The result has been to scale back coverage and make workers pay a higher portion of the costs.

Ed Herman, the Republican candidate for Ohio’s 10th district, including much of Cleveland, says Bush’s ideas for tackling big structural problems such as social security and healthcare recognise that the world has moved on from the days of the industrial plants of the 30s and that a more individual approach is required.

“The Democrats’ old tactic is class warfare and they do it effectively. It is a myth perpetuated that Republicans want to destroy the welfare system. That is not the case. The services are being expanded not shrunk and as that awareness spreads more people
will consider themselves Republican.”

Zack Schiller, at Ohio Policy Matters, disagrees. While the president has directed tax cuts towards the wealthy and large corporations, the American working-class is feeling threatened, he says. “Many welfare programmes are under attack. Medicaid [which helps poor people buy prescription drugs] will probably be cut back; they have lowered the threshold on subsidised childcare; they are trying to reduce housing subsidies. To an extent this election is a referendum on the welfare state.”

An outsider might have difficulty understanding why Ohio is even a swing state. But the Bush administration has been effective in directing attention away from the economy and making it instead about homeland security and social issues such as abortion and gay marriage. The president is more popular in the rural south of the state, but even in Cleveland, union organisers say 30% of their members vote Republican.

John Ryan, who runs the local chapter of the AFL-CIO, the umbrella union organisation in the US, explains that many of his bluecollar members are Republican. “We have devout Catholics or Christian right who have strong views on abortion or gun owners who want to own a bazooka.” In the end, though, he believes that the mass registration campaign organised by the Democrats will win the state for Kerry. “God and guns can’t compete.”

State of the nation’s health: Plans and pledges

Bush’s first-term record In 2002, 75% of Americans were covered fully by health insurance, 44 million were not covered at all and 70 million either had no cover or were not covered for part of a year; those not covered were more likely to be children, young adults and Latinos; average healthcare costs are estimated to be $14,500 (£7,800) per family by 2006


Bush Tax credit of $700 per low income individual or $2,000 per family to help the uninsured; no change to drug pricing, which prevents imports of cheaper drugs because they could be tainted

Kerry Tax credits to make healthcare cheaper for small businesses, those near retirement and workers between jobs; use IT to cut red tape, saving $350bn annually; allow drug imports from Canada

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