Q. Times are tough for American workers. How tough?

A. Things haven’t been going very well for workers in America. Wages have essentially remained flat for the past five years or so. Workers [are:] losing health insurance and pensions. Pensions are being replaced by 401(k)s, which generally aren’t nearly as good, nearly as generous, nearly as secure for giving people a good retirement. At the same time, companies are doing very well. Profits have gone up 10, 11, 12, 14 percent a year since the last recession ended in November, 2001. Also, worker productivity has gone up about 15-20 percent since 2001. And a lot of people, a lot of economists are saying there’s something wrong here, corporations are doing well, productivity is going up, yet wages remain absolutely flat after inflation and benefits are growing worse.

Q. You write about the growing income inequality. What effects does that have?

A. Income for the bottom fifth of households has gone up just six percent since 1979. Compensation for the middle fifth has gone up maybe 15-70 percent, after inflation. But for the top one percent income has more than tripled. Again, that’s something many economists are trying to figure out. One problem is that the minimum wage has remained very flat. That’s held down incomes for many workers. Unions have grown weaker—that’s held down incomes. Globalization has made it easier for companies to tell workers, “Look, you’ve got to accept lower wages, you’ve got to forgo raises because if you don’t we’ll move your jobs overseas.”

Q. Is this squeeze that workers are experiencing unique to the United States?

A. It’s not unique. It’s been going on somewhat in Europe and Japan as well. But the squeeze is stronger in the United States. Wages have been flatter here than in Europe. The deterioration of benefits has been faster here than in Europe. And European workers already start out in a much better position in terms of having universal health coverage, having three, four, five weeks vacation guaranteed. Here in America workers are guaranteed no vacations by law. And management in the United States is less constrained than in Europe to make cuts.

Q. You show that in recent decades the basic character of American capitalism has changed. How has that affected workers?

A. Thirty to 50 years ago, there was a lot of emphasis on maximizing production. That meant you needed a lot of workers, you wanted to treat them well, you wanted to maintain good relations with your workers. After World War II, there really was an effort between the General Motors and the Fords and the U.S. Steels, prodded by labor unions, to share their prosperity. And that largely explained why America developed the world’s most prosperous and biggest middle class. And there was this unspoken but very real social contract where people were guaranteed job security, there were safety nets of health insurance, pensions —, many companies gave life insurance to workers. And as we’ve moved from managerial capitalism to investor capitalism, there’s been more emphasis on maximizing profits. We’ve seen many companies slowly tear apart that wonderful social contract that was developed after World War II.

Q. To what extent have government policies contributed to this squeeze on the middle class?

A. Government over the past few years has embraced many policies that have worsened the squeeze. There hasn’t been enough government regulation of mortgage lending, and as a result, we’re having this big crisis. Another failing has been on the minimum wage. For nearly a decade the minimum wage was just $5.15 an hour — — the longest that the minimum wage had not increased since it was first enacted in 1935. And during that decade, the value of the minimum wage dropped by 20-30 percent because of inflation.

Another way government policy has hurt the average American is that tax cuts have really favored disproportionately the folks on top. There have been tax cuts, they have helped the middle class, but they really have helped the upper class far, far more. A fairer distribution of tax cuts would have helped workers very much when they’re facing the squeeze. The typical middle class American I think got $744 dollars in tax cuts, whereas you know I think people in the top one1 percent,% who, I believe, earn $1.1 million a year, their tax cuts were more than $100,000 dollars a year.

Finally, the Republican Congress and the Bush administration were quite hostile to unions. They made it harder for unions to organize. And in many ways, the weaker unions are, the harder it is for American workers to assert a claim to their fair share.

Q. So, on the flip side, can government do much to lessen the squeeze?

A. In my last chapter I discuss some ways to alleviate the squeeze on the nation’s workers. I tried to recommend things that just seemed you know dictated by logic. So, if you want to increase mobility for the poorest Americans, you got to do much more to improve their schools. You’ve got to do much more to give them access to college education. One statistic I cite is that in the top 146 colleges in America, only 10 percent of the students are from the bottom 50 percent income-wise, and only 3 percent are from the bottom 25. So the nation’s universities have to do a lot more to open their doors to low-income Americans, to create real mobility and real equal opportunity.

American law guarantees workers the right to form unions. It even officiallyencourages the right to form unions, yet the government bureaucracy has made it hard for workers to form unions, and in many ways has given companies a green light to break the law in fighting against unions. And in the book I write about the many recommendations being floated in Congress to make it easier for workers to unionize, to penalize the many companies that repeatedly break the law.

I talk about the importance of raising the minimum wage, because, as I said, that’s very important for families on the bottom. I talk about the importance of raising the earned income tax credit, because raising the minimum wage in itself is not enough to lift many workers out of poverty. I talk about the importance of trying to rebuild the nation’s manufacturing base. The number of manufacturing jobs has fallen by 20 percent in recent years. I suggeshaving the government encourage the development of green industries. Of course, another important thing the government should do is push for universal health coverage. We are the world’s richest nation and it seems just plain wrong that in a nation rich as ours there’s so many millions of people without health insurance.

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