Checking the Power of Finance in a Bottom-up Economy

Welcome back to the Bidenomics Brief from the Roosevelt Institute.

This week, we’re looking into the role of the financial industry in the president’s vision of Bidenomics, and taking a deeper look into the headlines about this year’s historic strikes—and whether they’re enough to actually make a difference in workers’ lives.

The Rebalancing

The increase in the wealth and power of the financial sector is one of the defining characteristics of the era of trickle-down economics. Since 1980, the deregulation of the financial industry has led to an explosion of growth by Wall Street and Big Finance: from 5 percent of GDP in 1980 to a whopping 9 percent of GDP in 2010. And while it’s down from that high, it’s still much higher than historic norms. The financialization of the economy is tied to the rise of shareholder primacy as a guiding view and practice for corporate America. Financialization and shareholder primacy have hampered growth and investment and contributed to wage stagnation—all problems that Bidenomics is trying to solve.

The president has taken some important steps to crack down on the power of banks as part of his economic vision, nominating people like Rohit Chopra (full disclosure: a Roosevelt Institute alum) and—just today—announcing new rules to prevent banks from charging “junk fees” for basic services. Given its success to date, it’s no surprise that the agency Chopra leads—the Consumer Financial Protection Bureau—is once again under attack by the financial industry and their allies, in a case just heard by the Supreme Court, Consumer Financial Protection Bureau v. Community Financial Services Association of America.

As the president tells it, cracking down on hidden junk fees is part of Bidenomics’ effort to put money back in working families’ pockets and make it possible for honest companies to compete on an even playing field. This is true–but there’s more the president can do to connect the dots. Strong, independent regulatory authority is necessary for achieving Bidenomics’ goal of rebalancing power in the economy. And the financial industry has been among the most extractive over the past several decades. Workers, small businesses, and the economy overall–in addition to consumers–have all paid the price.

The president should lay out how the financial sector has used its power to skim much more than junk fees from Americans, and what the federal government can do about it. Because if rebalancing power is central to the goal of Bidenomics, then curbing the power of the finance industry needs to be as central to his vision for the economy as finance is to our economy.

Some Like It Hot

This year has been a historic one for the labor movement, but just how far have workers come? And how much further do they have to go?

2023 has already been one of the most active years for the labor movement in over two decades: 362,000 workers have gone on strike so far in 2023 according to ILR Labor Action Tracker from Cornell University’s School of Industrial and Labor Relations. This is a huge increase from the 123,000 who went on strike in 2022, and the 37,000 who went on strike in 2021.

And the year is far from over. More than 75,000 health-care workers at Kaiser Permanente, including medical assistants, surgical and lab technicians, pharmacists, and administrative staff, have authorized a strike over staffing shortages and low pay. They could be joined by 60,000 members of the Culinary Union in Nevada, 95 percent of whom voted to authorize a strike over wages, mandatory room cleaning, and rules on AI and tech adoption. The UAW strike could eventually expand to include all 150,000 members who work at a Big Three plant.

If any of these strikes were to happen, it would give this year the highest number of striking workers since 1983—the year Reagan infamously crushed the PATCO strike, and after which his changes to the NLRB empowered employers to ignore labor law, sharply reducing the number of striking workers.

Bidenomics has contributed to 2023’s surge in labor organizing: Low employment, and COVID-era support, means workers have more leverage than they’ve had in decades. The administration has staffed an assertively pro-worker NLRB and Department of Labor, which made a series of policy decisions intended to make it easier for workers to form a union. And the vocal support of the president, as well the historic step of a sitting president joining a picket line, has made a real difference.

There’s still a long way to go. While this year’s strike numbers are the highest since the Reagan administration, they’re still quite low by postwar standards—between 1 million and 4 million Americans went on strike annually from the beginning of World War II to 1981. And while real wages have begun to increase in the past few months, the hot labor market and record low unemployment of the current moment have only just begun to make a dent in the stagnating real wage growth that workers experienced during the trickle-down era.

The increased labor action of the past year has created new opportunities for American workers to recoup the real wages lost to deregulation, financialization, and consolidation. And it gives the president new opportunities to show Americans that Bidenomics isn’t just a new technocratic approach to the economy, but an effort to rebalance wealth and power—away from the corporations that have enjoyed record profits and toward the workers who make those profits possible.

What to Read

• The sit-down strikes of 1936–37 by the UAW were a historic moment in the American labor movement, the success of the New Deal, and the development of the American middle class. Alex Press at Jacobin argues (with help from Nelson Lichtenstein) that the Stand Up Strike by the UAW could have a similar effect on the entire working class. [Jacobin]
• Sandeep Vaheesan had a sharp piece in Democracy Journal with some historical parallels that provide real insights into how and why the story of the IRA is still being written.
• Want to track the places and industries where Bidenomics is having an impact, but don’t know which trackers to track? Roosevelt’s Sunny Malhotra has compiled a tracker of trackers, so you don’t have to.
• “If anybody loves me, knows me—I love FDR . . . and I love Eleanor Roosevelt.” – Cardi B [Hot Ones]

Who Said It: JRB or FDR?

Every week, we close with a quote from either President Biden or FDR that sheds some particular light upon the news of the prior week.

And if you guessed JRB for last week’s quote—you were right!

And this week’s quote:

“For nearly four years you have had an administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the government of the United States as a mere appendage to their own affairs. We know now that government by organized money is just as dangerous as government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”