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Broken Covenants

June 3, 2014

Timeless Posts – III

This essay provides an explanation for the hostility the Tea Party feels towards the public sector. Given that this is the new reality, I am working on an extended version of this that offers some ideas on how public education should respond… Stay tuned….  

After leaving the US Navy at the end of World War II, my father, like his father before him, went to work for DuPont. Like most large corporations at that time, DuPont provided health benefits for him and his family, a solid retirement plan, stock bonuses when the company had a good year, and job security. He worked hard by the standards at the time, 40-50 hours a week, but DuPont provided enough time for him to coach my little league team, serve as PTA president of the junior high I attended, and sing in the church choir and a local chorale. He retired when he turned 62. When he passed away, my mother continued to draw on his pension, worked with a broker to manage his stock portfolio, and used his health insurance to pay her medical bills for cancer treatments. Those were the old days, when there was a covenant between businesses and their employees and between businesses and the communities where their employees lived. DuPont not only provided generous benefits for my father, they encouraged him and his colleagues to engage in civic activities, in some cases viewing those activities as an asset when promotions were considered.

In the mid-1970s, my brother followed in my father’s footsteps at DuPont with very different results. After twenty-two years selling x-ray film, he learned that DuPont was selling his division to a British corporation. Later, that corporation sold his division to a Dutch enterprise. As a result of each of these transactions my brother’s sales territories expanded, his support staff was reduced, and he was often, and as it turned out rightfully, concerned about his job. Because his division was sold, he lost the retirement DuPont promised when he was hired. Each acquisition resulted in diminished benefits, less vacation, and lost accumulated sick leave. Serve in the community or sing in a group? Forget it. After spending hour after hour driving, and then returning to complete paper work that was performed by a secretary when my father worked, my brother was physically drained. When he retires, he will rely on a mix of pensions he is formulating for himself and whatever health insurance the Federal government provides. He worked more hours and experienced more stress than my father and has a lot less to show for it.

My brother is not the only person of my generation who experienced the broken promises of large corporations. The auto industry, technology corporations, communications businesses, and large companies like DuPont have all downsized, right-sized, and outsourced. In doing so they have broken covenants with their employees many of who, like my brother, expected to retire with a solid pension, a good stock portfolio, and full health benefits. As these same businesses thinned their workforce to “increase productivity”, moved factories and backroom support services offshore to reduce costs, and demanded that their employees work 60-70 hours per week, the pool of volunteers to serve on public boards, the pool of parents to coach little league teams, and the pool of voices to sing in church and community choirs has diminished.

During this same period of time, corporations in search of lower costs and higher profits broke covenants with entire communities. In many communities in New England where I live now the mills or manufacturers in the community underwrote parks, sponsored civic activities, paid taxes that enabled the communities to have good schools and well-maintained roads, and paid wages that led to thriving small businesses downtown. In most of those communities the mills went south where they could pay lower taxes and lower wages and the 1950s vintage schools, parks, and storefronts are in varying degrees of disrepair. Those towns in the south where manufacturers fled to cash in on local government’s tax incentives and looser regulations have encountered the same broken covenants. Plants in those communities have closed and the jobs promised by manufacturers have been moved overseas where the corporation can pay even lower wages, avoid taxes altogether, and encounter fewer regulations.

To date, teachers and other publicly funded service workers have been shielded from the broken covenants that private sector firms imposed on their employees under the banner of the “creative destruction” of capitalism or “global competition”. During the late 1960s and early 1970s, the time my father’s generation served on school boards and town councils, public employee unions were nascent. To privately employed volunteers serving on public boards at the time, the notion of providing teachers and town employees and their families with affordable health insurance and a decent retirement package seemed reasonable. It mirrored what was in place in their workplace at the time and seemed particularly fair since the compensation of these employees was relatively low. Indeed, in the community I grew up in outside of Philadelphia teachers earned so little that they typically worked part-time in local grocery stores and hardware stores during the school year and held summer jobs at camps in order to make ends meet.

Over the past forty years, though, roles have reversed. Teachers and publicly funded employees have job security, health benefits, retirement packages, and working conditions that are superior to those in the private sector… and these advantageous wages and working conditions are all funded by taxes that are perceived as a “burden”. This reversal of roles is what is leading to the day of reckoning at all levels of governance: a day when State legislators and local town governments and school boards are expected to behave like the business leaders of the past several decades and break covenants with policeman, road crews, civil servants and school teachers the way corporate CEOs did with people like my brother.

The Tea Party’s anger and frustration with “big government” is a by-product of their members’ powerlessness against the corporations who failed to keep their side of the bargain, the corporations who broke their promises of secure employment, affordable health care, a decent retirement package, and a reasonable work load. And those whose covenants were broken in the name of “creative destruction” and “globalization” now expect teachers and public servants to share in their pain. And in the greatest irony of all, the Tea Party support the notion of “privatization”, the solution to all social ills offered by the fiscal conservatives, a solution that will result in deregulated for-profit businesses providing education, policing, fire fighting, and road building at the lowest cost possible to the overburdened taxpayer. The race-to-the-bottom in wages and benefits that results from privatization will exact the revenge sought by the angry taxpayers, but it will benefit the corporations who assume responsibility for these functions, the very corporations who broke the covenants to start with, and the very people who are bankrolling the Tea Party candidates.

I now have a Grandson in first grade who is being raised in a world where it is unimaginable for corporations to provide the same level of support my father received when he got out of the Navy in 1945 and unimaginable that a government at any level would show the compassion that our country showed after World War II. Sadly, the only practical advice I can offer him as he begins his schooling is look out for yourself… and learn Mandarin.

Categories: Essays
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