For the fortunate few scanning America's economic recovery from
luxurious penthouse suites, they are treated to the magnificent scenery
of record profits, escalating CEO pay and an ever-growing share of the
nation's income.
While the economy is going well for the 1%, "for the vast majority the view remains bleak," writes Bybee. (photo: Tau Zero)
But
for the vast majority, the view remains bleak, despite the 4.3 million
private-sector jobs added since early 2010. The horizon is still gray
because of ongoing, pervasive wage cuts and a feeble job market. Very
decidedly, this is a recovery largely reserved for the Republic-deified
"job creators" and the investor class. In 2010, the richest 1%
monopolized income gains, hauling in fully 93% of increased income,
according to economist Emanuel Saez. As
Think Progress reported:
After dipping during the Great Recession, corporate profits have now skyrocketed past their pre-recession levels, Business Insider's Joe Weisenthal notes.
After-tax profits and corporate profits as a share of gross domestic
product (GDP) are now higher than they were in the middle of the last
decade, after a similar vertical spike. Despite massive profit gains,
however, corporations are adding more jobs overseas than they are in the
United States and paying one of the lowest effective tax rates in the
developed world.
Economist Heidi Schierholz of the Economic Policy Institute explains
that the relatively slow pace of hiring—although an improvement from the
depths of the recession brought on by Wall Street
deregulation—undermines the bargaining power of workers both
individually and collectively.
"We haven't seen a labor market this weak for this long since the
Great Depression. This economy needs at least 10 million more jobs.
Workers don't have much power individually when there is a long line of
people applying for jobs extending around the block," Schierholz says.
With the economy still running in low gear except for the mechanisms
generating riches for those at the top, there are few alternatives for
workers from which to choose from. "The lack of bargaining power is tied
to a lack of outside options for employment," Schierholz says. "That's
why the number of voluntary quits is very, very low."
In addition, Republicans have now fiercely reversed course on the
counter-cyclical strategies followed by Richard Nixon, George H.W. Bush
and George W. Bush of increasing public employment during recessions.
They have vigilantly fought against every attempt by President Barack
Obama to stimulate the economy with increased public hiring. At the same
time, Republican governors have hacked away at public employment and
pay at the state and local level. In the midst of the biggest economic
crisis in 80 years, "The government sector has cut 502,000 workers from
payrolls"
since the start of 2010.
The collective power of workers through their unions has been
severely diminished by a set of devastating policy changes, most
recently with restrictions on public employees' bargaining rights in
Wisconsin and enactment of
anti-union "right to work" legislation in Indiana. These developments cap an era
concisely explained by EPI vice president Ross Eisenbrey and Iowa history professor Colin Gordon:
[O]ver the [last] 30 years—an era highlighted by the filibuster of
labor law reform in 1978, the Reagan administration's crushing of the
PATCO strike, and the passage of anti-worker trade deals with Mexico and
China—labor's bargaining power collapsed. The consequences are driven
home by the figure below, which juxtaposes the historical trajectory of
union density and the income share claimed by the richest 10 percent of
Americans. Union membership has fallen and income inequality has worsened—reaching levels not seen since the 1920.
The repercussions have been
massive:
[The] divergence in income growth, especially noticeable since 1979,
corresponds with a decline in union influence, as an increase in union
membership would help to boost worker incomes. Indeed, if the incomes of
the union rank-and-file rose by just 10 percent, middle-class incomes
would go up $1,479 per year, even for middle-class families who aren't
union members, according to a September analysis from the Center for
American Progress.
The systematic weakening of union power, accompanied by the fierce
competition for a shrinking number of quality jobs, has set the stage
for wage-slashing by U.S. employers. A number of indicators document
that the trend toward wage-cutting—spotlighted by
New York Times
economics reporter Louis Uchitelle in early 2009 when the
reverberations of the Wall Street meltdown were still being felt—is, if
anything, gaining momentum even as major corporations have fully
recovered.
In some states, like Wisconsin, there have been employment gains in
traditionally high-wage industries like manufacturing, but these
industries have also witnessed wage drops, as the
Milwaukee Journal Sentinel reported. "From December 2010 to December 2011, the average weekly wage in Wisconsin declined."
Starting wages in manufacturing—a mainstay of high-wage, family-supporting jobs—have dropped by 50% in just the past six years,
notes former Labor Secretary Robert Reich.
Two-tier and multi-tier wage structures—which freeze the pay and
benefits of long-term union members at current levels while slashing
starting wages by 40% or more for new workers—have begun to
proliferate in the face of labor's weakened bargaining power.
Even the once-mighty United Auto Workers has been forced to accept
pay packages for new hires at the Big Three that provide half of what
new hires got a decade ago. At $14 an hour, new auto workers earn about
the same as America's service-sector workers.
But perhaps nothing exemplifes the national picture more than the
strategy followed by General Electric. Even during the Great Depression,
when it faced shrinking profit margins, industrial giant General
Electric limited its wage cuts to 10%, according to Chris Townsend,
political director of the United Electrical, Radio and Machine workers,
who recently perused his union's extensive files.
But General Electric's current condition can be described as nothing
less than superb, enjoying a 16% increase in profits in 2011 on top of
$14.2 billion in 2010. To make things sweeter, GE managed to pay no
corporate taxes. Nonetheless, GE was able to force its unionized
workforce to accept a new system of risky high-deductible healthcare
policies and to exclude new workers from defined-benefit pension plans.
But nothing is more indicative of GE's new mindset than the recent
wage cuts imposed at its non-union plant in Mebane, North Carolina,
where veteran workers had earned as much as $23.67 per hour. After being
recalled from brief layoffs, long-time workers with up to 20 years of
service at GE discovered that their pay had been cut by 45% and that
they had been removed from the company's defined-benefit pension plan.
The wave-slashing is about to become more widespread at GE's
non-union plants, based on GE memos obtained by the UE's Townsend. In
last year's negotiations with a coalition of unions, GE repeatedly
informed labor that it viewed $13 per hour a competitive wage in
manufacturing, recalled Townsend.
But GE is not alone in pressing this low-wage agenda. "Toyota's goal
has become $12.64 an hour, the median wage for comparable manufacturing
in Kentucky, where it has its largest plant, or $10.79 in Alabama, where
it is building a new plant," reports UC-Berkeley Professor Harley
Shaiken, a long-time scholar on labor issues and the auto industry.
Absent a revitalized upsurge from labor and its allies like the
Occupy movement that places inequality squarely at the center of the
presidential campaign in 2012, we can expect even further acceleration
of wage-slashing from corporate America.
© 2012 In These Times
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