The War on Wages
Not to get all Marxist on folks, but this is the classic definition of the exploitation of labor: workers increase productivity and the wealth of their employers, but don't geta fair share of the increase in higher wages. From the New York Times:
The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards — has risen steadily over the same period.
[W]ages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s.
You can't even blame rising benefits -- ie. employer contributions to health care -- for this loss in wages, since the past year has not even seen benefits increasing at the rate of inflation.
Beware people who quote "average" wages, though, as opposed to median wages -- since average wages include high paid executives and professionals that skew the mean wage far above the median wage. But the raw fact is that wages have instead been going increasingly to shareholders and top executives-- a basic struggle in the workplace over who gets the fruits of productivity and a struggle that workers have been losing in recent years.















This really bites. (She says while working at 2:00 a.m.) Back to work. Got to be productive.... er, more productive.
CSPAN junkies visit http://spannerbackup.ipbhost.com
August 27, 2006 11:15 PM | Reply | Permalink
Just recent there was a post on TPM Cafe that had a large section on this - the bottom line is that if average hourly non-supervisory workers hourly wages had kept up with inflation and productivity growth since 1975, instead of $16/hr being the average, it would be $32.
That's right, on average workers are making half of their fair share. To give you an idea of how ineffectual tax cut madness is, you could cut taxes, all taxes, on workers to zero, and they would still be behind.
To put it in terms that the MTV generation would understand, "like the profits ate our country, dude."
Stirling Newberry http://www.bopnews.com
August 28, 2006 4:08 AM | Reply | Permalink
Attention US workers:
You are now directed to compare your current wages and benefits with the new global statistics. All comparisons with previous US wages and benefits no longer apply. As you can see, your wages and benefits now fall into the upper 10%, far above the average. So, suck it up, be happy and keep increasing your productivity or you will soon be training your replacement in India.
Thank you.
Your global management team.
PS. Keep flying the flag and supporting the war. You still pay US taxes but we are working with the Republicans to make your share more fair.
August 28, 2006 5:54 AM | Reply | Permalink
The Republican reaction to this report is not shock and concern over the impoverishment of fellow Americans but concern over incumbency. Remind me again what we have in common with them?
August 28, 2006 6:17 AM | Reply | Permalink
Maybe this does not directly address what I wrote but as I was doing my run through the variosu sources I found this quote from Vonnegut on Digby. It certainly addresses at least a little the nature of the defectives we have in our country and in power:
"I was once asked if I had any ideas for a really scary reality TV show. I have one reality show that would really make your hair stand on end: "C-Students from Yale."
George W. Bush has gathered around him upper-crust C-students who know no history or geography, plus not-so-closeted white supremacists, aka Christians, and plus, most frighteningly, psychopathic personalities, or PPs, the medical term for smart, personable people who have no consciences.
To say somebody is a PP is to make perfectly respectable diagnosis, like saying he or she has appendicitis or athlete's foot. The classic medical text on PPs is The Mask of Sanity by Dr. Hervey Cleckley, a clinical professor of psychiatry at the Medical College of Georgia, published in 1941. Read it!
Some people are born deaf, some are born blind or whatever, and this book is about congenitally defective human beings of a sort that is making this whole country and many other parts of the planet go completely haywire nowadays. These were people born without consciences, and suddenly they are taking charge of everything.
PPs are presentable, they know full well the suffering their actions may cause others, but they do not care. They cannot care because they are nuts. They have a screw loose!
And what syndrome better describes so many executives at Enron and WorldCom and on and on, who have enriched themselves while ruining their employees and investors and country and who still feel as pure as the driven snow, no matter what anybody may say to or about them? And they are waging a war that is making billionaires out of millionaires, and trillionaires out of billionaires, and they own television, and they bankroll George Bush, and not because he's against gay marriage.
So many of these heartless PPs now hold big jobs in our federal government, as though they were leaders instead of sick. They have taken charge. They have taken charge of communications and the schools, so we might as well be Poland under occupation.
They might have felt that taking our country into an endless war was simply something decisive to do. What has allowed so many PPs to rise so high in corporations, and now in government, is they are so decisive. They are going to do something every fuckin' day and they are not afraid. Unlike normal people, they are never filled with any doubts, for the simple reason that they don't give a fuck what happens next. Simply can't. Do this! Do that! Mobilize the reserves! Privatize the public schools! Attack Iraq! Cut health care! Tap everybody's telephone! Cut taxes on the rich! Build a trillion-dollar missile shield! Fuck habeas corpus and the Sierra Club and In these Times, and kiss my ass!"
August 28, 2006 6:35 AM | Reply | Permalink
The issue not being addressed is where all the money has gone that hasn't been paid out to workers. There are four destinations.
First, the top management has gotten part of it (estimates are that 10% of a firm's earnings go to this group). That is twenty people get 10% of the earnings while thousands of stockholders get the rest.
Second, firms have been using 3-5% of their earnings to buyback their own shares. This is in an attempt to keep stock prices up and make management's options more valuable.
Third, companies are buying each other up, using some of their retained earnings for this purpose. Wall St. regards this as a bad idea as can be seen by the drop in stock price of the acquiring firm when such a deal is announced. Most firms are big enough that merging with another does nothing to improve "efficiency".
Fourth, the largest amount of the accumulated money is just sitting in firm's treasuries as retained earnings. They can't find anything to spend the money on. Investment opportunities in things like new plants don't promise a big enough return. In other words US firms have no confidence in the US economy.
--- Policies not Politics
Daily Landscape
August 28, 2006 6:43 AM | Reply | Permalink
Stirling, you're right about the value from increased productivity not going to the wages. It is going to the corporate executives and shareholders instead of to labor or wage earners.
To get some of that "profit", labor has to negotiate a wage that anticipates demand for the product they produce. As the NYTimes correctly points out, wage negotiation has been nonexistent for the last long while.
You can't expect management in the Bush Dickensian administration to give labor it's fair share, can you?
Sure, due to the payroll taxes (FICA) that never go away.
August 28, 2006 9:17 AM | Reply | Permalink
Why should American firms have confidence in the American economy? Real wages are declining. The real estate bubble is bursting. Forclosures are up. Fewer and fewer people have sufficient disposable income to buy stuff. Foreign markets don't look much better.
Money locked up in corporate treasuries as retained earnings represent a loss of purchasing power that spells real trouble for everybody.
We need to find better ways to encourage corporate owners to spend. In the past such encouragement has taken the form of higher corporate taxes (spend your profits or lose them) but I guess that is something Republicans oppose with a vengence.
Any bright ideas.
Ron Byers
August 28, 2006 9:20 AM | Reply | Permalink
Am I the only one, or does it gall you to see these people, holding hands with their loyal spouses, smiling gloriously into the camera as they go into or out of court?
The only celebrity who seemed to take it all seriously was Martha Stewart. At least she truly looked worried; not happy.
Jan Knaus
August 28, 2006 10:11 AM | Reply | Permalink
I don't how this could be done politically, but if firms don't know what to do with the money than it should be collected via taxes.
The percentage of the federal budget paid by corporate taxes is about half of what it used to be. Another case of taxes being shifted to the middle class from the wealthy.
--- Policies not Politics
Daily Landscape
August 28, 2006 10:28 AM | Reply | Permalink
You mean the living wage has gone down? We have to work harder and more to get less in return? What a revelation!!!
PS I was very productive at my first job until I had to get a sceond, and then a third one just to pay the bills-then my productivity slid a bit!!!
August 28, 2006 10:38 AM | Reply | Permalink
After finishing Sean Wilentz' weighty tome on pre-Civil War America I'm thinking we can use an argument the anti-slavery people used: individual liberty and rights trumps property. This was the moral lesson of slavery, that property rights, while they represent personal liberty, are not synonymous with it.
When worship of property, in the form of unfettered wealth acquisition, weakens the social fabric it must yield to the needs of providing for the general welfare. Mechanically this becomes reality when wealth concentration eliminates the markets that generate wealth.
How can Wal-Mart make a profit when the consumer credit runs out?
Certainly in my job the hours have increased while the pay has been static, or cut. Our board chairman announced at the start of the last contract negotiation that he wanted a 25% cut in payroll. This despite the fact that our payroll accounted for only 30% of total budget. Rather than strike both sides yielded somewhat, but we saw losses in every area.
August 28, 2006 10:50 AM | Reply | Permalink
Here's an idea: Let's take their money away and spend it for them! Oops, I forgot, this is America. Maybe we could pay them to spend it?
August 28, 2006 10:55 AM | Reply | Permalink
"When worship of property, in the form of unfettered wealth acquisition, weakens the social fabric it must yield to the needs of providing for the general welfare. Mechanically this becomes reality when wealth concentration eliminates the markets that generate wealth."
Heavy words there. I often ponder this question of wealth accumulation. What is it in human nature that drives people to accumulate so much wealth? How much of this is necessary to the advancement of society and at what point does it become counterproductive? How much wealth is based upon one's own achievements and how much is derived from the efforts of one's employees or fellow workers, one's environment, one's government, one's civil society? What is the proper balance between what an individual can accumulate and what he should accumulate for, as you say, the common good? How much wealth accumulation is constrained by moral and ethical considerations? How much does society need to constrain it for the common good?
August 28, 2006 11:13 AM | Reply | Permalink
You raise two basic questions: why seek wealth and how much is enough?
The tricky part is that the answers are different for the individual and for the group. For the individual the absolute quantity isn't the important factor, it's whether you have more than the other guy. When hurricanes and wars happen those resources matter, and like the two guys running from the bear, when one stops to change shoes and the other wonders why the answer is "I only have to run faster than you."
The proper balance between individual freedom and group needs can't be fixed (or easily measured). It must be free to wander a bit, but certainly there should always be a balance, and much of politics, from Socrates and Pericles to the present, is about this issue.
So we can definitely say that there are, in principle, reasonable limits to individual wealth that will adequately reward the individual while acknowledging the fact that wealth only has meaning by the assent of the community.
If we accept the evolutionary explanation for the desire for wealth then absolute wealth is irrelevant. Even with steeply progressive taxation the wealthiest have an advantage over the rest, so there is no logical argument against some leveling of the field.
The benefit of redistribution (or wealth limitation if one wants a less loaded term) is that by limiting the financial distance between the worker and the owner it increases the worker's hope (while limiting the owner's leverage). This should encourage the civic loyalty of the worker, which is good because there are a lot of them.
The extreme case, a full communal society, fails in practice at large scale because the group can't decide resource allocation as efficiently as a market.
The extreme case, in the other direction, fails in practice because revolutions tend to occur when you have a Louis XVI.
August 28, 2006 12:23 PM | Reply | Permalink
RIGHT FOOLS
"So, suck it up, be happy and keep increasing your productivity or you will soon be training your replacement in India."
Conservatives love to tout rising productivity as synonymous with prosperity. Why then would they advocate that one of the largest engines of productivity be “regulated” by a handful of US companies?
I’m talking about the internet and Net Neutrality. Several studies have shown that unfettered internet access is a large factor in the recent productivity gains. Other studies have shown that the cost of internet access in the US is already higher than in many developed and developing countries around the world.
Allowing Comcast, Verizon, AT&T and others to “run” the internet would be a HUGE MISTAKE, both in terms of productivity and in terms of our democracy.
August 28, 2006 1:14 PM | Reply | Permalink
"The tricky part is that the answers are different for the individual and for the group." I would also add that the answers are or at least used to be different for the two political parties in the US. The Republicans press the accelerator while the Democrats can't find the brake. Growth is the common mantra regardless of where or how the growth occurs.
"The extreme case, in the other direction, fails in practice because revolutions tend to occur when you have a Louis XVI." The topic of this post and many other signs suggest that capitalism might be reaching a similar extreme as communism once did. I would argue that globalization may be removing the feedback mechanisms that once maintained some kind of balance between individual and group needs. The state seems to have lost all power to help maintain any semblence of balance.
August 28, 2006 1:50 PM | Reply | Permalink
When the median hourly wage falls, it means that there are a greater percentage of jobs that pay less than and a smaller percentage that pay more than the old median.
This can happen when low wage jobs are created faster than high wage, and when high wage jobs shift compensation from wages to other benefits such as more vacation, or stock options. Likewise high wage individuals that become self-employed and earn no wages even though their income may be higher also depress the median.
This trend should continue for demographic reasons as high wage baby bommers retire in greater numbers.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
August 28, 2006 1:57 PM | Reply | Permalink
The "net" is the one means of communication that Democrats or the Left has used to greater advantage than the Republican'ts or the Right. The Right would like nothing better than to strangle the baby in its crib to keep the Left from continuing to best them via the Internet.
Net Neutrality is another "Clear Skies" "Healthy Forests" "No Child Left Behind" euphemistic nomenclature for the Right's effort to control and diminish access to the net by giving it to the major phone and cable companies.
August 28, 2006 3:11 PM | Reply | Permalink
This baby boomer can't afford to retire.
August 28, 2006 3:23 PM | Reply | Permalink
The prophet defines the word "median" taking all of two paragraphs to perform this service. Then he imparts demographic wisdom. I am overwhelmed. Even before the verse.
August 28, 2006 4:11 PM | Reply | Permalink
Capitalism, in small doses, is a necessity for a good economy, but capitalism in large doses is poison. I don't think there has ever been a time when capitalism without heavy regulation by government has not caused just the type of problems we are seeing more and more of. We can only hope that eventually the majority of voters will decide first to vote, then to place a higher priority in determining who to vote for based on the nation's economy and less on quasi-religious factors. That is almost certain to occur within the next ten years.
Hoppy in Sacramento
August 28, 2006 6:14 PM | Reply | Permalink
You know it's possible that many of the value voters are actually in good shape economically and so can afford to fret about less vital matters like gay marriage and creationism. Statistics can hide a lot of deviations, and not everyone has done poorly dring this decade. Things got rough for me in 2001 but in the past three years my salary has increased by a whopping 44%. (Though like most other people, my health benefits have eroded rather seriously). I'm not saying that all's well with the world based on my own experience-- even for somewhat sucessful people like myself, the benefits are becoming a problem, and job security is non-existent. I'm just cautioning that there are lot of people still doing OK and even more than OK (heck, that was true even in the Great Depression) so don't expect the economy alone to defeat the GOP.
August 28, 2006 6:58 PM | Reply | Permalink
Of course not. It will take actual christian "morals and values" such as treating others as one wants to be treated. That will be the death of the present GOP and it's fans as they are presently constituted.
It will take good people that "are doing well" albeit with a speck of social conscious. Nothing could be further away from the present powers that be.That is why the bottom 90% need to vote the bums out. All the bums. No more divide and conquer. What is good for me must be good for my neighbor, or this ain't America any more.
Do not ask for whom the bell tolls... kinda thinking.
CSPAN junkies visit http://spannerbackup.ipbhost.com
August 29, 2006 5:29 PM | Reply | Permalink
And don't forget that a big chunk of that wealth is now sitting in the Cayman Islands after Bush cut taxes on investment income. What a perfect time to divest from the U.S. entirely (in particular, your income tax contributions).
"Rights originate with and are retained by the people, they are not granted to them." Louis Henkin
August 30, 2006 7:23 AM | Reply | Permalink