Sunday, December 14, 2014

How American Workers were Devalued

Labor vs. Capital

Here is Franklin D. Roosevelt's Statement on the National Industrial Recovery Act (on June 16, 1933) -- "No business which depends for existence on paying less than living wages to its workers has any right to continue in this country."

Adam Smith (sometimes referred to as "the father of capitalism") wrote in his magnum opus The Wealth of Nations (the first modern work of economics): "Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased."

Fast forward to 2014...

From The Washington Post: Why America’s Middle Class is Lost (by Jim Tankersley on December 12, 2014) -- Yes, the stock market is soaring [and] the unemployment rate is finally retreating after the Great Recession. But all that growth has done nothing to boost pay for the typical American worker. Make no mistake: The American middle class is in trouble. That trouble started decades ago, well before the 2008 financial crisis. In this new reality, a smaller share of Americans enjoy the fruits of an expanding economy. This isn’t a fluke of the past few years — it’s woven into the very structure of the economy. And even though Republicans and Democrats keep promising to help the middle class reclaim the prosperity that it grew accustomed to after World War II, their prescriptions aren’t working.

From SI Live: American Workers have Become Devalued (by Thomas Strmel on December 11, 2014) -- Wealthy corporations are always looking to squeeze out every cent of profit they can, and that’s fine. However, in doing so, their methods have destroyed whatever is left of our working or middle-class. The conservative policies that offered tax breaks to the very wealthy were supposedly designed to have a “trickle down” effect, and eventually lead to job creation for potential American workers. It never happened. The rich have become richer, the wealthy corporations took their tax breaks (and said thank you very much) and continued to send millions of U.S. jobs overseas to China and other countries — and in many cases, basically hired slave labor to build or assemble their products.

From Grasping Reality: Need We Fear the Robot Uprising? (by Brad DeLong on September 29, 2014) — "The global division of labor that had previously been near-exclusive property of American workers, had allowed workers elsewhere in the world to use their new-found bargaining power to extract resources for their own consumption. This was to the detriment of America's blue-collar working and middle classes."

From The Brane Space: The Devaluation of Labor (by Copernicus on September 6, 2010) -- It is well for us all to ponder (irrespective of our place in the labor constellation, whether employed or not) how we came to the sorry pass of American labor being so devalued. One only needs to do the most rudimentary research to ascertain how far we've fallen since 1973-74. The top 1 percent (and indeed, the top 5 percent) have made out like bandits since the Bush tax cuts were passed in 2001. As a result, there has been an average transference of $7,000 every year from lower and middle income earners to the top. How the hell did things get this bad for middle and working class labor? It has been a long time coming, but numerous processes were at work:

  1. Cutting employee benefits, i.e. health plans — even after employees have retired with them.
  2. Eliminating defined benefits plans, such as provided standard corporate pensions — in favor of defined contribution plans (such as 401ks) in which workers are in it for themselves to accumulate adequate savings for retirement.
  3. Cutting wages — either de facto, or through eliminating labor unions which protected them (much exacerbated after Reagan ascended to power).
  4. Firing/downsizing workers just before their retirement dates, so the company is free not to have to pay retirement plan benefits, or provide stock options, as per contract clauses.
  5. Re-engineering the workplace to increase its automation factor in order to dump workers, so as to increase profit margins by not having to pay benefits, etc.
  6. Shipping as many jobs as possible overseas, to places like India or China, with labor costs barely 20% of what they are in the U.S. (and with no benefits to factor in).
  7. Firing — downsizing workers after mergers and acquisitions, as dictated by Wall Street interests, in order to enhance a company' profits through higher Wall Street share prices.
  8. Identifying older (over 50) workers as "surplus" so that they can be replaced with younger workers for whom half the wages (or less) can be paid, with fewer benefits. (A recent 5-4 Supreme Court ruling a few years ago exacerbated this by asserting anyone claiming "age discrimination" could not file a suit in standing if that was the only charge)
  9. Eliminating nearly all permanent jobs which carry health and pension benefits, in favor of using temp workers, outsourcing/offshoring, or some other device not requiring benefits. On the academic (university) front: by using "adjunct" professors, hired on a per-hour, per-course basis, without benefits and with no possibility of "tenure".
  10. Tying health insurance to employment, so that when let go or fired, workers are waylaid again by having to do without critical protection — and hereby driving them into bankruptcy and/or poverty if they should get seriously ill or seriously injured in an accident.

What kind of nation is this? One in which the labor pool has been nearly totally devalued and debased. In an issue of Psychology Today (July/August 1998, p. 10.) they write, "Starting in the mid-1970s, the nation's quality of life parted company with its wealth, and the gap between social health and GDP is now bigger than it's ever been." In other words, capital is opted for over labor, and this was the topic of The Judas Economy: The Triumph of Capital and the Betrayal of Work (by William Wolman and Anne Colamosca).

From Truthout: Devaluing Work and Workers (by Emily Schwartz Greco and William A. Collins on May 14, 2014) -- What are some of the forces driving the devaluation of work and workers? For starters, U.S. employers have shipped millions of jobs abroad or replaced them with technology. Many of the jobs that stayed stateside (without being relegated to robots) were stripped of labor protections by relocating factory work to non-union states in the South. Public unions everywhere have fallen prey to a concerted Republican attack. There’s also the decline of full-time employment and the rise of a "gig" economy dominated by precarious part-time and temporary jobs [and "independent contractors"]. And the minimum wage is too skimpy. Another reason for worker (and retiree) impoverishment is the decline in retirement plans. Plus, the propaganda wars against unions and supposed shiftless slackers have succeeded. Profits, not people, have become the centerpiece of American culture. The Republican Party is leading the charge, while most of the Democratic Party tags along.

From The Washington Post: Devaluing Labor (by Harold Meyerson on August 30, 2006) [He could have written this today because it's just as relevant] -- From 1947 through 1973, American productivity rose by a whopping 104 percent, and median family income rose by the very same 104 percent. More Americans bought homes and new cars and sent their kids to college than ever before. That America is as dead as the dodo. Ours is the age of the Great Upward Redistribution. Clearly, globalization has weakened the power of workers and begun to erode the egalitarian policies of the New Deal and social democracy that characterized the advanced industrial world in the second half of the 20th century. The declining power of the American workforce antedates the integration of China and India into the global labor pool by several decades. Since 1973 productivity gains have outpaced median family income by 3 to 1. Clearly, the war of American employers on unions, which began around that time, is also substantially responsible for the decoupling of increased corporate revenue from employees' paychecks. [But point a finger at] a corporation for exploiting its workers, and you're trafficking in "class warfare". For the bottom 90 percent of the American workforce, work just doesn't pay, or provide security, as it used to. Devaluing labor is the very essence of our economy.

The Washington Post: The Devalued American Worker (by Jim Tankersley on December 14, 2014) -- "The American economy has stopped delivering the broadly shared prosperity that the nation grew accustomed to after World War II. The explanation for why that is begins with the millions of middle-class jobs that vanished over the past 25 years, and with what happened to the men and women who once held those jobs. Millions of Americans are working harder than ever just to keep from falling behind ... [ Many] workers have been devalued in the eyes of the economy, pushed into jobs that pay them much less than the ones they once had. Today, a shrinking share of Americans are working middle-class jobs, and collectively, they earn less of the nation’s income than they used to. Millions of American jobs disappeared during the 1990, 2001 and 2008 recessions ... For decades after World War II, lost jobs came back when the economy picked up again. These times, they didn’t. And it was a particular sort of job that disappeared permanently in those downturns: jobs that companies could easily outsource overseas or replace with a machine."

Study (pdf): Inequality and Work in the Second Machine Age (by Henning Meyer, December 2014) -- "The rise of intelligent machines is a moment in history. It will change many things, including our economy. But their potential is clear: they will make it possible for human beings to live far better lives. Whether they end up doing so depends on how the gains are produced and distributed. It is possible that the ultimate result will be a tiny minority of huge winners and a vast number of losers. But such an outcome would be a choice, not a destiny. A form of techno-feudalism is unnecessary. Above all, technology itself does not dictate the outcomes. Economic and political institutions do. If the ones we have do not give the results we want, we must change them."

From Blogster-at-Large: The Future of American Labor (by Bud Meyers on October 3, 2014) -- This is what "globalization" has really been all about for US-based multinationals for decades — not global competition, but destroying America's middle-class for corporate profits and higher stock prices. Yes, if someone has a pension or 401k, they also benefit from high share prices — but most Americans don't [and many are at risk]. Just under a third (30 percent) of retirees receive income from either a traditional pension, a retirement savings account (such as a 401k), or an individual retirement account (IRA). It's mostly the mangers of these funds, the large institutional investors (banks, hedge funds and private equity firms) and the billionaires and corporate execs (with stock-option grants for "performance pay") who benefit far greater from the rise in stock prices than do average American workers — especially if company profits are not being reinvested in creating jobs (in the US) and raising wages [but instead, billions in profits are being used for stock buybacks and/or mergers & acquisitions].

From the First Annual Message (by President Abraham Lincoln on December 3, 1861) -- "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."

1 comment:

  1. According to a new study, "Union members are more satisfied with their lives than those who are not members -- and that the substantive effect of union membership on life satisfaction rivals other common predictors of quality of life. Moreover, we find that union membership boosts life satisfaction across all demographic groups ... Organized labor in the United States can have significant implications for the quality of life that citizens experience [but] the ability for labor to effectively organize and bargain collectively has become an increasingly contentious question and source of political conflict." (i.e. Republican union busting)

    Union membership in the US peaked in 1979.

    Also, this is interesting: "Tennessee governor and senator get subpoenas over anti-union threats in Volkswagen vote".