U.S Workers Confront Growing Insecurity

...Wage stagnation” applies particularly to the 2000-2007 period, when real average weekly earnings of production and nonsupervisory workers rose at an average annual rate of 0.3 percent...

...Health insurance, universal in the EU, is not covered at all, or covered only stingily, by many American employers...

...As the slump in industrial production indicates, overcapacity in a wide array of industries, and the multitude of services attached to them, has resulted in the disemployment of millions of workers, many of them forced to return to a countryside itself impoverished...

...Thus, the critical question: Can the American labor market, especially given its exposure to highly competitive global labor markets, create the large number of jobs at adequate pay that are needed...

...But they are not in the offing, have rarely occurred since the Second World War, and would likely be prevented by anti-inflationary monetary policies, as they have been in the past...

...Data from the Bureau of Labor Statistics indicate that while employment in manufacturing declined by more than three million persons from 1996 to 2006, or 18 percent, manufacturing output, as measured in constant 2000 dollars, rose 15 percent...

...These countries, moreover, became links in the supply chains of multinational firms...

...Some industries, or large segments of them, such as retail trade, hotel, and lower grades of the health services, are heavily dependent on low-wage help...

...The paper states that workers’ “aspirations for representation are being thwarted by a coercive and punitive climate for organizing,” unrestrained by a regulatory regime that appears to be indifferent to protecting workers’ rights...

...The extreme inequality in the distribution of income, brought about largely by the appropriation of productivity gains by owners of capital and managerial staff, has deprived the mass of American workers of a just share of these gains over the past thirty years...

...Using U.S...

...Sen mentions unemployment insurance and education as examples...

...new subway and light rail cars are made abroad and assembled by their (foreign) manufacturers here...

...Freeman argues that by comparison with other industrially advanced countries, the American labor market is far more competitive and far more limited in its “social intervention in worker outcomes...

...As noted, the Department of Labor groups them with persons “marginally attached to the labor force,” but not with the “unemployed...

...That employers widely consult with unionavoidance advisers is well known...

...Business and its spokespersons have sought to control the demand side of the labor market since the United States became an industrial power and, on the supply side, to prevent union organization and deny political power to workers...

...A brief survey will indicate the need, and help to explain why it is unlikely to be met...

...Productivity is not a mere engineering concept...

...Multinational corporations strongly fought the “Buy American” clause of the stimulus package and will undoubtedly be granted exemptions for many of the goods they import...

...The minimum wage sets—or should set—standards that the Earned Income Tax Credit (EITC), despite its virtues as income support, doesn’t set, for it “permits firms to maintain low wages and substandard employment terms...

...The rescue or subsidization of financial institutions has anyway failed to help much in sustaining employment...

...The paper uses a random sample of more than a thousand National Labor Relations Board certification elections that took place between 1999 and 2003 and well over five hundred organizing campaigns...

...He notes that “real wages in virtually all other advanced countries increased substantially at roughly the same rate as the increase in productivity...

...The supply side of the labor market, and the course of collective bargaining, is largely determined by nonmarket factors (leaving immigration aside...

...Its dimensions include unemployment insurance, conditioned on the acceptance of any suitable job offer, and welfare payments, which may be subject to even more stringent conditions...

...High economic growth rates in those and other developing countries, together with the rising employment and income they made possible, were predicated on large-scale exports...

...Kim Moody, in his well-documented U.S...

...This gap “reflects a giant-scale shift from wages to profits,” writes EPI, spelling a loss of more than $200 billion in labor compensation over the last decade alone...

...Business and its ideological apologists argue that because of the competitiveness and other adversarial forces of global markets, they require the freedom to lower costs, dismiss inefficient employees, and relocate if necessary, regardless of possible consequences to communities as well as workers...

...2) increasing competition by Japan on a global scale...

...It imposes no penalties on employers who ignore the law, except for minor fines when, often after years of delay, violations have been found...

...But resolute politics on the demand side of the labor market (see below) could help overcome that lag...

...Lagging educational attainment may be a hindrance to better employment opportunities, which are in any case sparsely available...

...The data suggest the intensity of the corporate drive to raise productivity...

...The “marginally attached” work force in still-developing countries such as China, Indonesia, and India surely exceeds greatly the official count of the unemployed...

...I will discuss some of these matters here, as well as some of the forces that resist attempts by labor and its advocates to raise and stabilize worker income and relieve unemployment...

...Judging by available data, white men and women generally hold more long-tenured, stable jobs...

...The Bureau of Labor Statistics describes eleven education and training categories in which it groups occupations...

...In an article in the New York Review of Books, Amartya Sen writes that the term “capitalism” is no longer very useful inasmuch as large areas of the welfare state are now removed from the market and the reach of private property...

...Employers’ intensive drive to dominate the labor market and resist union organizing has been documented by Kate Bronfenbrenner, Director of Labor Education Research at Cornell University, in an EPI Briefing Paper published last May...

...Nor can we be sure that the huge increase in special drawing rights, administered by the International Monetary Fund, will do more than finance balance-of-payments deficits so as to prevent devaluations that “export” unemployment...

...In a highly commercial society, in a globalizing economy where business seeks to commodify labor often at the expense of workers’ bargaining rights, the social dimensions of the labor market cannot be overestimated...

...The politically motivated notion of the “ownership society,” moreover, prompted such institutions as Fannie Mae greatly to liberalize its mortgage purchases, thus increasing the flow of funds for more mortgages, ignoring or dismissing the risks incurred by debt-financed ownership...

...Labor Market (Russell Sage Foundation, 2007...

...New sources of economic growth sufficiently vigorous and labor-intensive to absorb the growing pool of redundant workers, domestically and internationally, are not currently in view...

...their employment in professional and managerial work and in skilled blue-collar occupations is proportionately higher...

...In this survey the United States ranks lowest...

...In the United States, the May figure for “discouraged” or “marginally attached” workers, who had given up a futile search for jobs, was reported at 2.2 million men and women, nearly 800,000 more than a year earlier...

...Unemployment, its duration ever more lengthy, thus further weakens the status of many workers...

...They replace market wage setting with collective bargaining and management control over workplaces with ‘industrial jurisprudence.’” American management has always considered this as an infringement on its rights to control the labor process and on the inviolate rights of property...

...Labor in Trouble and Transition (Verso, 2007), calculates that neither import competition nor offshoring (the relocation of productive facilities abroad) can account for the massive loss of manufacturing jobs...

...The average wage at the poverty level in cities then was $8.04, only two-fifths less than for the total work force...

...Education has been largely oriented to prepare its subjects for eventual participation in the labor market...

...Pressure to settle for wages in line with prevailing wages in the broader labor market has led to cuts of about one-half in entry level pay in the automobile industry, for example, with the wage scale over time reduced accordingly...

...The job-generating success of the Obama administration’s stimulus expenditures, inherently limited by their comparatively moderate size, will likely also be moderated by America’s heavy reliance on imports of the very manufactures that the stimuli were meant to produce...

...Economic Policy Institute, based on Federal Reserve data).* Debt, if taken on prudently, may finance bigticket items such as cars, education, home renovation— all of which yield services for many years...

...But Sen and others who share his views ignore the institution of the labor market, the core of the capitalist economy...

...No improvement in this situation is likely soon...

...This is not least a political fact on which I will comment below...

...and (3) the easing of monetary policy and of inflationary pressures as the 1990-1991 recession unfolded...

...Osterman also strongly favors unionization of low-wage workers, “the…obvious strategy for improving employment conditions,” in addition to the minimum wage...

...While traditional employment and training programs focus on the supply side, that is, they aim at changing the characteristics of the individual worker, he argues that much more attention must be paid to the demand side and urges a broader role for the minimum wage, one high enough to forestall low-wage competition with employers paying above the minimum...

...In their book The Race between Education and Technology, Claudia Goldin and Lawrence Katz frame their argument in terms of the spawning of “human capital” by the American school system in the twentieth century and the effort to raise workers educated and skillful enough, but just enough, to apply the new technologies...

...Top executives averaged forty-two times as much as the average worker in 1980, but by 2005 the average CEO made between 262 and 431 times as much (the difference depends on the way the data are calculated...

...Before doing so, I need to look briefly at how rising productivity was attained in recent decades...

...But, writes Raphael, “many low-skilled workers [are] unwilling to accept diminished wages...

...Labor unions seek to limit competition in the labor market so as to oppose the power of a united workforce to the power of employers...

...Four-fifths of real private nonresidential investment flowed into new equipment, only one-fifth into new plants...

...Department of Commerce data, Moody figures that real assets per production worker in manufacturing tripled to $189,000 between 1980 and 2004...

...More generally, such replacements are made easier by the “employment at will” doctrine that governs employment relations—modified, perhaps, by severance allowances and employers’ reluctance to dismiss experienced skilled workers...

...rose 49 percent...

...Of the forty-three countries for which the Economist reported data on industrial production, all show declines from a year earlier, with the United States down more than 13 percent...

...Overcapacity causes job cutbacks in addition to those linked to productivity growth...

...The data on employment and unemployment argue for a jobs program such as HumphreyHawkins, however modified and updated...

...The profound economic insecurity of much of the American work force is magnified when large numbers of families confront heavy indebtedness...

...Thus, if the forecasts of continuing weakness worldwide (or in the Euro area) by the World Bank and the European Central Bank materialize, high rates of unemployment will persist, intensifying international competition and making for a deterioration of working conditions...

...and even file for bankruptcy, thereby seeking to invalidate collectively bargained contracts...

...Annual job growth averaged but 0.6 percent from 2000-2007, as against 1.8 percent during the business cycle of the 1990s and 2 percent in previous cycles...

...That has had a disproportionate impact on less educated men who are hampered by their criminal histories in their search for employment,” says Steven Raphael in the W.E...

...the HumphreyHawkins Act in the mid-1970s, which sought to make government the employer of last resort, was passed but never implemented...

...The widening discrepancy between workers’ real compensation and their productive effort is a telling indication of management’s strength in setting working conditions and labor’s weakness in negotiating them...

...Even if they were, development would be stymied by the vast corporate and household indebtedness yet to be liquidated...

...Globalization has also led to more sophisticated anti-union strategies, such as offshore outsourcing, threats of ownership change (which would require new contract negotiations), and the unquestionable priority of investor rights over labor rights in international trade treaties (such as NAFTA...

...The unemployment numbers understate the problem...

...Developments like the ones described here suggest how wrong it is to claim that we live in some sort of postcapitalist era...

...One of the results of the productivity advance in manufacturing, and more generally in industrial and commercial enterprise as a whole, is an enormous increase in the capacity to produce, in turn giving rise to overcapacity, idling manufacturing plants by an estimated 32 percent currently...

...Nearly the same proportion is projected by the agency to 2016...

...He might have added that civil service regulations have at least until recently shielded government employees from being arbitrarily dismissed...

...Tight labor markets would be an efficient means to absorb large numbers of low-wage workers and raise their incomes...

...Incorporated in new (or reconstituted) machinery, the new technologies were readily aligned with new organizational methods like “lean production,” on-time delivery, more exacting quality control, more minutely controlled assembly work, and so on...

...The median annual wage of workers in this category was $19,620 in May 2006, roughly one-third less than the median annual wage of $30,400 for total employment at the time...

...The Obama administration is generally sympathetic to the rights and needs of working people...

...Over the first half of this year, African Americans lost jobs at a rate roughly four-fifths above that of whites...

...But the owners of capital may invoke managerial authority...

...Paul Osterman, a professor at MIT with a deep knowledge of labor market policy, writes that “at the bottom of the labor market, too many adult Americans continue to find themselves in jobs that pay poverty wages and provide little in the way of a future...

...Rather, after about 1990, “business in general, including manufacturing, turned to the cornucopia of new technologies”—prompted by such factors as (1) the slowdown of the rate of productivity growth during the previous fifteen to twenty years...

...We are facing a more repressive capitalism...

...Richard B. Freeman adds significant details to the discussion in his superb book America Works—The Exceptional U.S...

...For example, most of this country’s solar panels and wind turbines are imported...

...move operations to lower-cost locales...

...Whether and how the financial aid promised at the G-20 conference in London earlier this year will help is not clear—and we do not know whether the promise will be kept or whom it would benefit...

...He cites the success of Justice for Janitors and, basing his conclusion on Census data, shows that the proportion of organized low-wage workers averages about one-third more in wages than the unorganized...

...The fairly steady and sharp increases in home prices from the mid-1990s to 2006 led many homeowners and home buyers to assume that debt could readily be repaid as equity also rose—and interested mortgage brokers and banks urged them on...

...But it also maintains close relations to Wall Street and the broader business interests Wall Street represents or symbolizes, and those interests are hostile to labor’s rights to organize and to equality of status in collective bargaining...

...Unemployment insurance, for example, is normally of shorter duration and replaces a lower proportion of the wage or salary than in countries of the European Union...

...EPI estimates that roughly 26 percent of the American work force earns wages at or below the poverty level...

...Workers Confront Growing Insecurity HORST BRAND Unemployment is now the most critical issue of the current recession, whose depth and duration remain unpredictable despite the federal stimulus program...

...In the United States, unemployment has risen from close to 7 percent of the labor force to roughly 9 percent in the spring quarter of this year...

...It is a statistical summary of social labor, of the mutuality of productive effort...

...In the Euro area, and in countries like Poland, Hungary, and Russia, the rate exceeded 9 percent in the early months of 2009...

...637, April 2009, based on Federal Reserve survey of loan officers, early 2009, late 2008...

...Jobs outside the existing market may have to be created, but programs designed to do this have always met with strong opposition by business and other interests...

...The paper’s title, No Holds Barred: The Intensification of Employer Opposition to Organizing, describes the obvious anti-labor political orientation of much of American business, although its central point is the “ineffectiveness” of current laws “to protect and enforce workers rights in the election process...

...However, African American underemployment is aggravated, particularly among younger men, by a record of past imprisonment, causing many employers to hesitate in hiring them...

...Its liquidation, necessarily gradual, cannot but retard any advance in aggregate demand and the employment linked to it...

...T)he prison incarceration rate between the late 1970s and the present more than quadrupled...

...Here we can touch on only a few highlights...

...But the longer term trend of the weekly wages of such workers, from 19792007, also runs virtually flat, spiking briefly only during the mid-1990s, a period of declining unemployment...

...Hourly earnings of production workers would have been 60 percent to 70 percent more in 2005 had their earnings paralleled the productivity trend...

...The compensation of the “median” worker rose a bare 10 percent...

...Lack of work now means diminished prospects for some sort of career later on for youngsters able, willing, and needing to work...

...Upjohn Institute’s 2008 collection of essays A Future of Good Jobs...

...In recent years household indebtedness has risen to levels unprecedented in the years since the Second World War...

...The main reason why banks have tightened credit standards, and likely will continue to do so, is because of the “uncertain economic outlook” and “reduced tolerance for risk” (Cato Institute Policy Analysis No...

...The “full employment” legislation passed in the mid1940s studiously avoided any reference to government-sponsored jobs...

...Hence they do not actively look for work...

...All this means significant diversion of the stimulus funds away from their domestic job-creating purpose...

...EPI defines a “low wage” as equal to or less than the “poverty level wage,” $10.20 per hour for a worker working full time the year round in 2007...

...The category requiring but one month of on-the-job experience and instruction included 52.3 million persons in 2006 or 35 percent of total employment that year—the largest number in any of the categories...

...But entry level workers earn less and less...

...The UAW’s sense of itself as the pacesetter for decent working conditions even among nonunion enterprises has come to naught—a historical defeat for American labor...

...The conservative Fraser Institute, cited by Freeman, ranks the United States “highest” in the absence of labor market regulation, our government being the most market oriented...

...Comparing the sample with surveys conducted during the twenty years preceding the current survey, she and her collaborators found “an increase in more coercive and retaliatory tactics…such as plant closing threats and actual plant closings, discharges, harassment and other discipline, surveillance, and alteration of benefits and conditions….(W)e see a gradual decrease in tactics such as granting unscheduled raises, positive personnel changes, promises of improvement [and so on...

...Beyond these factors, according to the latest EPI biennial report, wages and income have largely stagnated, and without being able to pay for their living standard, many families have taken advantage of often extremely low interest rates to finance consumption through debt...

...Trade unions are the primary worker institution in capitalist economies,” writes Richard Freeman...

...install job-displacing technology...

...The new technologies and more efficient organizational methods, moreover, are associated with so-called labor market “churning”— workers accustomed to operating with the older technologies and under the older organizational conditions are replaced by younger men and women, perceived to be more adaptable, perhaps more ambitious, and probably less costly...

...In the face of declining home values and homeowner equity, household debt ran to 141 percent of disposable income in 2007, driven by dramatic increases in mortgage debt since the early 1990s—compared with a ratio of 66 percent in 1973 at a time of much higher relative home equity levels...

...Horst Brand is an economist who writes frequently for Dissent...

...Such competition, however, has been deliberately fostered over the past three decades...

...It aggravated the growing inequality in the distribution of income (which I discussed in “Rising Productivity, Deepening Inequality,” Dissent, Fall 2008...

...According to the EPI, unemployment spells “were much longer during the 2000-2007 cycle than they had been for previous cycles,” and a “significantly higher percentage of “involuntary” part-time workers (who preferred full-time work), were employed in 2007 than in 2000 (both peak cyclical years...

...pursue “shareowner value” by personnel cutbacks...

...The current high volume of unemployment yields additional opportunities to tailor operations to lower labor costs and improve efficiency...

...Yet, even prior to the current recession, the demand side of this market was comparatively weak...

...Civil service job security is jeopardized by progressive privatization (or the supervention of private over public service as in mailing or jailing...

...The far greater vulnerability of job loss by African Americans than by whites has long been evident...

...In contrast, the Global Labor Survey, conducted in 2004 by a program of the Harvard Law School, also cited by Freeman, finds that the more countries are “institution oriented” (that is, wages and benefits are set by collective bargaining in all relevant industries and regions), the greater the impact of social expenditure on worker welfare and security...

...In agreement with other analysts, Freeman writes that “most of the productivity growth of the past 20-30 years ended up in the pockets of a small number of super-rich Americans...

...Here we must consider the wide divergence between the long-term trends in productivity (output per hour in the nonfarm business sector), which climbed 83 percent between 1973 and 2007, and the trend in real average compensation (which includes high-paid executives as well as low-paid day laborers), which * All references in the text to EPI are to the Economic Policy Institute’s publication The State of Working America, 2008-2009, by Lawrence Mishel, Jared Berstein, and Heidi Shierholz (ILR Press, an imprint of Cornell University Press, 2009...

...Teenage unemployment now exceeds onefifth of teenagers looking for work, as part-time jobs have been increasingly filled by adults pressed for income...

...real assets in all of manufacturing more than doubled...