Vol. X, Bulletin No. 9. September 10, 2005
U.S. Economy Up, Workers Down
When I first became eligible to enter the labor market in Chicago many years ago, a relative told me: "Remember, the harder you work, the more money you'll make." Later, editorial writers and economists tried to teach me a similar lesson: the more productive workers are, the higher the real wages they earn. But it ain't necessarily so.
On my first job, I earned the minimum wage working weekends as a high school senior in a large department store. I worked hard cleaning freezers and wrapping meat, but my paychecks in no way reflected my productivity. So I learned early that the axiom of higher productivity equals higher wages does not hold true on the micro level.
But the axiom is also false on the macro level. Take what's happened in the first years of this century. The productivity (output per hour of work) of the U.S. labor force moved up nearly 20% from 2000 to 2005, but wages and salaries have not had a parallel growth. They have stagnated.
Yet the Bush administration and the major media continue to be lyrical about a "robust" economy. But robust for whom? Not for the ordinary working men and women.
'Madness of Executive Compensation' Grows Year after Year
My uncle was right in believing that if I worked harder and became more productive, I would generate more income, but he was wrong in assuming that I would necessarily be the beneficiary. The rewards, however slim in my case, went to the department store owners. Likewise, an increase in productivity, whether in a factory, office, industry, or the country as a whole, does indeed create more income, which nationally is reflected in the Gross Domestic Product -- but who shares in a GDP increase is another matter. It goes to those in the best position to claim the increase: above all the CEOs and board members of large corporations.
"CEO pay," Business Week wrote in 1992, "is undermining competitiveness, fairness, and leadership in U.S. corporations." Reflecting contemporary reactions of the business press, Fortune magazine condemned "the madness of executive compensation." At that time the total compensation of those CEOs was around 150 times that of the average worker. Last year it reach 431 times, a record in madness that is most likely being exceeded this year.
"Executive Excess," a Labor Day report by United for a Fair Economy and the Institute for Policy Studies, provides some of the details, such as: "If the [federal] minimum wage had risen as fast as CEO pay since 1990, the [minimum wage] workers in the U.S. would be earning $23.03 an hour today, not $5.15 an hour."
Unhappy Anniversary for Our Working Poor
The federal minimum wage has remained stuck at $5.15 an hour since September 1, 1997. So September 1 this year marks an "unhappy anniversary" for America's working poor, as well as for those who know that those poor deserve better.
Will the Katrina disaster shock Congress and the administration out of inaction? A pre-Labor Day statement by the Economic Policy Institute and the Center on Budget and Policy Priorities shows how the inaction violates even the traditional standards for setting the minimum wage level:
Other Arguments for Upping U.S. Minimum Wage
- One standard is "the principle that minimum-wage workers...should not fall too far behind other workers." But the present $5.15 federal minimum "now equals only 32% of the average wage for private sector, nonsupervisory workers" -- a 56-year low.
- Another standard is to take into account changes in the cost of living and to change the minimum accordingly But after adjusting for inflation, the value of "the minimum wage has deteriorated by 17%" and is at "its second lowest level since 1955."
Those are not the only reasons for action. Late last year four Nobel Prizewinners and 558 other economists declared in a statement: "We believe that a modest increase in the minimum wage would improve the well-being of low-wage workers and would not have the adverse effects that critics have claimed.....Research has shown that most of the beneficiaries are adults, most are female, and the vast majority are members of low-income families." (See "562 Economists Favor Minimum Wage Rise.")
The general public supports a realistic minimum wage. That was confirmed early this year by a Pew Research Center poll. It showed that 82% of Americans consider a minimum wage increase to be an important national priority; only 6% opposed an increase.
Because of that grassroot support, voters in Florida and Nevada last year voted Yes in referendums for increasing their state's minimum wages. State legislatures have been acting too: since the last federal increase, 16 states, including New York and Delaware, have raised their minimums.
But a federal increase has been blocked because the Republican majority has refused to let Congress vote it up or down. The Fair Minimum Wage Act of 2005 (Senate Bill 1062) would increase the minimum to $7.25 an hour over a period of two years.
In a Labor Day statement the U.S. Catholic Bishops declared that "all of us are called to look at the economy from the 'bottom up,' how our economic choices (i.e., work, investments, spending) affect 'the least of these' -- poor families, vulnerable workers, and those left behind." It is one of the "troubling signs of the times," they added, that the current federal minimum "leaves a full-time worker with two children below the poverty level, while the gap between executive and worker compensation continues to widen." Curiously, however, the statement did not go beyond citing specific problems in economic and public life and repeating a set of abstract principles to deal with them. It neglected to endorse a minimum wage increase, or to specify any other real-life reforms.
14 Firms That Prosper on the High Road
Not many companies tout the slogan "Proud to Be a Union Company," or display union logos in their stores, or have a former CEO speak at the national convention of a union representing their employees. Cingular Wireless has done all those things since negotiating its first contract with the Communications Workers of America in 2000.
For these and other worker- and union-friendly actions, Cingular won a special honor early this month. The Social Responsible Business program of American Rights at Work, a Washington labor advocacy group, placed it on "The Labor Day List" of 14 employer-union "Partnerships That Work."
Among the 13 other companies on that list are Catholic Healthcare West, the largest not-for-profit health care provider in California; Harley-Davidson Motor Company, the leading motorcycle manufacturer; and Costco Wholesale Corporation, the warehouse chain. The 14 companies are praised for "bucking the current 'race-to-the-bottom' trend while defining new standards for 21st century labor relations that balance profitability with workers' needs and rights."
Why Costco Is More Profitable that Wal-Mart's Sam's Club
Costco made the list as an example of a company "that values its workers and reaps the benefits through a loyal, productive, and efficient cadre of employees." This is the evidence cited, drawn partly from findings of a 2004 Business Week study: "Costco employees sell 50% more per square foot of sales space than Wal-Mart's rival warehouse chain Sam's Club. They bring in profits that are about 25% higher than those at Sam's Club, despite the fact that Costo's hourly employees average $16 per hour and employees pay only 8% of their health insurance costs." (The salary and bonuses of Costco's CEO add up to only 10 times what a typical Costco employee earns.)
In an interview with SocialFunds.com, Nikki Daruwala, director of the Socially Responsible Business program, said that the 14 companies "offer a roadmap to countless others who mistakenly conclude that eroding worker benefits and protections is the only way to remain competitive or profitable."
Job Exports Upset Public But Not Enough
Outsourcing U.S. jobs abroad is "the foreign policy issue that most upsets Americans," but public disapproval has still not reached the "tipping point" leading to government policy changes. So says an opinion poll measuring public confidence in U.S. foreign policy goals.
The poll, described in the September/October issue of Foreign Affairs magazine, sampled how Americans grade U.S. performance in achieving a range of 20 current foreign policy goals. The goal of "Helping other countries when natural disasters stroke" got the highest approval rate, 83%. "Protecting U.S. jobs from moving abroad" got the lowest, only 18%. A large majority of Americans (78%) "give the government a mediocre or failing grade" on pursuing this goal, a rating so low that both "stopping illegal drugs from coming into the U.S." and "protecting U.S. borders from illegal immigration" do better (74%).
Despite this widespread public concern, offshoring has "not yet galvanized the public into demanding significant policy change," writes pollster Daniel Yankelovich. The reason, he explains, without citing poll data, is that "by and large the public does not hold the government directly accountable for losing jobs to lower-wage countries."
The war in Iraq, Yankelovich says, stands out as "the foreign policy issue that most clearly appears to have reached a tipping point" -- meaning "the moment at which large swaths of the public begin to demand that the government address their concerns." It is the only foreign policy issue that "seriously worries" a majority of Americans, according to the poll, conducted in early June..
Good Idea To Separate Poll Results from Pollster's Speculation
Yankelovich's firm, Public Agenda, will sample public opinion semiannually "to follow shifts in the public's comfort level with U.S. foreign policy." In his article about the next set of interviews, Yankelovich would be wise to draw more careful distinctions between the poll results and his own interpretations, at least on the issue of offshoring jobs.
In his current article, he writes that Americans believe its is unrealistic to think that "U.S. companies will keep jobs in the United States when labor is cheaper elsewhere." The quote, presumably repeating a poll question, is not buttressed with a percentage figure indicating the strength of this belief. He then continues with this speculation:
"There may, of course, be proposals for protectionist legislation in the future. But for the moment, no swelling constituency is clamoring for them. And if policymakers can figure out ways to offset the effects of outsourcing by, say, offering American workers special training in engineering and technical skills, they could score big points with the public."
Maybe. But Yankelovich's personal opinion, also held by many economists, is worth testing with the public. The next Public Agenda poll ought to pose a question like: Do you think that offering American workers special training in engineering and technical skills will offset the strong concern about the movement of U.S. jobs to countries with lower wages?
Globalization, Seen Through Tunnel Vision
In "Diagnosing the Flat World's 'Disorder'," I expressed several objections to the ideas promoted by Thomas L. Friedman, the New York Times foreign affairs columnist, in his latest best-seller, The World Is Flat. A lengthy review by Ronald Steel in the September 5 New Republic examines a wider range of Friedman's ideas and finds them a simplistic paean to globalization. A brief excerpt:
Friedman assures us that he is aware of the downside of globalization, but he devotes little attention to describing it....Among the obvious baleful consequences of "outsourcing," for example, is unemployment in (relatively) high-wage countries. To these regrettably redundant workers, Friedman's counsel is: "You have to constantly upgrade your skills." This may be cold comfort for those who cannot move from Buffalo to Bangalore, or who have never had the benefit of a decent educational system, or who find that they remain redundant even with their newly upgraded skills because lower-paid Asians have those skills too....
Friedman acknowledges that the social and political upheavals caused by the onslaught of globalization "will take some sorting out." But surely it is of some consequence that the "sorting out" can manifest itself in war, revolution, aggressive nationalism, social violence, and terrorism -- all distressing factors that he chooses not to dwell on. Yet they, too, are an integral part of the story, and any analysis that neglects to take them into consideration is not doing justice to the subject. Friedman, too, should upgrades his skills.
Women's Place in the Labor Force
Those are a few of the many statistics available in "Women in the Labor Force: A Databook," published in May by the Bureau of Labor Statistics of the U.S. Department of Labor. It is available on the internet at www.bls.gov/cps/wlf-databook2005.htm.
- The number of women in the labor force (employed and unemployed) increased by 36,878,000 from 1970 to 2004, compared with an increase of only 27,752,000 for men. During that period, the labor force participation rate for women rose from about 43% to 59%, while it dropped from nearly 80% to 73% for men.
- About 57% of women with children under 3 were working at a job or looking for one in 2004, compared to a peak of 62% in 1998.
- In the past 25 years, women's earnings as a percent of men's increased by 18 points, from 62% to 80%.
- In the past 28 years, women in agricultural industries increased their average workweek by about two hours to 35.9 hours, while the average workweek for men remained relatively unchanged (41.6 hours last year).
- In 2003, among the women who worked or looked for work 27 weeks or more, 6% lived in poverty, versus 4.7% for men.
Off-Shoring Human Rights for Workers
"Same Boss, Different Treatment: Why?", an article in the July issue of Human Rights for Workers, caught the eye of Ms. R. Rajeswari, assistant secretary of the Malaysian Trade Union Congress and editor of the MTUC's monthly Labor Bulletin. A condensed version of my article appeared in the international news section of the Bulletin's six-page August issue.
The Bulletin has a wide reach. Printed copies are distributed to the MTUC's 235 affiliated unions and dozens of non-governmental organizations in the country, as well as labor and human rights organizations abroad. Besides, each issue has an electronic version that appears on the MTUC's website, www.mtuc.org.my.
"How many readers do you have?" When asked this question, I have a simple answer: I don't know. But I do know that key people like Ms. Rajeswari have written me to say they find HRFW informative. And that's what counts for me.
'Focus on Looters Stigmatizes the 99-1/2%'
Here are excerpts of an email that a law professor at Loyola University New Orleans, William P. Quigley, and his wife sent after they were evacuated by boat from a hospital where they had spent five days. I got to know Bill from his dedication to the cause human rights, including the human rights for workers. In his book "Ending Poverty as We Know It" (Temple University Press), he proposes a 17-word amendment to the U.S. constitution stating: "Every person shall have the right to work and to receive a living wage for their work." (See the HRFW lead article just two years ago, "Mending the Constitution.")
Now that we are out of New Orleans, we are so disappointed with the disproportionate attention paid to looters and to a few hundred people who were acting criminally. Nobody in Louisiana thinks that people are looters if they broke into stores for diapers or food. People stealing TVs or shooting others made up a fraction of one percent of the people in New Orleans, but looting seems to have attracted attention in the media out of all proportion.
The distorted emphasis on criminal behavior has stigmatized the people who are now in shelters. Events this week exposed racial, economic, and geographic segregation in our society that includes inequality in planning and resources. People need to stick up for the folks in the shelters.... People need to help them, not fear them. Our question should not be, "Why was there looting?" but "How are your families?" and "How can we help?"
There are a million stories of inspiration, love, hope, affection, and community from New Orleans. The focus should be on the 99-1/2% of people who were brave and patient and who managed to help others....
The 100,000 or so people who were left behind in New Orleans are a reflection of the people who are left behind in our country and in the world. We need to turn this disaster into an opportunity for the nation to reevaluate our priorities and invest in construction, both here and in the rest of the world.
Thank God there is no one to bomb in retaliation. Instead of wasting our resources on destruction, we should rededicate our people, resources, and creativity to addressing the fundamental problems that were exposed when the superficial covering of New Orleans was ripped away, leaving us struggling for survival as people do in so many other countries.
-- Bill and Debbie Dupre Quigley
New Book on AFL-CIO and Vietnam War
This month the University of Michigan Press is publishing "Between a River and a Mountain: the AFL-CIO and the Vietnam War" by Edmund F. Wehrle, assistant professor of history at East Illinois University. Wehrle's 10 years of research includes the declassified reporting of U.S. labor attaches at the U.S. Embassy in Saigon. As one of those whose reports are quoted, I'm looking forward to receiving a review copy.
Human Rights for Workers: Bulletin No. X-9 September 10, 2005
Robert A. Senser, editor
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