Vol. XI, Bulletin No. 8 September 2, 2006
'State of Working America' Makes International Comparisons
How U.S. Lags Behind Other Rich Nations
"The State of Working America 2006/2007," a pre-publication edition of which was issued by the Economic Policy Institute (EPI) just before the September 4 Labor Day, is a gold mine of information on the United States and its families.
The 350-page volume reveals a sharp contrast. On the one hand, the U.S. economic expansion that began in late 2001 has posted impressive productivity growth. On the other hand, real income for the typical family is lower than it was in 2000, while the incomes of the best-off families have grown rapidly.
"Productivity growth has been seen as the tide that lifts all boats," EPI President Lawrence Mishel explained in a press release, "but today we're seeing more and more Americans rowing harder and harder but not moving forward, while the big boats zoom farther ahead."
Putting the U.S. Economy into a Much Larger Context
This comprehensive study also does something that the U.S. mass media usually neglects. It puts the U.S. scene in an international context by comparing the social and economic situation in the United States with that of other rich countries -- specifically, the 19 other wealthy countries belonging to the intergovernmental Organization for Economic Cooperation and Development (OECD).
Here is how the United States rates in some significant areas:
- Work hours. U.S. workers clocked more hours than workers in any other OECD country except New Zealand: an average of 1,824 hours per year, just two hours less than the New Zealand record. Full-time workers in the United States averaged 46.2 weeks of work per year, or 10.2 weeks longer than workers in Sweden, who worked the fewest weeks of the year of all OECD countries.
- Productivity. Among OECD countries the Netherlands matched U.S. productivity. Four economies exceeded it -- Norway by 125%, Belgium by 113%, France by 107%, and Ireland by 104%.
- Income. The
United States led all OECD countries but one
(Norway) in per capita income in 2004. The higher per capita income
came largely from working longer hours.
- Inequality. The
United States has a large income gap between those at the
top and the bottom of the income scale. In fact, inequality is greater
in the United States than in other OECD countries, and it has shown a
strong tendency to rise even as inequality remained relatively stable
or declining in most other OECD countries.
- Mobility. Americans are more likely than other Westerners to be stuck in the same income class as their parents. Out of six countries, four -- Finland, Canada, Germany, and Sweden -- had greater intergenerational mobility (up or down). The United Kingdom had less.
- CEO pay. U.S.
CEOs earn two and a quarter times the
average of the 13 other advanced countries for which there are
comparable data. In only one country, Switzerland, are CEOs paid
even as much as 60% of that of U.S. CEOs.
- Poverty. The United States, with 17% of its population living in poverty, had the highest poverty rate. Ireland, with 16.5%, and Australia with 14.3%, were close behind. The Scandinavian countries had the lowest poverty rates, ranging from 5.4% to 6.4%.
- Life expectancy. Denmark and the United States had the same life expectancy of 77.2 years, according to the latest data (2003). That was lower than in any other OECD country.
- Health care. Although the United States spends more on health care than other OECD countries, about 16% (or 45,800,000) of the people living in the United States did not have any form of health insurance in 2004. Ireland, Austria, and Finland spend about half of what the United States spends, as a percentage of GDP, yet cover 99 to 100% of their populations.
- Infant mortality. The United States in 2003 had the highest infant mortality rate among OECD countries, with seven deaths per 1,000 live births. Japan has the lowest, with three deaths per 1,000 live births.
I culled almost all of the above information from "International Comparisons," the last chapter of the eight-chapter book. The last paragraph of that chapter says:
"Countries should not assume that the
highly deregulated, high-inequality U.S. model is the most successful
economic model. Other countries with less inequality and more
regulated markets have relatively impressive macroeconomic outcomes
(France, for example, has higher productivity levels than the United
States, yet much higher unemployment). Moreover, unlike the
United States, many of the citizens in other countries have a deep
respect for the role of government in their lives, and they look at the
U.S. model with a more jaundiced view than policy makers touting the
U.S. model."
"The State of Working America 2006/2007," by Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, will be published in its final version (incorporating the fall 2006 Census Bureau data) will be published by Cornell University Press on January 1.
To Add Values to a Value-Free System
Human Rights Watch's new report, "Race to the Bottom: Corporate Complicity in Chinese Internet Censorship," notes that a Google vice president has publicly urged that the U.S. Departments of State and Commerce, and the Office of the U.S. Trade Representative, "should treat censorship as a barrier to trade." In testimony at a Congressional hearing in February, Elliott Schrage, a Google vice president, expressed support for making "[anti-]censorship a central element of our bilateral and multilateral [trade] agendas."
The Human Rights Report, released August 10 in Hong Kong, develops a strong case that the U.S. government should take action to help Western internet companies break away from their collaboration with China's censorship. But the Google suggestion is not among the report's recommendations.
The companies insist that, to work in China, they must comply with its laws. The report charges, however, that they have done little to resist the government's demands, and have in effect actively cooperated by censoring themselves. Instead, says Human Rights Watch, they should comply with censorship demands only if they are made via legally binding procedures that can be documented and only after the company has exhausted all legal means to resist.
Yahoo Complicity in Arrest of a Chinese Journalist
Human Rights Watch strongly criticizes the decision by Yahoo to disclose the identity of private users to China's authorities. "This assisted in the imprisonment and heavy sentences of four Chinese government critics," the report states. In the latest episode, for example, Shi Tao, a journalist, last year was sentenced to 10 years in prison after Yahoo provided security police with information about his yahoo.com email account, which he had used to communicate with a U.S.-based human rights Website.
Brad Adams, Asia director of Human Rights Watch, explains: "Laws are needed to end this race to the bottom and establish a level playing field so that the Chinese government can't pick off companies one by one. Otherwise the standard set will be that of the company trying the hardest to please the Chinese government."
Those laws, Human Rights Watch recommends, should would prohibit U.S.-based Internet firms from, among other things:
- Storing "personally-identifying user data in jurisdictions where the courts have a well documented track record of convicting people for peaceful expression of political or religious views."
- "Taking actions on their own to censor political or religious
speech."
- "Complying with oral, undocumented requests from Chinese authorities for censorship of political and religious speech."
It is unfortunate, however, that Human Rights Watch's 149-page report ignores an idea that has had some support within the industry itself -- an idea that would insert human rights values into a trade system largely devoid of them.
Standardizing Responsibility by Number
The International Organization for Standardization (ISO) has formalized over 15,000 global standards, each with its own ISO number. Now that organization is developing an international standard with guidelines on "social responsibility" for corporations and other organizations, and has already designated its ID -- ISO 26000.
A working group led by the national standards units of Brazil and Sweden is drafting the standard, with October 2008 as the target date of publication. Although the preliminary draft has not been released, it is known that the final text will cover the key conventions of the International Labor Organization and of other UN bodies..
"The need for organizations in both public and private sectors to behave in a socially responsible way is becoming a generalized requirement of society," the ISO writes. But unlike the typical ISO standard, this one will be a "guidelines standard" -- that is, voluntary -- without the accreditation procedures common for ISO standards.
So will ISO 26000 make any difference in the global economy's factories and offices? It might, depending on the final text.
Little Progress So Far Seen in Corporate Social Responsibility
Garrett Brown, an internationally known expert on health and safety issues, holds that so far initiatives on corporate social responsibility have produced "very little tangible progress." To be even minimally useful, he insists, the proposed new social responsibility guidelines need provisions requiring 1} much more transparency in the whole auditing process and 2) "a feasible, effective means for workers in the audited enterprises, or their representatives in non-governmental organizations, to contest errors or misrepresentation in CSR audits and reports."
Brown is a compliance officer with the California division of occupational safety and health (the state's OSHA). That's his day job. He devotes most of his weekends and other spare time to promoting worker health and safety. His principal advocacy role is as the pro bono coordinator of the Maquiladora Health and Safety Support Network, which has the volunteer help of 400 health and safety professionals. He is also a frequent contributor to professional journals, and last year published an article in Industrial Safety and Hygiene on "ISO's 'Social Responsibility' Guidelines -- a Small Step Forward, Maybe."
Identifying The Real Roadblocks to Progress
In that analysis, Brown emphasized that the obstacles to advancing social responsibility in the global economy "is not a lack of guidelines, or management CSR [corporate social responsibility] command-and-control systems, or certification schemes." In his view, the real obstacles are these:
- "Lack of political will by corporations to refrain from taking advantage of vulnerable countries and desperate workers whose super-exploitation fattens the bottom line and meets financial analyst's 'quarterly expectations.'
- "Lack of political will, and perhaps lack of genuine options, on the part of governments in the developing world (heavily in debt, totally dependent on foreign investment, and straight-jacketed by international financial institutions) to enforce existing regulations and establish new ones.
- "Lack of resources (financial, international, and political) of
sweatshop workers -- the only ones with a permanent, unalterable
commitment to corporate social responsibility -- to know what their
rights are, to know how to protect themselves on the job, and to be
able to 'operationalize' that knowledge."
The Shame of Washington's Politics
Although the federal minimum wage has been frozen for nine years now, 22 states and the District of Columbia have moved to raise their minimum wage above the federal level of $5.15 an hour. (For background, check A Moral Issue: Raising the Minimum Wage.) As a result, more than half of the nation's population (58%) now lives in states that have minimum wages higher than that mandated by U.S. law, according to an analysis of the Economic Policy Institute. The lowest of the new state minimums are those in North Carolina, $6.15 an hour, and Arkansas, $6.25.
Unlike Social Security benefits and U.S. civil service/military pay, the federal minimum wage is not automatically adjusted annually to keep up with inflation. So it is up to Congress to update the law periodically. Since it hasn't done so for nearly a decade, the purchasing power of $5.15 an hour has deteriorated by 20% -- putting its purchasing power value at its lowest level since 1955.
A briefing paper, "Buying Power of Minimum Wage at 51-Year Low" issued by the Economic Policy Institute and the Center on Budget and Policy Priorities, documents the sorry record of inaction by the federal government (meaning both the Congress and the White House).
An estimated 6,600,000 Americans would have gained a pay boost if the Senate had last month agreed to upping the federal minimum incrementally to $7.25 by 2010. But House Republicans had tied the increase to another round of tax cuts for the ultra-rich, and their bill was narrowly defeated in the Senate, thanks to Democratic opposition.
So, in current Congressional election campaigns, Republicans can now claim that Democrats killed a minimum wage increase, even though the bill's primary purpose is revealed in its title: "H.R.5970 Title: To amend the Internal Revenue Code of 1986 to increase the unified credit against the estate tax to an exclusion equivalent of $5,000,000, to repeal the sunset provision for the estate and generation-skipping taxes, and to extend expiring provisions, and for other purposes."
Such is the level of Washington's political morality.
Dr. Bernanke's Poor Prescription
In a long and thoughtful speech on August 25, Federal Reserve Board Chairman Ben Bernanke warned that "further progress in global economic integration should not be taken for granted" and suggested how policymakers can counter opposition to globalization:
"The challenge for policymakers is to
ensure that the benefits of global economic integration are
sufficiently widely shared -- for example, by helping displaced workers
get the necessary training to take advantage of new opportunities --
that a consensus for welfare-enhancing [global] change can be
obtained. Building such a consensus may be far from easy, at both
the national and the global levels."