The War On Wages
Mitt Romney, who helped build his massive fortune by serving as a “pioneer” in offshoring family-sustaining jobs to low-wage sweatshops in
Of course, the key tenets of the Romney-Ryan campaign were aimed precisely at destroying any support for wages in the $25 range. Romney’s pledge of higher pay for U.S. workers collided directly with his support for a national “right-to-work” law designed to virtually eradicate unionism, his support for running-mate Paul Ryan’s proposal for eliminating taxes on the profits from overseas plants operated by major U.S. firms would heighten the incentives for moving highly-paid jobs outside the U.S., and his call for “making America the most favorable and competitive.”
This push for “improving” competitiveness in the global economy translates into deteriorating conditions in the lives of working families. While unions and their members have been a primary target, the result has been a flattening of earnings across the middle class.
Amid a general push to drive down pay for American workers, there are mounting signs that major
Formal democracy in the U.S. and other advanced societies is now focused on “responding to the global market forces as advantageously as possible and apportioning the resulting gains and losses—while trying to manage public opinion…in accordance with the electoral cycle,” as Martin Leys described the state of governance in Market-Driven Politics. As a result, “Society is being shaped in ways that served the needs of capital accumulation rather than the other way around.”
The careful circumvention of critical issues like declining living standards by the major parties and the inability of voters to hold elected officials to fundamental commitments was sharply depicted by Kevin Baker writing in Harper’s. Baker pointed to Obama’s willingness to consider a “grand bargain” with Republicans under which Social Security and Medicare benefits would be cut, in spite of overwhelming opposition from the public, especially Democratic voters and Obama’s own pledges in the past. “Just as Western capitalism deindustrializes, offshoring industry, cutting wages and benefits, eliminating workers’ rights and protections—so Western democracy depoliticizes, its major parties expelling or silencing entire constituencies, scorning the participation of groups that once sustained them,” observed Baker.
The Obama administration’s defense of its policies as “saving Wall Street in order to rescue Main Street” was increasingly seen as a veiled form of trickle- down economics, as the Administration consistently consulted and courted Wall Street while allowing CEOs and bankers to set the terms of policy of critical issues like unemployment and home foreclosure. In contrast, the poor and working-class victims of shattering economic dislocations in their lives were effectively excluded from helping to shape programs to reconstruct their lives. No wonder, then, that Democracy Corps pollsters Michael Bocian and Andrew Baumann found in the spring of 2010 that, “Just 3 percent agreed that government’s policies helped ‘the average working person’ or ‘you and your family’” and “a 48 percent plurality of voters think Obama and Democrats put bailing out Wall Street ahead of creating jobs for ordinary Americans.”
President Obama’s campaign glided over the all-out attack on workers’ living standards—in terms of wages, healthcare benefits, pensions, job security, and public safety-net programs—being waged by corporate leaders. Obama devoted much of his campaign to touting his success in stimulating 31 straight months of “private-sector” job creation. But with this emphasis, Obama failed to address the sharp deterioration in the quality of jobs in the private sector as major corporations launched a war on decent wages and failed to defend the vital role of public-sector jobs in both providing needed services and stimulating the economy during economic slowdowns. Obama’s electoral strategy of stressing his successes in getting the U.S. out of its deepest crisis in 80 years—while giving limited recognition to the continuing suffering of the under-employed and jobless and poor—surely left millions of Americans feeling shut out from his vision of America, just as Romney derisively dismissed 47 percent of Americans as “dependent” wards of government.
Repudiation Of Social Compact
The assault on wages and middle-class living standards represents a radical u-turn from the unwritten “social compact” followed by leading corporations from roughly 1940 to the mid-1970s, during which corporate leaders reluctantly accepted the unionization of their workforces and paid out substantially higher wages in exchange for shop-floor peace and a vastly-expanded domestic consumer market. Unions in the
However, U.S. employers were determined to escape any sharing of power with unionized workers, even though U.S. labor law provides none of the relatively expansive democratic features in Western European labor law (e.g., in Germany, workers must have representation on corporate boards of directors). After a post-WWII strike wave, the spread of “right-to-work” laws that enabled bosses to shape docile non-union workforces—set up by the passage of the Taft-Hartley Act in 1947—gradually made the old Confederacy increasingly attractive to employers seeking to escape unionized workers and pro-union communities in the North. The low unionization rates once common only in the South have become the national norm: just 7.9 percent of American private-sector workers are now in unions. Ironically, non-union Southern communities are being de-industrialized by employers seeking even lower wages and moving on to
A trend that has been labeled “Caterpillar Capitalism” has begun to emerge. Corporations flush with record profits nonetheless exercise their leverage to extract wage concessions. The exemplar, Caterpillar, with profits of $4.8 billion in 2011 and CEO Douglas Oberhelman enjoying a 60 percent increase in his compensation to $16.9 million, chose to target machinists in Joliet, Illinois to impose massive concessions—including a 6-year wage freeze, a doubling of health care premiums and cuts to pensions. Caterpillar had previously been a leader in forcing the acceptance of 2-tier wage structures, under which new workers receive 50 to 60 percent of veteran workers, along with far more limited health and retirement benefits. The 2-tier trend has spread to GM, Chrysler, and Ford, with new hires beginning the brutally-paced work at around $14 an hour. In
Between 2004 and 2010, GE cut the number of
The wage-slashing is about to become more widespread at GE’s non-union plants, based on GE memos obtained by the UE’s Townsend. In last year’s negotiations with a coalition of unions, GE repeatedly informed labor that it viewed $13 per hour a competitive wage in manufacturing, recalled Townsend. Alert to trends among U.S.-based firms, foreign-owned firms are emulating the downward spike in wages. “
According to Chrystia Freeland, author of the new book Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. The new super-rich are “less connected to the nations that granted them opportunity and the countrymen they are leaving ever further behind.” The
Global Consumers, Impoverished Amercians
The secession from domestic concerns extends to issues like healthcare, education, and global warming. Referring to the need for massive investments in healthcare, energy, and technology to ensure continuing U.S. competitiveness, even globalization cheerleader Thomas Friedman of the New York Times was uncharacteristically critical of the nation’s CEOs: “When I look around for the group that has both the power and interest in seeing America remain globally focused and competitive—America’s business leaders—they seem to be missing in action.”
At the same time as the bubble of “plutonomy” has emerged for the super-rich,
A substantial part of the income loss can be explained by employers engaging in what the NY Times’ Louis Uchitelle called the largest wave of wage-slashing since the Great Depression. The almost non-existent level of job creation—under 1 percent from 1999 to 2009, the worst decade since World War II when job growth had ranged from 22 percent to 38 percent—strengthened the hand of employers in holding down pay and trimming benefits. The panic created by the Wall Street meltdown of 2008 and the ensuing loss of 8.5 million jobs added to management leverage, already strong because of labor unions’ weakened bargaining power, to push wages down further.
But the level of
Roger Bybee is a Milwaukee-based freelance writer and