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Behold the ugliness
http://www.monthlyreview.org/0607wkt.htm
Wage Stagnation, Growing Insecurity, and the Future of the U.S. Working Class
by William K. Tabb
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The most important promises used to justify capitalism are that your children will have a better life than you do, and in President Kennedy’s famous words, “a rising tide lifts all boats,” meaning everyone benefits from the accumulation of capital. These promises ring hollow in a period in which the relative position of the working people of the United States is declining and its ruling class is able to appropriate an increasing share of the national income. This pattern of accumulation and appropriation has become evident to many Americans and this awareness is beginning to affect political consciousness.
Today, people worry that their children will not enjoy the same standard of living that they have. They know that the benefits of growth are going overwhelmingly to the wealthy and not to working people. The statistics support such an understanding. For a quarter of a century, from 1980 to 2004, while U.S. gross domestic product per person rose by almost two-thirds, the wages of the average worker fell after adjusting for inflation. Over the three decades from 1972 to 2001, the wages and salaries of even those Americans at the 90th percentile (those doing better than 90 percent of their fellow citizens) experienced income gains of only 1 percent a year on average. Those at the 99.9th percentile saw their income rise by 181 percent over these years (to an income averaging almost $1.7 million). Those at the 99.99th percentile had income growth of 497 percent.1
From an economic standpoint what has happened is that the link between productivity and wages has been broken. No longer does economic growth mean increases in the real earnings for the working class as their productivity rises. This was evident through Clinton’s last term when between 1997 and 2001 the top 10 percent of U.S. earners received 49 percent of the growth in real wages and salaries; indeed, the top 1 percent got 24 percent of the total while the bottom half of workers received less than 13 percent. This trend is of longer duration. Based on a somewhat different calculation the share of income going to the top .1 percent quadrupled between 1970 and 1998 at the expense of working-class earners.
Inequality was growing in most of the rest of the world too; but the United States led among the richer nations; and unlike most others that offset market inequality though government intervention, the United States has not done so. For working people the issues are not simply the stagnation of real wages and growing inequality but the worsening insecurity that permeates many aspects of their lives as labor market conditions change and government abrogates more and more elements of the social contract.
Because globalization has been such a powerful force restructuring the international political economy there is a tendency to see economic developments as the result of this process rather than in terms of class. If we start with class and labor as the givens—rather than beginning with globalization trends—and then go on to the dispiriting impacts on people, the focus moves from deterministic structures to agency and the need for and potential of struggle. To understand the present, we need to look closely at how the factions of capital are advancing their selfish interests, at the expense of working people, by consciously manipulating the beliefs, fears, and idealism of citizens.
Despite globalization, manufacturing output is not declining in the United States. It has been expanding, growing faster than the rest of the economy in recent years. It is manufacturing employment that is shrinking.
It is at its lowest level in more than half a century. Between 2001 and the spring of 2006 worker hourly productivity rose by 24 percent so fewer workers are needed to produce more output. But output has not been rising as fast as in the past. This is not only because of greater global competition but also slower global growth in demand. If demand had increased at levels seen during the early post–Second World War era, millions of additional jobs would have been created in manufacturing for U.S. workers. Manufacturing jobs are especially important for those with the least education. Men with less than a high school education saw their wages fall in the 1980s in real terms by 20 percent. From 1979 to 1992 real yearly wages for male high school dropouts fell by over 23 percent while high school graduates with no additional education experienced a fall in real wages of 17 percent. There was a large expansion of temporary and part-time work.
The U.S. economy is always creating and destroying jobs. The question is how much trouble do the unemployed have in finding work? What kind of jobs are available? What do they pay? What is the work like? What are the benefit packages, if any? If they are laid off how much pain do workers endure when they are involuntarily separated from employment?
How long does the period last? What sort of job did they lose, did they get, and again at what pay and with what benefits? Every three months 7 percent of all jobs are destroyed and roughly the same number are created. In a typical year a quarter of all jobs disappear. The Bureau of Labor Statistics tells us that in 1983, men between the age of 45 and 54 held jobs on average for 12.8 years but by 2004 for only 9.7 years. Jobs are now less secure for white-collar workers as well as in blue-collar occupations.
The layoffs have been in big companies, which tend to pay better and to offer benefits. It is not of course that things were great in the 1980s. During that decade, 13 percent of Americans between 40 and 50 years of age spent at least one year living in poverty, but by the 1990s, 36 percent did. Mobility has also declined. Today, according to a Federal Reserve study, if your parents are rich the chance of your being rich is as high as the probability that if your parents are tall you will be tall. Social mobility is not as likely here as in Germany, for example.
The true cost of job loss must be measured not just in money as economists do in their limited calculations. For many people there is a spiral pattern in which layoffs lead to not only financial insecurity but to feelings of powerlessness and hopelessness, depression, sleepless nights, headaches, chronic stomach aches, and fatigue that cause lasting harm.
Even after getting work some people have trouble talking to the boss and dealing with job demands. The damage done by job loss, even the threat of job loss, along with the worries about how people will live after they are no longer able to work, or if they have a serious illness how they can pay for the doctor and a hospital stay, produce anxieties that permeate working-class existence. There is a rise in escapist pursuits as the economy produces greater uncertainty; the growth of gambling addiction is one example. By the start of the 2000s, Americans were spending more on gambling than on theme parks, video games, spectator sports, and movie tickets. The most desperate tend to risk the most. Data from the late 1990s shows households with incomes under $10,000 a year spend three times as much on lottery tickets as those with incomes of more than $50,000. There is, however, an important psychological disconnect between harsh economic realities, escapist avenues, and the ideological interpretation most working people adopt to preserve their sense of worth and well-being. Credit card debt ensnares a large part of the working class. In 2004, 1.6 million people filed for personal bankruptcy, twice the number of a decade earlier, and half of those filed after a major medical expenditure. Other prominent causes of debt were divorce and job loss.
On the whole, life grows ever more insecure for working people. Capital’s share of all corporate income is the highest and the compensation of employees is the lowest that they have been in twenty-five years. Moreover, capital income is more concentrated than it has ever been. As the profit share went up, the CEO’s share of both the total wage bill and of corporate profits dramatically increased. By the mid-1990s CEO pay was about 5 percent of corporate profits. In 2003 their share was 10 percent of all profits.2 The percentage available for labor’s share decreased.
In the 2006 holiday season the top Wall Street firms together paid out an estimated $36 to $44 billion to their employees. The bulk of it went to those masters of the universe who were restructuring employment prospects for U.S. workers and extorting concessions from workers to finance debt. Andrew Sum of Northeastern University’s Center for Market Labor Studies points out that from 2000 to 2006, all 93 million American workers—all production and nonsupervisory workers as defined by the government—had real earnings increases of less than half of the combined bonuses awarded by the top Wall Street firms for just one year.3
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