CounterPunch
April 22, 2005
Working Wages Slide, While Business Lines Its Pockets
The One-Sided Class War
By LEE SUSTAR
Once inflation is taken into account, compensation for nonsupervisory workers in the private sector--about 80 percent of the workforce--dropped 0.4 percent in 2004. Analyses in the New York Times and Los Angeles Times blamed the usual suspects: globalization and the outsourcing of jobs overseas, a slack labor market and weak unionization rates. (Source: State of Working America, 2004-05)
These developments are, in fact, symptoms of the underlying cause: a systematic shift of wealth from labor to capital through free-market policies--known internationally as “neoliberalism”--that began more than three decades ago. Today’s economic picture--in which profits are taking a greater share of the national income in an economic recovery than at any time since the Second World War--reflects the consolidation of the neoliberal economic order internationally.
The pattern of wage stagnation and decline has worsened the precarious situation of U.S. workers. While overall real pay last declined in the early 1990s, hourly wages either declined or stagnated throughout the period between 1973 and 1995. Beginning in the mid-1990s, tight labor markets finally pushed up pay, particularly among low-wage workers. Unions were able to reverse some of the downward trends--workers went on strike at UPS in 1997 and General Motors to win more full-time jobs; at Bell Atlantic/Verizon, workers struck twice to win better pay and benefits.
But the recession of 2001 and the weak recovery since unraveled many of these gains. Although real wages continued to grow slowly during the recession, the economy shed large numbers of jobs, particularly in manufacturing, which saw 41 straight months of employment decline.
At the same time, productivity gains that emerged in the late 1990s continued to accelerate, which meant that fewer workers could produce more. According to the Bureau of Labor Statistics, the 4.3 percent average annual increase in productivity for 2001 to 2004 was last matched in 1948 to 1951.
The result is that while the U.S. economy in 2004 generated 2.2 million jobs, that total is 1.4 million less than expected, based on averages from previous economic recoveries. About 20 percent of the jobless today are among the long-term unemployed--people who have been 27 weeks without a job--“an unprecedented development in the post-
period,” according to the EPI.
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