The legendary economist John Maynard Keynes predicted that by this time, people would be working a 15-hour week sufficient to provide a living wage because he assumed that pay increases would follow increases in productivity.
That hasn’t happened because workers have been robbed of the benefits of their increased productivity, which have gone exclusively to CEOs (earning 300 times what their own average worker is paid), to senior management, shareholders, and to fattening their coffers with record amount of cash the companies are sitting on.
Productivity has increased more than 90 percent since 1979, but the hourly wage for the typical worker grew a measly 10 percent after adjusting for inflation.
After the Great Recession, the median wage fell for a few years and then made up little ground through 2014. (“As His Term Wanes, Obama Champions Workers’ Rights,” by Noam Scheiberaug, New York Times, Aug. 31, 2015, www.nytimes.com/2015/09/01/business/economy/as-his-term-wanes-obama-restores-workers-rights.html?ref=us&_r=1).
Indeed, employers took advantage of the 2008 financial collapse to excess 8.,7 million workers, forcing the remaining ones, too shell-shocked and fearful to protest, to do the work of three at the same or even less salary.
They forced employees to “give back” health and pension benefits in exchange for the privilege of not being fired. No doubt, the workers who were taken advantage of had the idea that employers would return their “loyalty” and reward the survivors when business rebounded.
That didn’t happen. This is despite the fact that the economy has seen substantial progress — unemployment is down to 5.1 percent, the lowest since 2008. Businesses have created 13 million jobs over the past 65 months — 3 million in 2014 alone, the best year since the end of the Clinton Administration.
But wage stagnation is why the economy is so stalled despite solid gains in employment and record corporate profits: consumer buying power has been constricted, workers are being kept in survivor mode. Consumer spending, accounting for 70 percent of GDP, is the engine driving the economy, and when ordinary people don’t have buying power, the economy stalls.
And the main reason why incomes have lagged while corporate profits set records is simple: Because employers can. And that’s the result of an earnest crusade to weaken unions, which coincided with Reagan.
“We’re experiencing the longest streak of private sector job growth on record. Businesses have created more than 200,000 jobs in fifteen of the past seventeen months — the first time that has happened since 1995.
In 2009, there were seven job seekers for every open job. Today there are fewer than two,” noted Labor Secretary Thomas Perez.
“A lot of people are back to work, but far too many families are finding it nearly impossible to get ahead. That’s not just a problem for those families — it’s a problem for us all. Our nation is stronger when prosperity is broadly shared.
“And as we’ve seen throughout our history, one necessary ingredient of shared prosperity is working people banding together and raising their voices,” he said, in a full-throated appreciation of unions.
“By doing just that, the labor movement has made our country better. We have them to thank for the eight hour work day and the weekend. We have them to thank for safer, healthier workplaces. We have them to thank for model apprenticeship programs that create pathways to the middle class.
“These benefits — benefits that most of us take for granted today — weren’t inevitable. They were demanded by the working people of this nation — people who wanted to go to work each day and return home with their dignity and a decent wage; people who wanted their chance to reach for the American Dream.
“History has shown that there is a correlation between a healthy middle class and a robust labor movement.”
The Bureau of Labor Statistics found that median weekly earnings for union members last year was $200 a week more than for non-union workers. “That’s not pocket change — $200 a week is the difference between paying the bills and worrying about whether the lights will go out.” It’s also the bill for groceries or for child care.
“There’s an inverse relationship between union membership and the size of the gap between rich and poor,” Perez continued. “As the number of workers choosing to be represented by unions increased in the middle of the 20th century, the share of income going to the wealthiest 10% declined and prosperity was broadly shared. But as union membership has steadily fallen in recent decades, the share of income going to the top 10% has steadily climbed.
“Many workers want to exercise their voice through a labor union; some are finding new and innovative ways to come together and be heard. Fast food workers, for example, have captured the attention of the nation with their fight for higher wages. Domestic workers in New York demanded the basic workplace protections enjoyed by most workers, but that had been denied to them for decades. And brave construction workers in Texas came together to stand up for safer working conditions when too many of their colleagues failed to come home at the end of a shift because their employer cut corners on safety.”
“It’s no coincidence that the rise of the middle class in America coincided in large part with the rise of unions,” President Obama said when Wisconsin Governor Scott Walker constricted unions (which Walker now uses as his greatest achievement to be elected President). “So it’s inexcusable that, over the past several years, just when middle-class families and workers need that kind of security the most, there’s been a sustained, coordinated assault on unions, led by powerful interests and their allies in government.”
The president stood up for unions when he signed a memorandum of disapproval of a resolution by Republicans in the Senate and House intended to reverse changes advanced by the National Labor Relations Board to streamline the voting process for those who want to join a union.
And in another breakthrough, the NLRB, which is charged with protecting workers’ rights to organize, in a long-awaited ruling, reversed a Reagan-era policy to make it easier for unions to negotiate on behalf of workers at fast-food chains and other companies that rely on contractors and franchisees. (Adopted 3-2 along partisan lines, the ruling was immediately attacked by business groups, who called on the Republican-controlled Congress to overturn it, and the ruling will likely be challenged in court by employers like McDonald’s and Yum Brands, the New York Times reported.)
Of course, Democratic support for unions is brushed off by Republicans as pandering to a powerful political constituency, and it is disrupting this political constituency that is at the heart of Walker and the Koch Brothers and the conservative PACs.
But it’s not just the traditional “blue collar” worker who is being used and abused because the pendulum of power has shifted too far to employers. It’s “white-collar” (if that even exists), who are being exploited. (See the explosive New York Times expose, “ nside Amazon: Wrestling Big Ideas in a Bruising Workplace,” Aug. 15, 2015, www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html)
The big issue today in the emerging “Uber” economy is the tendency of employers (because they can) to classify workers as “contractors” or “freelancers” who do not have the same protections or benefits as wage earners.
Employers can save a bundle by avoiding paying a share of Social Security (that means the worker pays 12.4 percent instead of 6.2 percent into Social Security), contributing to health care under the Affordable Care Act, or paying overtime. (see “Help for the Way We Work Now,” by Sara Horowitz, New York Times, Sept. 7, 2015, www.nytimes.com/2015/09/07/opinion/help-for-the-way-we-work-now.htm).
Last month, a federal appeals panel affirmed an earlier regulation granting nearly 2 million previously exempted home care workers minimum wage and overtime protections.
“These moves constitute the most impressive and, in my view, laudable attempt to update labor and employment law in many decades,” Benjamin I. Sachs, a professor at Harvard Law School and a former assistant general counsel for the Service Employees International Union, told the New York Times. The goal, he said, is to “keep pace with changes in the structure of the labor market and the way work is organized.
That’s a theme that runs through all of this.”
Throughout his time in office, Obama has pushed forward with changes that would make a real difference to restore the middle class and actually put some reality back into the increasingly mythic American Dream — raising the minimum wage (something that has been done dozens of times in the past), pay equity, paid family leave, raising the threshold for overtime pay (also something that has been done in the past) — all of which the Republican Congress have blocked, even as Republican candidates have perversely used “income inequality” and “stagnant wages” as “evidence” of failed economic policies and to stoke dissatisfaction of the very people who should be embracing Democratic policies and rejecting Republicans.
The fight for a living wage is simple, and even should appeal to conservatives: No one who works a 40-hour week should be living in poverty, forced to live off of handouts from the government (taxpayers).
Those handouts really amount to corporate welfare – subsidies to companies like McDonald’s and Wal-Mart. (Wal-Mart got praise from Obama this year for pledging to spend $1 billion more on wages and now is slashing hours because it is cutting into their profit. Keep in mind that the six Wal-Mart heirs have more wealth than the bottom 42 percent of all Americans.)
So Obama has resorted to executive orders where he can: requiring federal contractors to raise their minimum wage and provide up to seven days paid parental leave, ordering the U.S. Department of Labor to issue new rules regarding overtime pay, ban retaliation against workers who discuss their compensation and provide employees more information about their pay (a workaround the pay equity issue to give workers the ability to sue under the Lilly Ledbetter Law for discrimination), and protect gay and transgender workers from discrimination.
He also convened the first-ever White House Summit on Working Families, to discuss the systemic and institutionalized impediments to parents succeeding at work. No surprises here: the need for flexible work, paid sick leave, paid parental leave, the need for sufficient advance notice of schedules so parents can arrange child care.
Why executive orders? Because these initiatives have been known for decades, certainly since the rise of the Women’s Movement of the 1970s. Employers don’t respond because they don’t have to, just as they don’t raise wages to reflect productivity because the job market, so far, has made labor a cheap commodity.
That’s changing, just a little, because of the improving employment picture and employers (believe it or not), are moaning and groaning about the hit their profits are taking because they actually have to pay better wages in order to compete for workers.
Instead of a drive down to the lowest common denominator, Obama is elevating the playing field.
I get furious when I hear Republican candidates pretend to care about the struggles of the “middle class” and working Americans, families and the growing gap between rich and poor, and dangle in front of their moronic followers the sad statistic of how their incomes have declined in real terms.
And then they do the bidding of the corporations and billionaires in making sure that there are no improvements to the lot in life, from raising the minimum wage to pay equity, to college affordability. Scott Walker’s big “achievement” which he says qualifies him to be president is that he could take on the public unions so he can take on terrorists, and Chris Christie said he would punch the teachers union in the face (he probably was a bully in school, too).
I’m betting that most Americans who may know subconsciously that things are better (in fact, more people have the confidence to seek better jobs and not be stuck), have no clue (or appreciation) for what the Obama Administration has done to change the work environment over Republican obstruction.
Paid Sick/Family Leave:
Today, 43 million private-sector workers in the U.S. are without any form of paid sick leave. Only three states — California, New Jersey, and Rhode Island — offer paid family and medical leave. The United States remains the only developed country in the world that does not offer paid maternity leave.
On Labor Day, President Obama signed an executive order providing paid sick leave to workers of federal contractors will benefit 300,000 — but more important, raises the stakes for employers, generally.
“A key part of middle-class economics is helping working families feel more secure in a constantly changing economy,” President Obama said at the Working Families Champions of Change Event in April. “And in today’s economy, having both parents in the workforce is an economic reality for many families…So things like paid leave, paid sick days, child care, equal pay — these are family issues and these are economic issues. Sometimes in this town they’re treated as women’s issues or side issues — we have to recognize them for what they are: They are national economic priorities,”
Hourly Workers: Minimum Wage & Scheduling
The retail sector’s low wages and unstable scheduling have had a tremendous negative impact on the quality of life of each of its more than 15 million workers, stated Catherine Ruetschlin, Senior Policy Analyst, of Demos. “Black and Latino retail workers are more likely than their white peers to be in lower-paying positions, non-supervisory roles, and to face involuntary part-time work. And retail employers perpetuate a racial wage divide by paying Black and Latino full-time salespersons just 75% of the wages of their white peers, or $7,500 less per year.
“Retail’s racial inequalities mean that the strains of low-wage work—from enrolling in classes, to securing childcare, to working multiple jobs — are borne disproportionately by the Black and Latino workforce.
“A raise to $15 per hour would reduce retail employers’ systemic underpayment of Black and Latino workers and cut rates of working poverty for the entire retail workforce in half.”
Scheduling: Here, there needs to be changes in the way employers can demand, on-the-spot, that an employee show up or lose pay or even worse, their job.
On the other hand, employers should accommodate the realities of working families by advancing flexibility in schedules and more opportunities for home-based work when necessary.
The fact of the matter is scheduling is a kind of tyranny over workers (the slogan “freedom to work” has been abrogated by the Scott Walker, anti-union, “right to work” for slave wages). Millions of low-wage hourly workers are given erratic and unpredictable work schedules that make it almost impossible to schedule child care, work at a second job, or go back to school.
Sen. Elizabeth Warren has introduced legislation, Schedules That Work Act, that would allow employees to have a say in their work schedule and bring more stability to their family’s lives. “Without basic workplace protections, these workers are one small personal emergency away from losing their jobs and falling more deeply into poverty.”
Overtime Pay
Forty years ago, 62 percent of full-time salaried workers qualified for overtime.
Today, because of the outdated “threshold” and because of employers are taking advantage, only 8 percent qualify.
Raising the salary threshold (so there is a threshold, and employers cannot simply give someone a “manager” title to avoid paying overtime) from $455 a week ($23,660 a year) – a figure which is now below the poverty threshold for a family of four – to $970 a week ($50,440 a year) in 2016 (and pegging updates to inflation and wage growth).
This would extend overtime pay to nearly 5 million workers within the first year of its implementation, of which 56% are women and 53% have at least a college degree.
All of these changes advanced by the Obama Administration, over the aggressive obstruction of Republicans and Corporatists, are demonstrative of the differences between Republicans and Democrats.
In this respect, Republicans have an added motivation to shutting down government, once again, this fall over a trumped up complaint (take your pick: Planned Parenthood funding, Iran nuclear deal, Obamacare, it’s hard to keep track). Employers are complaining that they will have to start upping wages in a more competitive labor market, and the Republicans just can’t have that. Wall Street is also upset about the idea that the Fed will start raising interest rates from the historically unheard of zero rate. Also, the healthier job market and economy, meaning higher tax revenues and lower expenditures for public services, Obama has been able to drive down the budget deficit, taking away another political plum from Republicans.
“If Congress wants to support working Americans and strengthen our middle class, they can pass a budget that invests in, not makes cuts to, the middle class…. Our economy doesn’t need another round of threats and brinksmanship. Nobody gets to play games with our economy — or the middle class I grew up in, and that you grew up in.
So tell Congress to pass a budget that reflects the values we honor on Labor Day. Rewarding hard work. Giving everybody a fair shot. And working together to give all of our kids a better life.”
