5-17-05, 10:41am
US workers are working harder, producing more, and receiving less in wages. According to the Financial Times, productivity has grown by an annual average of 4.1 percent, while compensation has grown only 1.5 percent since Bush took over in 2001. Meanwhile, the number of hours worked per week for production and non-supervisory workers in private industry (about 80 percent of the workforce) has grown form 33.5 hours in April 2004 to 33.9 in April 2004, according to the Bureau of Labor Statistics.
Since growth in productivity is mainly measured by calculating the growth in economic output per hour and measured against the growth of labor and other production costs – or economic “efficiency” – these numbers provide insight into how well workers are rewarded by employers for producing more at faster rates. Or, put another way, the productivity rate compared to the growth of wages shows the degree of exploitation workers face.
Financial Times estimates that in the seven previous business cycles, workers took home wage increases that grew at about 75 percent of the growth of productivity. Since Bush took office in 2001, workers have seen their compensation rise at a rate of only one-third of the rise in productivity. It is safe to say that since taking office Bush has presided over, aided, and abetted a dramatic rise in exploitation of working people. Elsewhere, Financial Times reports that inflation in the US rose 3.1 per cent in the year to March but salaries climbed just 2.4 per cent, according to the Employment Cost Index. In the final three months of 2004, real wages fell by 0.9 per cent. Real wages are called “real” because they measure the relationship between the increase in wages and the increase in prices. For the last few months, inflation has outpaced wages, weakening buying power.
The Economic Policy Institute reported last summer that in the period between the fall of 2001 and the summer of 2004, real wages for “blue-collar” workers and non-managerial workers – about 80 percent of the workforce – actually fell from about $530 per week to about $525 per week. The weakening wage base for the vast majority of working people is also a clear sign of increased exploitation. In fact, the trend for the vast majority of workers since the early 1980s, except for a minor recovery in the late 1990s, has been a long-term stagnation of real wages.
Let’s also note, for the record, that this group of “blue-collar” and non-managerial workers did not share in any meaningful way Bush’s lucrative tax cuts for the rich and will not be sharing in future tax cuts Bush has planned.
Inflation and weak growth in employment – labor force participation remains short of the pre-recession high nearly four years ago – are key factors in stagnant wages. The weakness of and political attacks on the labor movement, economic “Wal-Martization,” and public policies such as “free trade” and corporate tax loopholes that promote movement of existing manufacturing jobs offshore or divert potential investment for job creation elsewhere are other main factors driving ballooning exploitation.
This is the economy the Bush administration and the Republican Party are presiding over. It is a bleak economy that they paint with rosy colors. Why? Well, corporations are making large profits – at least the big ones are. CEOs have seen double digit growth in their salaries over the last 12 months, outstripping inflation by four times. You have to understand that the Republican Party is the party of the rich, and the rich are doing fine. So Bush and fellow rulers really don’t care and have no policy solutions to the grinding economic crisis we are mired in.
What about the trickle down effect? So far, a weak jobless recovery, stagnant wages, looming inflation, massive budget deficits, and sharp cuts in social safety net type programs show that nothing has trickled down. A huge and costly war in Iraq didn’t turn the economy around. Massive tax cuts for the rich didn’t turn things around. Making a lot of noise about religion, gay people and immigrants hasn’t turned things around.
What will turn things around? We need a New Deal. Start by ending corruption and abuse of power by Republican congressional leaders. Repeal the rich tax cuts. End the $200 billion war on Iraq and bring our troops home.
Invest in public education, rebuild the infrastructure of our country (roads, schools, hospitals, parks, public buildings, public transportation, etc.), and eliminate bureaucratic waste and fraud in the Pentagon. Promote manufacturing job creation with direct investment and renegotiation of trade deals that aid in the movement of jobs overseas.
Eliminate massive inflation and bureaucratic waste in the private health insurance industry by investing in a single-payer national health program, eliminate bureaucratic and legal obstacles to the right of workers to organize and collective bargain for better wages and benefits, and develop sound, efficient, and low-cost sustainable energy sources.
--Reach Joel Wendland at jwendland@politicalaffairs.net.
