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Need for Labor Movement Greater Than Ever

By Kevin Osborne · September 7th, 2011 · Porkopolis
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If you listen to today’s Republican leaders, they will tell you that it’s because of high taxes and overzealous regulations that the economy is sluggish and the unemployment rate remains high.

“Right now, America’s employers are afraid to invest in an economy ... hamstrung by uncertainty,” said House Speaker John Boehner (R-West Chester) during a speech in August 2010. “The prospect of higher taxes, stricter rules and more regulations has employers sitting on their hands.”

Since then, the GOP has repeated some variation of that theory ad nauseum.

Anyone who analyzes both short- and long-term trends, however, can readily peg this as a bullshit rationalization for policies that harm the public interest and the common good, and has little or nothing to do with our current predicament.

Corporate profits are at an all-time high. Profits at the 500 largest U.S. corporations grew by a record 81 percent last year.

They’re so high, in fact, that the U.S. Commerce Department recently had to revise its figures upward for the years 2009 and 2010, based on newly available data from corporate tax returns.

I’m sure most of my readers will remember that those two years were abysmal for the average person’s finances, with many people either losing their jobs or homes and seeing their investment portfolios or retirement plans shrink in value.

Nevertheless, The New York Times reported last month that corporate profits accounted for 14 percent of the total national income in 2010, the highest proportion ever recorded.

Meanwhile, the amount spent on wages, salaries and benefits for employees fell to 62.1 percent of the national economy in 2010, which is its lowest level since 1965. For the first quarter of this year, it fell even more, to 61.7 percent.

As The Times noted, “Corporate profits more than kept up with inflation. Other categories of income did not.”

I’ve written before about how data from the latest U.S. Census shows the gap between the richest and poorest Americans is at its widest since records tracking household income have been kept, and is the highest among all industrialized Western nations.

Between 1993 and 2008, the top 1 percent of Americans captured 52 percent of all income growth in the nation. To put this in perspective, the average CEO makes more than 300 times the salary paid to the average worker.

That ratio was 42-to-1 in 1960, and it still is 25-to-1 in Europe. But unfettered greed, alas, has become the new American virtue.

The real explanation for this gap mostly can be found in two major trends: Changes in tax policy and the decline in labor unions.

A study published last month in American Sociological Review found that the dramatic decline in union membership between 1973-2007 was responsible for one-third of the wage inequality among male workers in the United States that occurred during that period, and also for one-fifth of the wage inequality among female workers.

The study was conducted by Jake Rosenfeld, a sociology professor at the University of Washington, and Bruce Western, a sociology professor at Harvard University.

“The decline of organized labor in the United States coincided with a large increase in wage inequality,” the pair wrote.

“From 1973 to 2007, union membership in the private sector declined from 34 to 8 percent for men and from 16 to 6 percent for women. During this time, wage inequality in the private sector increased by over 40 percent.”

Even when accounting for factors like educational differences and technological innovation, the study concluded that unions play an important role in fostering wage equality for all.

“We argue that unions also contribute to a moral economy that institutionalizes norms for fair pay, even for nonunion workers,” the pair wrote. “In the early 1970s, when 1 in 3 male workers were organized, unions were often prominent voices for equity, not just for their members, but for all workers. Union decline marks an erosion of the moral economy and its underlying distributional norms. Wage inequality in the nonunion sector increased as a result.”

It should come as no surprise, then, as union membership has declined, income inequality and the average pay for CEOs have skyrocketed. Put simply, there is no mediating force to counter the avarice rampant in corporate boardrooms.

If you don’t believe the professors, check out this nugget from an article earlier this year on the CNN Money website, which is produced by CNN and Fortune magazine.

“Incomes for 90 percent of Americans have been stuck in neutral, and it’s not just because of the Great Recession,” wrote Annalyn Censky. “Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.”

When analyzing economic data going back decades, CNN Money found the average American’s income hadn’t budged much, although the richest 1 percent of Americans have seen their earnings surge. The average U.S. worker earned about $33,400 in 1988, when adjusted for inflation. In 2008, that amount was $33,000 — basically unchanged. By comparison, the richest 1 percent have seen their incomes grow by 20 percent in the same period.

Interestingly, some economists have concluded that income inequality has grown more rapidly under Republican presidential administrations than under Democratic administrations, largely due to income-tax policy.

Overall, the top income-tax rate for married couples making more than $250,000 annually has decreased from 92 percent in 1952 to 70 percent in 1966 to 50 percent in 1982 and to 28 percent in 1988.

After increasing slightly to 31 percent in 1992, and again to 39.6 percent in 1994, it remained at 36 percent during much of Bill Clinton’s term before dropping to 33 percent under George W. Bush and Barack Obama.

And thanks to various loopholes and tax breaks, many wealthy people pay far less, with some paying nothing at all.

So, the rich generally have more money and are paying less taxes than almost ever before.

Similarly, the “fear of more regulations” argument offered by the GOP rings hollow.

It was the nonenforcement of many financial regulations under Bush II that led to the Great Recession which, in turn, prompted Wall Street to ask for a taxpayer bailout to save it from its own recklessness. (So much for the “invisible hand of the free market” providing checks and balances.) And it was the lack of proper enforcement of regulations that also led to the Deepwater Horizon oil spill in the Gulf of Mexico for three months, beginning in April 2010.

If it was left up to Wall Street, the Republican Party and, yes, some Democrats, we wouldn’t have any effective regulations. Witness the GOP-led effort to kill the Environmental Protection Agency as proof. But we need regulations to protect society from excess and abuse; taxpayers end up paying more in the long run when they’re not enforced.

So, don’t believe the hype being pushed by Boehner, Rick Perry, Michele Bachmann and the Koch brothers. It’s malarkey.

A message that went viral on the Internet this past Labor Day noted that unions fought to bring us the eight-hour work day, end child labor and wage discrimination, gave us vacations, paid holidays and the minimum wage, along with many other progressive reforms that make our working life easier.

As my friend, Paul, noted, how many of these reforms would be opposed by Boehner and crew as “job-killers” if they were proposed today? I’m betting most, if not all, would be.

Keep that in mind the next time politicians try to fool you into voting against your own economic self-interest.


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09.07.2011 at 04:15 Reply

Meanwhile, the amount spent on wages, salaries and benefits for employees fell to 62.1 percent of the national economy in 2010, which is its lowest level since 1965. For the first quarter of this year, it fell even more, to 61.7 percent.  ....Lets try to think of something that happened in 65 that may have some correlation with this data.  Oh yeah, that was when Teddy Kennedy and Lyndon Johnson got their new immigration law through Congress.  You know the one which effectively resulted in millions of unskilled laborers from developing countries flooding the country year after year.  That of course could have no harmful effects on working class wages, now could it Kevin?  Because we all know that this world couldn't possibly require us to make choices between two nearly equally unpleasant alternatives like being unwelcoming to the poor from developing countries or watching out so the working class of this country don't get their middle class wages underbid by these poor,could it?  Because we all know that if you just keep your liberal dreams pure enough, watch out for those all powerful human rights, and blame everything on some mysterious class of mean, evil rich people, nirvana is at hand.

 

09.10.2011 at 07:31

Nice red herring, Trey.  Proximity in either time or space is not causation.  Sir Winston Churchill died in 1965 as well.  Perhaps that accounts for the subsequent decline by your reasoning.  Or possibly the premiere of the Sound of Music or Muhammed Ali knocking out Sonny Liston in their rematch were responsible instead as they both occurred in 1965.  Because we all know if you keep your ultrarightwing radical delusions pure enough, you don't have to pay any attention to reality.

 

09.19.2011 at 07:14
The point is that during the immigration surge in the early 1900's we didn't have the anti-organizing laws we do now and and the few people that were able to go to school in that era weren't taught anti-Union sediment as they have in say the last 40 years. My father complained about what I was being taught about Unions in high school and I did the same when my kids were in school
As for your statement: "logic behind labor unions in the first place: to limit the supply of labor available for capitlists to hire so as to raise wages."- My kids are 33 and 30- Is this theory what is being taught these days? That is the most absurd labor related statement I have ever heard. How would labor Unions sustain themselves if they limited membership/ supply of labor? How would any organization? It seems that only the willingly blind right-wing ideologues could fail to see that.

 

09.13.2011 at 12:01 Reply

First, I want to apologize for the overly sarcastic tone of my original post.  I usually don't write like that but my emotiona must have gotten the best of me.

So I'll give you a little bit of the benefit of the doubt here Steve and conclude that you were mostly responding to my tone and not my argument.  Because, to be honest, you're response is sort of, shall we say, ridiculous.

Your saying that a flood of immigrants for the last 40 years possessing only low-tech job market skills apparently has no more impact on the income level of working class Americans than a boxing match, the death of a famous statesman, or a movie release?  I'm afraid you along with Kevin must have your left-wing blinders on with regards to this issue.  I, personally, can think of no more powerful variable in this situation than tems of millions of new arrivals willing to significantly underbid the legacy American working class for the country's low-tech jobs.  (Just like I think that 99 out of 100 times, the high bidder will win on ebay, I think the low bidder will win in the labor market:  the law of supply and demand).

And the left wonders why they are losing the legacy American working class.  Sweeping under the rug unpleasant data and analysis that are obvious to even the most casual observer does not help make for a trusting relationship.

 

09.17.2011 at 08:05

Question Trey- How is the supposed flood of unskilled labor in 1965 different from the flood of unskilled labor in the early 1900's? This country grew after the original flood largely because of Labor Unions.

Remember Trey, God forbid the Unions are destroyed. If they are they'll come after you next and there will be noone there to protect you

 

 

09.19.2011 at 06:13

I'm not really sure what your point even is Rick.  But anyways I did a little research on labor unions and until approximately the last 10-15 years, US labor unions have been consistently opposed to mass immigration.  Which makes sense since opposing mass immigration of low-tech workers to compete with the US working class for jobs is basically the exact same logic on the national scale as the logic behind labor unions in the first place: to limit the supply of labor available for capitlists to hire so as to raise wages.  This is not difficult logic to understand.  It seems only willfully blind ideologues could fail to see it.

 

 
 
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