Oct 272014

onaschoutsmall  by Bill Onasch

Just Cause For Firing
The Bureau of Labor Statistics has released their Usual Weekly Earnings Summary for the Third Quarter of 2014. The median weekly pay for the 107.9 million full-time employees–ranging from domestic service to corporate CEO–was 790 dollars. That means half of those working full-time for a regular boss earn less than that figure.

The stats for part-time wage employees have some interesting twists. The median weekly wage for the 24 million part-time workers over age 16 was 245 dollars. But, in striking contrast to full-time workers, women in all color/ethnicity groups except Latino earned more than men in their category. Asian women did the best with 274 a week. And among men both Asians and Latinos outperformed whites. Perhaps there is literature explaining this anomaly but I haven’t seen it.

My guess is that women stay in these jobs longer than men and their higher wage reflects incremental longevity raises. Some, especially single mothers, may stick with part-time because its flexibility allows them to schedule doctor and teacher visits. They are also less likely, of course, to get the relatively more attractive job offers available to their male coworkers eager to escape from the involuntary working part-time category.

For different reasons related to immigration, Asian and Latino men may also make do longer in part-time, low wage jobs.

The BLS survey does not include millions, like my hard working wife Mary, who are self-employed. Most agricultural workers and all members of the armed forces are also excluded.

Nearly half of all retired workers, including me, depend on Social Security as our sole source of significant income and it is an essential part of the budgets of most of the other half. Last week it was announced that we will get a 1.7 percent cost-of-living raise in 2015. This will bring the average monthly benefit up to 1,328 and the maximum benefit to 2,663. (The max is received by about ten percent whose income exceeds the ceiling for payroll tax deductions, going up next year to 118,500.)

David Cay Johnston, who won a Pulitzer Prize for investigative reporting while at the New York Times, and now teaches the history of business, tax and property law at Syracuse University, takes a more comprehensive look in a perceptive opinion piece on the Aljazeera America site, Compensation shrinks for all income groups – except the very highest. He opens,

“American paychecks shrank last year, just-released data show, further eroding the public’s purchasing power, which is so vital to economic growth. Average pay for 2013 was $43,041 — down $79 from the previous year when measured in 2013 dollars. Worse, average pay fell $508 below the 2007 level, my analysis of the new Social Security Administration data shows. Flat or declining average pay is a major reason so many Americans feel that the Great Recession never ended for them. A severe job shortage compounds that misery not just for workers but also for businesses trying to profit from selling goods and services.”

(Note the difference in the average measure compared to the median used by the BLS.)

This bad news has impact beyond the borders of the USA. Since World War II, the American market, both consumer and capital, has often been key to the health of other industrialized and emerging countries as well. The European Union is facing a real threat of a Triple Dip Recession and even the once white hot industries of China and Brazil are cooling down too.

Johnston has done a diligent job in presenting a picture of stratification of wages and salaries of all 155.8 million in the USA who had at least some paid work in 2013, after combing the best available source–Social Security records. The one encouraging trend he noted was that this total labor force was up 2.1 million from 2012. Still, even this improvement over recent years didn’t keep up with the 2.4 million growth in population last year.

The average per capita wage declined 1.8 percent from 2000 to 2013. During this same period the Gross Domestic Product increased 11.6 percent.

According to Johnston’s analysis, 61 million–nearly forty percent of all jobs–pay less than 20,000 a year. Even a single person will have trouble getting by on such paltry wages but many of these workers are principal bread winners for families.

Johnston thinks capitalist greed may have harmed even ruling class interests. He writes,

“The overall decline in purchasing power per American is a major factor in the recent drop-off in corporate profits, which had been soaring since the recession officially ended on June 30, 2009. At Walmart, McDonald’s and other companies that sell to workers in the bottom half or even the bottom 90 percent, corporate financial reports show eroding conditions, with profits falling and debt rising. This is the inevitable and unavoidable result of pay and jobs not growing in tandem with the economy, especially the increases in productivity that in the postwar era used to be shared by investors and workers.”

He has a point. To a certain extent wage-cutting is a double-edged sword. Even the global giant Walmart–that vanquished the old dime stores, sent Montgomery Ward to its demise, and humbled Sears through a combination of low prices and even lower wages–is being pestered by the “dollar stores” aiming still lower that have become hot investments.

But companies such as General Electric, Caterpillar, and Boeing are making enormous profits even as they ruthlessly drive down labor costs. The auto industry–both “domestic” and “foreign” owned–are doing quite well replenishing aging cars despite recalls of millions of defective, unsafe vehicles. German, Italian, Japanese, Korean and even Russian companies are increasingly taking advantage of the high skilled, very productive, relatively low wage American workforce to acquire or build plants in a number of industries in the USA. Some American companies, for the same reason, are “in-sourcing” work they once offshored.

The WIR is not the proper format for theoretical debates about under-consumption versus over-production or about the tendency of falling rate of profit. I think we can safely conclude that no significant part of the ruling class–which today has a global agenda–thinks substantial raises in wages will help their bottom line. In every industrialized and emerging country–with the possible, partial exception of China–the bosses continue to aggressively extract take-backs from private sector workers and impose heartless austerity in the public sector.

Johnston concludes his article,

“We can do better than this. We can elect leaders who favor broad prosperity through time-tested principles that encourage investment in economically productive activities rather than in financial speculation and unproductive assets such as mansions and yachts, that favor domestic jobs rather than offshoring, that restore bargaining power to workers and that recommend major new public investments that will make the economy more efficient and expand the knowledge base from which wealth creation springs. America will remain in the economic doldrums until our political leaders recognize these trends and use their power to change them or until we fire them at the ballot box.”

Like so many who sometimes offer useful analysis Johnston demonstrates the deeply ingrained naivete about how the political side of political economy plays out in the real world. He believes the system is sound but just takes some shaking to bring its leaders to their senses.

President Obama–who I have often described as the most reactionary President in living memory–has called for an increase in the minimum wage to 10.10 an hour. That’s about 21,000 a year for a full-time worker. That might lead to a modest boost for Walmart and McDonalds but would mean little for construction or manufacturing. But even this token is unlikely to be granted.

It certainly is getting no attention in the heated Midterm elections. Most Democrats are distancing themselves from the President; some won’t even admit to ever voting for him. Never has there been any less choice between these two parties owned lock, stock, and barrel by bosses and bankers. And never has there been such public disgust with both parties, and all branches of government, as being registered in polls today.

So how do we fire them? As long as those responsible for our “doldrums” maintain a tight monopoly of all things political how do we bring about meaningful change for the working class majority? If there’s any kind of lesser evil today it surely is the petty partisan gridlock that has so far prevented President Obama from making a Grand Bargain that would gut our few remaining social benefits such as Social Security, Medicare, and Medicaid.

Next time, on the eve of the election, I will review what I think is needed to deal with the class behind the dummies competing for our favor.

That’s all for this week.
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Bill Onasch is a paid up NWU member

Bill Onasch is a paid up NWU member

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