The Plight of Labor

Labor Day comes and goes — but Congress does little to improve the plight of workers in our country. In the last three decades our elected officials have too often chosen to side with big corporations rather than the working people in the United States.

In the face of aggressive employer demands for concessions, the downward pull of international competition, weak and barely enforced labor and workplace safety laws, relatively high unemployment rates, and a struggling labor movement, most workers have seen wage rates stay practically flat over the past several decadesóeven as CEO salaries and profitability have skyrocketed.

The executive class has captured almost all of the gains in wealth from the growth in gross domestic product (GDP) in recent decades. And George W. Bush’s recession and jobless recovery has only worsened the problem.

A Wall Street analyst said in March 2004: ìWe’d thought that the labor share of national income was in the process of bottoming out, but whether we’re talking outsourcing or just old-style downsizing, the effort by U.S. business to pare costs (and extract productivity gains in services) continues apace.î Meanwhile, employers have slashed benefits for those workers lucky enough to retain a job. And workplaces remain far more hazardous than necessary.

There are glimmers of hope that the situation can be improved. Some unions and communities have won important victories that have made a difference in workers’ lives, but they remain a rarity.

Most people earn no more an hour than they did three decades ago (adjusting for inflation), but those at the top have enjoyed substantialincreases in salary and those at the very topóthe CEOs and top company executivesóhave seen their compensation go through the roof.

Most people struggle to get by with rock bottom net worth. They’re working more and moreóeither working longer hours or picking up a second or third jobóto pay the bills and meet rent or mortgage payments. (Americans worked on average two hundred hours a year more from 1973 to 2000óthe equivalent of five full-time weeks.) In two-parent families, increasingly both parents are in the workforce. Just to meet everyday expenses, they’re borrowing more and more from credit cards, home equity loans, or second mortgages, or from legal loan sharks at check-cashing operations. If someone in the family gets sick and lacks health insuranceó forty-five million Americans are in that boatóthe family is in a jam. Even if they have insurance, the extravagant price of medicine may not be covered, or covered entirely, and paying for the pills can drive a family into despair.

Meanwhile, the executive class rakes in more money than ever before, and indulges new forms of conspicuous consumption. We have competition among CEOs over who has the bigger yacht. If an executive has to go to the hospital, they can check into platinum class luxury suites offered by leading medical institutionsófor $10,000 a night. The New York Times recently reported on a new convenience for rich New Yorkers: private indoor pools, with start-up costs of $500,000.

Any way you slice the numbers, you get the same result: a deeply divided America with a struggling majority and a super-rich clique. It’s a story of a gap between haves and have-nots more severe than anything this country has witnessed for a century, since the start of the Manufacturing Age:

For the private production and non-supervisory workers who make up 80 percent of the workforce, it took until the late 1990s to return to thereal earnings levels of 1979.
CEOs at large corporations now make about three hundred times more than the average worker at their firms. In 1982, they made just forty-two times more; in 1965, twenty-six times more.
The top fifth of households own more than 83 percent of the nation’s wealth, the bottom 80 percent less than 17 percent.
The top 1 percent owns over 38 percent of the nation’s wealth, more than double the amount of wealth controlled by the bottom 80 percent. The top 1 percent’s financial wealth is equal to that of the bottom 95 percent.
In 1979, the top 5 percent had eleven times the average income of the bottom 20 percent. By 2000, the top 5 percent had nineteen times the income of the bottom 20 percent.
Whatever the data examined, it’s worse for women and people of color, who receive lower wages and have much less accumulated wealth than White men. Women and minority males earn 70 percent to 80 percent of what White men make. More than a third of single mothers with children live in poverty.

Thanks to low levels of unemployment in the late 1990s, worker wages started rising, eventually catching up to the levels of twenty years earlier. But the recession and high rates of unemployment that have persisted into the new millennium have almost surely ended that trend.

The effective stagnation in worker wages for three decades occurred even though productivity rose steadily. Productivity is the amount of output per person hour worked. In other words, workers were making and producing more, but not receiving any share of the increased wealth.

Virtually all of it was captured by increased corporate profit taking. CEO pay grew at a much faster rate even than corporate profitability.From 1990 to 2003, inflation rose 41 percent. Average worker pay rose 49 percent. Corporate profits jumped 128 percent. CEO compensation rose 313 percent

If the federal minimum wage had increased as quickly as CEO pay since 1990, it would today be $15.71 per hour, more than three times the actual minimum wage of $5.15 an hour, as calculated by Boston-based United for a Fair Economy.

It is time for Congress to show some courage and some compassion and side with the workers who struggle to make ends meet. Ralph Nader is the author of: The Good Fight : Declare Your Independence and Close the Democracy Gap (Harper Collins Books).