“Higher Profits, Smaller Paychecks”: Corporations Increasing Profits At The Expense Of Workers
Two cheers for the comeback of American manufacturing. Or maybe just one.
The manufacturing sector has experienced a modest renaissance since it hit bottom during the Great Recession. The number of manufacturing jobs is set to rise this year, as it has every year since 2010. Profits are soaring — in 2012, after-tax profits of manufacturing firms hit a record high of $289 billion. Share values have soared with them. The Standard & Poor’s 500 Industrials Index has risen 59 percent more than the overall 500-stock index since 2009, Bloomberg reported last month.
Wages, however, are falling. Although the average wage for all workers, adjusted for inflation, has declined by about 1 percent since May 2009, Bloomberg reported, it has declined by 3 percent for workers in the more-profitable-than- ever manufacturing sector.
Numbers like these explain the epic drama playing out in Washington’s Puget Sound region, from which Boeing, long the area’s dominant employer, has threatened to at least partially decamp. Several weeks ago, with the reluctant blessing of union leaders who feared the company might relocate production, Boeing presented its workers with an ultimatum: Either they had to agree that the new hires who would build the company’s new 777X passenger jetliner would have to work for 16 years, rather than the current norm of six, to bump up to full union scale, or Boeing would build the plane elsewhere. Instead of making roughly $28 an hour to build one of the world’s most sophisticated pieces of machinery, workers would make roughly $17 an hour, or less, until they’d put in a decade and a half on the job.
By a 2-to-1 margin, the workers rejected their leaders’ recommendation and voted down the offer. Boeing then initiated a bidding war to see how much in tax breaks it could wring from states that wanted the work. More than a half-dozen states have sent in bids, some with side agreements from local unions that members would work at reduced rates, some with no such agreements because unions barely exist in their states.
It’s not as if Boeing is a clothing manufacturer scrambling to meet the price competition of rivals that make their goods in Bangladesh. Boeing’s sole competitor in the large-scale passenger-plane market is Airbus, the European conglomerate whose workers’ wages are comparable to those in the United States. But Boeing has already located one major plant in South Carolina, where workers make about $10 an hour less than their Puget Sound counterparts. It’s through such moves, and the threat of further such changes, that U.S. manufacturers have increased their profits at the expense of their workers’ paychecks.
None of the workers at either end of Boeing’s pay scale makes anything like the federal minimum wage, but I suspect the anxiety instilled by these kinds of stories is one reason there is wide, and growing, support for raising the minimum wage. It takes no great imaginative leap to see a time in the not-too-distant future when the incomes of all but a fortunate, talented tenth of the U.S. workforce are reduced or held stagnant. Indeed, the median inflation-adjusted salary for American men is already lower today than it was in 1969. Tyler Cowen, a heterodox libertarian economist, has written that the U.S. economy is morphing into one in which 10 to 15 percent of the workforce will be wealthy and the remainder will resign themselves to making do with less. He foresees little likelihood that the eradication of the broad middle class will lead to a United States “torn by unrest.”
I am not sure that the docility of the American people can be so readily assumed. The adoption of minimum-wage increases and living-wage ordinances throughout increasingly liberal cities and blue states suggests that where workers have the capacity to rebalance the economy through legislation, they’ll do just that. With the near-elimination of unions from the private-sector economy, legislation remains the sole means available for workers to bargain for their fair share of their company’s revenue, particularly in sectors, such as retail, that can’t really relocate. That’s why the victories of those workers demonstrating at Wal-Mart and fast-food outlets have taken the form of legislated increases in local minimum wages, rather than resulting in union contracts.
The fight for higher minimum wages may be just the beginning of a long battle to rebalance the economy. If laws are not changed to enable workers to form unions without fear of being fired, the battle for higher median, not just minimum, wages will eventually be fought in the legislative arena as well. Profits that come at the expense of downwardly mobile workers may find little honor — or legislative support — in their own country.
By: Harol Meyerson, Opinion Writer, The Washington Post, December 13, 2013
“Pope Vs. Rush”: Pope Francis Threw A Rock Into A Bunch Of Dogs And The One It Hit Is Now Hollering
I like capitalism.
Specifically, I like the idea that if I write a better book, have a better idea, build a better mousetrap, I will be rewarded accordingly. A system where everyone gets the same reward regardless of quality or quantity of work is inconsistent with excellence and innovation, as the mediocrity and inefficiency that beset the Soviet Union readily proves.
The woman who is successful under capitalism gets to eat steak and lobster whenever she wants. That’s never bothered me. What does bother me is the notion that the unsuccessful man who lacks that woman’s talent, resources, opportunities or luck should not get to eat at all. There is something obscene in the notion that a person can work full-time for a multinational corporation and not earn enough to keep a roof over his head or food on his table. The so-called safety net by which we supposedly protect the poor ought to be a solid floor, a level of basic sustenance through which we, as moral people, allow no one to fall — particularly if their penury is through no fault of their own.
Maybe you regard that opinion as radical and extremist. Maybe it is. But if so, I am in excellent company.
Martin Luther King, for instance, mused that “there must be a better distribution of wealth and maybe America must move toward a democratic socialism.”
The Apostle Paul writes in 2 Corinthians 8:13-15, that it’s wrong for some to live lives of ease while others struggle. “The goal is equality, as it is written: ‘The one who gathered much did not have too much and the one who gathered little did not have too little.’” In Acts 4:32, Luke writes approvingly of the early church that: “No one claimed that any of their possessions was their own, but they shared everything they had.”
Which brings us to the Pope — and Rush Limbaugh. As you may have heard, the former has issued his first Apostolic Exhortation, The Joy of the Gospel, in which, among other things, he attacks the free market and what he calls an “economics of exclusion.” This had the latter up in arms last week on his radio show.
Pope Francis writes that poverty must be “radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality…”
“This is astounding … and it’s sad,” says Limbaugh. “It’s actually unbelievable.”
“How can it be that it is not a news item,” writes the Pope, “when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”
“This is just pure Marxism coming out of the mouth of the Pope,” fumes Limbaugh.
Trickle-down economics, writes the pontiff, “expresses a crude and naive trust in the goodness of those wielding economic power…”
Maybe, says Limbaugh, his words were deliberately mistranslated by “the left.” No, seriously, he said that.
But then, some of us are fine with faith so long as it speaks in platitudinous generalities or offers a weapon to clobber gay people with, but scream bloody murder when it imposes specific demands on our personal conscience — or wallet.
It is perfect that all this unfolds in the season of thanksgiving, faith and joy, as people punch, stun-gun and shoot one another over HDTVs and iPads and protesters demand what ought to be the bare minimum of any full-time job: wages sufficient to live on.
This is thanksgiving, faith and joy? No. It is fresh, albeit redundant evidence of our greed — and of how wholeheartedly we have bought into the lie that fulfillment is found in the things we own.
Some of us disagree. Some us feel that until the hungry one is fed and the naked one clothed, the best of us is unfulfilled, no matter how many HDTVs and iPads he owns. This is the radical, extremist ideal embraced by the human rights icon, the Gospel writers, the Bishop of Rome — and me.
By: Leonard Pitts, J., Featured Post, The National Memo, November 4, 2013
“Obama Gets Real”: A Growing Deficit Of Opportunity Is A Bigger Threat To Our Future Than Our Rapidly Shrinking Fiscal Deficit
Much of the media commentary on President Obama’s big inequality speech was cynical. You know the drill: it’s yet another “reboot” that will go nowhere; none of it will have any effect on policy, and so on. But before we talk about the speech’s possible political impact or lack thereof, shouldn’t we look at the substance? Was what the president said true? Was it new? If the answer to these questions is yes — and it is — then what he said deserves a serious hearing.
And once you realize that, you also realize that the speech may matter a lot more than the cynics imagine.
First, about those truths: Mr. Obama laid out a disturbing — and, unfortunately, all too accurate — vision of an America losing touch with its own ideals, an erstwhile land of opportunity becoming a class-ridden society. Not only do we have an ever-growing gap between a wealthy minority and the rest of the nation; we also, he declared, have declining mobility, as it becomes harder and harder for the poor and even the middle class to move up the economic ladder. And he linked rising inequality with falling mobility, asserting that Horatio Alger stories are becoming rare precisely because the rich and the rest are now so far apart.
This isn’t entirely new terrain for Mr. Obama. What struck me about this speech, however, was what he had to say about the sources of rising inequality. Much of our political and pundit class remains devoted to the notion that rising inequality, to the extent that it’s an issue at all, is all about workers lacking the right skills and education. But the president now seems to accept progressive arguments that education is at best one of a number of concerns, that America’s growing class inequality largely reflects political choices, like the failure to raise the minimum wage along with inflation and productivity.
And because the president was willing to assign much of the blame for rising inequality to bad policy, he was also more forthcoming than in the past about ways to change the nation’s trajectory, including a rise in the minimum wage, restoring labor’s bargaining power, and strengthening, not weakening, the safety net.
And there was this: “When it comes to our budget, we should not be stuck in a stale debate from two years ago or three years ago. A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.” Finally! Our political class has spent years obsessed with a fake problem — worrying about debt and deficits that never posed any threat to the nation’s future — while showing no interest in unemployment and stagnating wages. Mr. Obama, I’m sorry to say, bought into that diversion. Now, however, he’s moving on.
Still, does any of this matter? The conventional pundit wisdom of the moment is that Mr. Obama’s presidency has run aground, even that he has become irrelevant. But this is silly. In fact, it’s silly in at least three ways.
First, much of the current conventional wisdom involves extrapolating from Obamacare’s shambolic start, and assuming that things will be like that for the next three years. They won’t. HealthCare.gov is working much better, people are signing up in growing numbers, and the whole mess is already receding in the rear-view mirror.
Second, Mr. Obama isn’t running for re-election. At this point, he needs to be measured not by his poll numbers but by his achievements, and his health reform, which represents a major strengthening of America’s social safety net, is a huge achievement. He’ll be considered one of our most important presidents as long as he can defend that achievement and fend off attempts to tear down other parts of the safety net, like food stamps. And by making a powerful, cogent case that we need a stronger safety net to preserve opportunity in an age of soaring inequality, he’s setting himself up for exactly such a defense.
Finally, ideas matter, even if they can’t be turned into legislation overnight. The wrong turn we’ve taken in economic policy — our obsession with debt and “entitlements,” when we should have been focused on jobs and opportunity — was, of course, driven in part by the power of wealthy vested interests. But it wasn’t just raw power. The fiscal scolds also benefited from a sort of ideological monopoly: for several years you just weren’t considered serious in Washington unless you worshipped at the altar of Simpson and Bowles.
Now, however, we have the president of the United States breaking ranks, finally sounding like the progressive many of his supporters thought they were backing in 2008. This is going to change the discourse — and, eventually, I believe, actual policy.
So don’t believe the cynics. This was an important speech by a president who can still make a very big difference.
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 5, 2013
“Why Republicans Can’t Address Rising Inequality”: Even In The Face Of Reality, They Cannot Confess That They Aren’t Troubled At All
So far, the Republican response to President Obama’s historic address on economic inequality has not veered from the predictable clichés of Tea Party rhetoric. It was appropriately summarized in a tweet from House Speaker John Boehner, complaining that the Democrat in the White House wants “more government rather than more freedom” – and ignoring his challenge to Republicans to present solutions of their own.
But for Republicans to promote real remedies – the kind that would require more than 140 characters of text – they first would have to believe that inequality is a real problem. And there is no evidence that they do, despite fitful attempts by GOP leaders on Capitol Hill to display their “empathy” for the struggling, shrinking middle class.
Back when Occupy Wall Street briefly shook up the national conversation, House Majority Leader Eric Cantor and Budget Committee chair Paul Ryan both professed concern over the nation’s growing disparities of wealth and income. But their promises of proof that they care – and more important, of policy proposals to address what Cantor admits are “big challenges” – simply never materialized.
Meanwhile, working Americans learned what rich Republicans say in private about these sensitive topics when the “47 percent” video surfaced the following summer, in the final months of the 2012 presidential campaign. In Mitt Romney’s unguarded remarks to an audience of super-rich Florida financiers, the contempt for anyone who has benefited from public programs (other than banking bailouts) was palpable. Whether that sorry episode turned the election is arguable, but the Republican brand has never recovered – and the perception that Republicans like Romney and Ryan are hostile to the interests of working people remains indelible.
Of course, the House Republicans have done nothing to diminish that impression and everything to reinforce it. They have set about cutting food stamps, killing extended unemployment benefits, rejecting Medicaid expansion, as if competing in demonstrations of callous indifference. They complain about the lack of jobs – so long as they can blame Obama – but undermine every program designed to relieve the suffering of the jobless.
Callous or not, they are certainly indifferent to the injuries of inequality. In a party consumed by right-wing ideology and market idolatry, the further enrichment of the super-rich at the expense of everyone else is a feature of capitalism, not a bug. Whenever they bray about “getting government out of the way,” that means removing the last defenses against that process.
With Pope Francis and President Obama — a pair of the world’s most powerful voices — warning against the dangers of social exclusion and excessive greed, we can expect to hear expressions of remorse as well as rage from all the usual right-wing suspects. But what we shouldn’t expect is honesty. Republicans know that worsening inequality disturbs the great majority of Americans, so they cannot confess that they aren’t troubled at all.
Congress could begin to address the income gap, which conservative policies have exacerbated for three decades. Raising the minimum wage significantly would be a first step toward restoring fairness. Rebuilding the nation’s infrastructure and school systems, rather than letting them continuously decay, would raise employment substantially and improve incomes. Removing obstacles to unionization would begin to level the gross disparities in economic power between the 1 percent and the rest of us.
Now the president has vowed to fight inequality for the rest of his days in office. He is taking that fight directly to the Republicans who have frustrated so many of his initiatives. He will have to cast aside the last illusions of bipartisanship.
No matter what he does or says, he may not be able to win a higher minimum wage or a serious jobs program or universal pre-school with the other party controlling Congress. But if he consistently challenges us — and his adversaries — to restore an American dream that includes everyone, he may yet fashion a legacy worthy of his transformative ambitions.
By: Joe Conason, Featured Post, The National Memo, December 5, 2013
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