View Full Version : The real story on wages.

9th Apr 2004, 07:10
More diligent workers aren't any richer

By Bob Herbert
New York Times

It's like running on a treadmill that keeps increasing its speed. You have to go faster and faster just to stay in place. Or, as a factory worker said many years ago, "You can work `til you drop dead, but you won't get ahead."

American workers have been remarkably productive in recent years, but they are getting fewer and fewer of the benefits of this increased productivity. While the economy, as measured by the gross domestic product, has been strong for some time now, ordinary workers have gotten little more than the back of the hand from employers who have pocketed an unprecedented share of the cash from this burst of economic growth.

What is happening is nothing short of historic. The American workers' share of the increase in national income since November 2001, the end of the last recession, is the lowest on record. Employers took the money and ran. This is extraor¬dinary, but very few people are talking about it, which tells you something about the hold that corporate interests have on the national conversation.

The situation is summed up in the long, unwieldy but very revealing title of a new study from the Center for Labor Market Studies at Northeastern University: "The Unprecedented Rising Tide of Corporate Profits and the Simultaneous Ebbing of Labor Compensation - Gainers and Losers from the National Economic Recovery in 2002 and 2003."

Andrew Sum, the center's director and lead author of the study, said: "This is the first time we've ever had a case where two years into a recovery, corporate profits got a larger share of the growth of national income than labor did. Normally labor gets about 65 percent and corporate profits about 15 to 18 percent. This time prof¬its got 41 percent and labor [meaning all forms of employee compensation, includ¬ing wages, benefits, salaries and the per¬centage of payroll taxes paid by employ¬ers) got 38 percent."

The study said: "In no other recovery from a post-World War II recession did corporate profits ever account for as much as 20 percent of the growth in national income. And at no time did corporate profits ever increase by a greater amount than labor compensation."

In other words, an awful lot of American workers have been had. Fleeced. Taken to the cleaners.

The recent productivity gains have been widely acknowledged. But workers are not being compensated for this. During the past two years, increases in wages and benefits have been very weak, or nonexistent. And despite the growth of jobs in March that had the Bush crowd dancing in the White House halls last Friday, there has been no net increase in formal payroll employment since the end of the recession. We have lost jobs. There are fewer payroll jobs now than there were when the recession ended in November 2001.

So if employers were not hiring workers, and if they were miserly when it came to increases in wages and benefits for existing employees, what happened to all the money from the strong economic growth?

The study is very clear on this point. The bulk of the gains did not go to workers, "but instead were used to boost profits, lower prices, or increase CEO compensation."

This is a radical transformation of the way the bounty of this country has been distributed since World War II. Workers are being treated more and more like patrons in a rigged casino. They can't win.

Corporate profits go up. The stock market goes up. Executive compensation skyrockets. But workers, for the most part, remain on the treadmill.

When you look at corporate profits versus employee compensation in this recovery, and then compare that, as Sum and his colleagues did, with the eight previous recoveries since World War II, it's like turning a chart upside down.
The study found that the amount of income growth devoured by corporate profits in this recovery is "historically unprecedented," as is the "low share ... accruing to the nation's workers in the form of labor compensation."

I have to laugh when I hear conservatives complaining about class warfare. They know this terrain better than anyone. They know this terrain better than anyone. They launched the war. And they’re winning it.


Faire d'income
9th Apr 2004, 12:51
Quel surprise! Look who you elected. :*

9th Apr 2004, 13:17
It's certainly not confined to the USA. It's almost a world epidemic. I just don't understand how they have got away with it for so long. Viva la revolucion! ;)

The Invisible Cat
9th Apr 2004, 14:06
Take a look here (http://www.claybennett.com/pages/graph.html) :ok:

10th Apr 2004, 10:14

Obviously the managment around the supermarkets are of the same breed - they walk around with cordless phones at our store pretending they are god - ordering people around for no chuffing reason.

Yes they are managers and I do respect that but they are round to the dept. every 15mins do this, do that....!! :mad:

Oh....the joys of part-time work!!!

10th Apr 2004, 10:56
"Yes they are managers and I do respect that "

But a few years ago, a managerial position was one that was earned by hard work, by people working their way up a company.
Nowadays it is very common to see job adverts (usually supermarkets or McDonalds!) stating "Managers required"

Whatever happened to training loyal employees, and giving them a promotion?


10th Apr 2004, 13:21
419, in the company which I work for we have so many managers, directors etc that there's no way they could have obtained them by promotion. :sad: They spend most of there time holding meetings and delegating tasks to others rather than just solving them (where appropriate).

Another hate of mine is how when "times are hard" its always the productive staff which are made redundant, very rarely management. A recent case in the company which I work for, during a recent(ish) round of redunencies (sp?) they dumped several genuinely valuable employees and ( :} ) a director (I believe the funding banks forced this) and guess what - he's back a few weeks later as a consultant :yuk:

At the end of the day a business is there to make money and clearly (against competition) must maximise its income (sales) and minimise its costs (overheads + direct costs). If this fails then everyone stands to lose out. The reciprocal should apply (it actually does in reality). Unfortunately there is often a situation where uncontrolled greed from a few upper management individuals results in the balance being pushed too far - with resulting staff unhappiness, high staff turnover, problems being stored up for later etc, even when the business should be thriving,


11th Apr 2004, 07:36

Have you ever wondered why governments of a certain stripe tend to favour private enterprise (that is to say public, or capitalist companies)? Take US aviation as a recent example but don't limit yourself to this sector. The governments do their best to cut corporate taxes, increase shareholder profits and then run huge budget deficits. These record deficits are then financed by all those newly enriched capitalists. Joe Bloggs (and his descendents) are left paying the interest. This is redistribution of wealth on a hitherto unknown scale. OK, so nobody ever made money from running an airline...:sad:

11th Apr 2004, 10:52
That news article takes me back. When was it written? 1970? 1975? 1980? It could've been almost any year of my career. This exploitation is nothing new surely? If it's new to you, then you've been insulated from reality for quite some time.

I think when we were "personnel" instead of "human resources" it may have been slightly better, but not much. Different president (or different PM) and different war maybe, but it's still: Plus ça change, plus c'est la même chose...