Be More Efficient--But Forget About Higher Wages

    Here are the seeds of a revolution--and even the elites are starting to see the danger. Used to be, if you worked your ass off and worked more efficiently, that would translate into more money in your paycheck.

    Not anymore, as I observe in the most recent installment of my TomPaine.com "Working in America" series. The link between productivity and wages has been decisively broken. What's most interesting about this development, as I found out, is that the elites are starting to get a bit nervous--after all, if people bust their butts but begin to see that the vast majority of the benefits are flowing to corporations and the rich, we're talking about a seriously pissed off population. Revolution anyone?

    I'm curious to hear from anyone who can weigh in--beyond rhetoric--with some SPECIFIC examples of corporations whose workers showed big productivity gains but got nothing in return from the company. If we can put together some real examples, it would help paint the gruesome, obscene picture.

    Of course, a lot of workers can see the picture already: their wages grow slowly while Stephen Crawford of Morgan Stanley walks away with $32 million after doing his job for just three months--which is about $355,000 PER DAY. Hey, Morgan Stanley, I'm cheap, I'll screw up at a bargain price of $1 million over three months.

UPDATE: I hadn't slogged through The New York Times this morning so didn't catch this article until the p.m.: "How Long Can Workers Tread Water?" (registration required). It makes the point that workers wages have stayed in neutral even though corporate profits, executive compensation and gains from investments are all going way up. It's one reason dry statistics about *overall* income growth can sometimes be misleading--it's the old joke that if you and Bill Gates were in the same room, the average wage of the two of you would be in the billions of dollars.

Comments

[hoping for the best, preparing for the worst]

The auto industry? Much of the recent high tech/IT/call center/manufacturing off shoring/?

Aren't there relatively long histories of significant productivity increases in front of all the job losses in these sectors.

And wasn't our domestic steel industry showing significant productivity gains relative to its own past performance?

It all blows up when compared with productivty numbers genereated when wage and benfit costs (if there are any at all of the latter) are those of developing countries.

The NY Times Sunday business pages several weeks ago had an intersting story by Lewis Uchetellie (sp? apologies) about Whirlpool actually moving production of high end front loading clothes washers to a realively high cost plant in Germany because of the plant and more importantly those workers (Uchetellie's description as I recall was something akin to "their knowledge was almost tribal") ability to manfacture high value appliances with very tight tolerances in the manufacturing process.

This story is such a huge exception to our current reality that it simply made the future seem that more dismal. Manufacturing high end appliances is never going to restore our nation's manufacturing base or shore up Germany's rapidly disappearing manufacturing base.

And speaking of Germany anyone following developments at Volkswagen?

And while we are at it how can the CPI be used in any meaningful way as to determine wage increases when the CPI doesn't reflect food cost, gasoline and housing—the three components of most working families budgets that make up what, 75-90 percent of their spending?

[it happened to me]

Before working for the Labor Movement, I worked as a helpdesk tech for Morgan Stanley. We kept being told by management that they were going to outsource our department. This made my coworkers and me work harder in hopes of keeping our jobs. We received no compensation for the extra work. In fact, wage freezes and the cutting of bonuses and benefits became practice, rather than the exception.

Also, as some departments were dissolved and coworkers either left or were let go, replacements were never hired. The extra burden of their work was placed on our shoulders. In a department that was supposed to have 8 to 9 workers, we were staffed with only 6. The echoes of outsourcing made my coworkers very nervous. A ten hour day was not only common, but it became expected.

The trends here are happening all across the tech industry, as well as other industries. Management has realized that threats of outsourcing or lay offs will keep workers quiet (because they fear to lose their jobs) as the workload is increased with no compensation (wages or benefits). Unfortunately, I just spoke with an ex-coworker of mine, and they are getting ready to outsource the department overseas.

[Info Tech Guy]

Firstly, I think it is important to point out that the idea of *opportunity* to advance monetarily due to increased productivity, skill or education is dying. Implicit in the previous discussions was the understanding that this cuts across both union and non-union employment and all employments sectors "blue collar" manufacturing/industrial/factory work and "white collar" call centers/engineering. We are witnessing the end of OPPORTUNITY -- the very word that many opposed to the union movement and labor used. The great catch-word of the "rugged individualist", independent, libertarian sorts is facing extinction in America. What new opportunities for middle class life are rising from the ashes of outsourcing and widening stream of imported low-wage (and non-union) foreign workers? I've seen software engineers work many, many hours in excess of the "40 hour work-week" sacrificing weekends and evenings but the additional efforts did not save their jobs. These were not 100K per yr. guys; they were making upper 60s through maybe 80k. Expensive? Not when you consider the additional education they paid for and skills they had developed. Now, corporations import foreign workers to do these jobs when they aren't sent offshore. The mostly Indian workers are paid a small fraction of what the Americans used to be paid. It seems that its more about cutting costs than retaining or expanding upon the excellence of workers. Managers make their decisions based on the very short term; that's how they advance and receive bonuses. The long-term competitive position of the company does not enter into their quarterly and annual compensation. As for Maytag, mentioned in an earlier posting, a recent news report indicates that a Chinese (PRC) company intends to buy them.

[D Flinchum]

Info Tech Guy has hit the nail on the head. We need to look at workers brought into the US to do US jobs as well as jobs outsourced to other countries. The H-1B is killing the US science and technology workers. Students today are steering away from degrees in IT and related fields because they are hearing about IT workers - including new graduates - who have spent a fortune to get their degrees and now can't find work in the field. This is one end of the job spectrum. And anybody interested in women in science and technology fields, please note for the record that the H-1B's imported to do this type of work are overwhelmingly male other than nurses. Not only will they work cheaper, they won't be using all those pesky family-friendly programs that irritate businesses so much, like the FMLA, parental leave, etc.

There is a wealth of information out there regarding the absolutely deadly effects that massive immigration - legal and illegal - is having on American blue-collar and service workers. Roy Beck's testimony on the conversion of slaughterhouse work from a heavily unionized industry to one now largely employing a steady stream of illegal immigrants with a turnover rate over 50% a year is a classic. So the $64,000 question is: Why in the world has SEIU individually and the AFL-CIO collectively endorsed the McCain-Kennedy bill that will grant amnesty to millions of of people in the US illegally AND set the stage for businesses to import as many more as they like? There are no "jobs Americans won't do" but there are jobs with wages set so low that Americans CAN'T take them and still live a middle-class life. If this bill passes, in time, US workers will ultimately have to accept these low wages and work several jobs just to get by or drastically adjust their life styles downward. Maybe both. This is already happening in some industries.

I am absolutely astounded at Labor's endorsement of this bill. Anybody who knows simple economics knows that a super-abundant supply of any commodity, including workers, depresses its value. It's no accident that wages are stagnating (unless you're a CEO). Why Labor is willing to hand business the hammer to crack them in the head with is a mystery to me. To make matters worse, political-correctness is such that anybody who brings this issue up gets called a racist, xenophobe, etc. so that it is almost impossible to have an intelligent conversation on an issue that affects the US profoundly from national security to jobs to quality of schools and life in general.

[NathanHJ]

To B Flinchum: I think the basic reasoning by labor on immigration is that (1) it ain't stopping and under current circumstances no matter how many fences and border guards we have it ain't gonna stop. Therefore if it ain't gonna stop, then (2) labor has better odds organizing legal workers rather than illegal ones.

Labor faced similar problems in the great migrations of the 1930's, which, though "internal" caused the same economic problems you cite: namely an oversupply of labor. Yet those times yeilded massive organizing drives. So I'd say that this bill could be one way of setting the stage for organizing new workers into labor.

[NathanHJ]

That's "D Flinchum". Not "B". My apologies.

[D Flinchum]

A crucial element in the economic rise and fall of the middle class - and the American Labor movement - in the last century has generally been overlooked: the level of immigration to the US.

The level of immigration has greatly changed over the last century. The “Great Wave” of immigration started in the 1880’s, adding millions of new citizens to the US. The “Great Wave” was diminished by three events: More restrictive immigration laws enacted by Congress in 1924, the worldwide depression in the 1930’s, and World War II. Then in 1965, Congress enacted legislation that started another “Great Wave” of immigration that has steadily increased, helped along by the 1986 "One Time Only" amnesty and other laws in the 1990's, to record levels today, including 12-20 million illegal immigrants.

Labor, like consumer products, responds to the market: An abundant supply depresses price, or in this case, wages. It is no accident that the period when the middle class - and the American Labor movement - experienced the greatest level of economic progress occurred between 1947 and 1973 while immigration to the US was still relatively low by current standards. Nor is it any surprise that the middle class and the American Labor movement have experienced economic decline in more recent years after decades of heavy immigration. The economic decline of the middle class would have been even worse except for the rise of the two-income family as more women entered the work force.

Hasn't it occurred to anybody that the reason that public sector unions have done better than private sector unions in the last 30 years or so is because with the public sector (ie government), there is no real bottom line in the classic sense as there is in private business? We all know that if a company "protecting its bottom line" wants to stop an organizing drive they generally can. How? Fire the leaders who are pushing the union. Legal? No, after years in the courts, they'll lose; but the fines levied against the company are off-set by management having a freer hand with labor. Successful? Yes, those who got fired are an example to the rest and they have to find new jobs, etc because workers generally don't have the resources to wait for years for the courts to find in their favor. They have families to support. It is impossible to believe that the newly amnestied low-skill immigrants won't be, if anything, more vulnerable to this sort of exploitation than current citizens are. They can be replaced overnight by the next wave.

Plus the McCain-Kennedy bill will allow businesses to bring in a nearly unlimited number of foreign workers to fill jobs that "Americans won't do"- in all economic levels. All they have to do is post them for a time period at a wage level that American can't live at. It also will only encourage still more illegal immigration, as immigrants pour into the country to find jobs they can "legally" apply for or to work off the books, waiting for the NEXT amnesty. The Border Patrol has discovered to its dismay that Bush's floating his "guest worker" plan caused a sharp rise in attempts to cross the US-Mexico border because the immigrants believed they'd be amnestied if they got though. Needless to say, these newest immigrants will be the major threat to the immigrants amnestied by McCain-Kennedy.

I believe it was Lenin who said something to the effect that the capitalists would sell the rope that would be used to hang them. By supporting this bill, the Labor movement is providing the rope that will be used to hang it - and much of the US middle class as well. It not only won't enable them to more readily organize the new immigrants, it will make the organization of current American workers harder - especially those at the lower wage spectrum - by providing new replacement workers.

[Ty]

D-

The only way to counter the effect that the oversupply of immigrant labor has on other American workers is to organize the immigrants along with the non-immigrants. The American labor movement will never get back on its feet without being willing to take the lead in cross-border alliances and in alliances between different nationalities in this country. That's what solidarity is all about. We can't stop the global economy, so we have to globalize the labor movement.

And if we take that seriously, it means the labor movement has to take the lead in the fight for immigrants' rights. We have taken that seriously here in Los Angeles, and the revitalization of our movement here has been lead by immigrant workers (both "legal" and "illegal") who work as janitors, hotel and restaurant workers, construction workers, etc. Maria Elena Durazo, president of UNITE-HERE Local 11 lead the national Immigrant Workers Freedom Ride, and Eliseo Medina of SEIU has taken a leading roll as well.

It's no accident that these are two of the unions that have dynamic and successful organizing campaigns in place. Trying to retreat into nativism won't get us anywhere.

Ty

[D Flinchum]

Lovely words, Ty; and for what it's worth, I wish that I could believe that you are right. I can't. I think it's wishful thinking.

[Josh H. Pille]

Ty is 100% right. The stance of the labor movement has shifted about 180 degrees in the past couple years on the question of immigrant workers. This change was led by HERE's Wilhelm, and SEIU, as Ty notes, was also influential in this change.

This is not to say that every affiliate is on board with this program, but the AFL-CIO (much to its credit) certainly is. Hell, even a decent number of the building trades are taking this seriously.

This is also not to say that we'll be successful in this organizing, but so far the signs are good. Los Angeles (again, echoing Ty) has been the center or such successful organizing, but it has also been seen in SF, Colorado, Arizona and Nevada-- exactly the states where we need to be organizing: booming immigrant workforces in low-wage industries; states on the fence and ready to go Blue (look at the margins in the 2000 & 2004 elections).

Why do you think that every single article about politics in Los Angeles uses the phrase "labor-Latino left"? This is for real.

[Tasini]

I'm with Ty and Josh on this. I think this continues to be a tough issue to educate some segments of the labor movement on--but I also sense that there is far less hostility towards immigrants and their place in the labor movement, than even 5 years ago. I ascribe that shift partly to a growing understanding of who the true enemy is.

[D Flinchum]

No one here is suggesting that immigrants themselves are "the enemy" nor am I suggesting that immigrants don't belong in the labor movement. Any you can sign up, I celebrate with you. My point is that, after careful research - and immigration is an issue I have devoted a fair amount of time to for years - I believe that McCain-Kennedy or a similar bill is going to be used to undercut American workers, skilled and unskilled, natives and recent immigrants. I don't think either side here is going to change its view. I certainly haven't.

Remember the Air Traffic Controllers strike back when Reagan was President? I thought they were making a big mistake by going out. A BIG mistake. The replacement workers that were brought in to do their jobs were not the "true enemy". They were just good people, trying to make a living and support their families. But they sure were effective in helping the "true enemy", weren't they?