These
developments are, in fact, symptoms of the underlying cause: a
systematic shift of wealth from labor to capital through free-market
policies--known internationally as “neoliberalism”--that
began more than three decades ago. Today’s economic picture--in
which profits are taking a greater share of the national income
in an economic recovery than at any time since the Second World
War--reflects the consolidation of the neoliberal economic order
internationally.
The
economic reality for U.S. workers today bears increasing similarities
to their counterparts in less developed countries: a small and
shrinking sector of better-paid workers amid a sea of low-paid
and often temporary labor, a country where unions are weak and
any economic gains for workers are under constant threat, and
where the state has abandoned almost all pretence of a social
safety net.
That,
said Sylvia Allegretto of the liberal Economic Policy Institute
(EPI), is the real character of what George W. Bush calls “the
ownership society.”
Until
the 1970s, “corporations provided health care and pensions,
and the government was there when they failed,” she told
me. “Today, fewer employers provide health care, and there
is less of a government safety net. It is a huge shifting of risks
from big business and the government onto workers’ backs.
An ownership society? To own something, you have to be able to
afford it.”
Allegretto,
a co-author of the EPI’s comprehensive book The
State of Working America 2004/2005, pointed out that with
workers’ wages stagnant, the three-year-old economic recovery
from the 2001 recession has leaned heavily on mortgage refinancing
and middle-class consumption. “One writer called it the
Nieman Marcus recovery,” she said. “With interest
rates rising, you will see the refinance boom continue to fall
off, and you can’t get around the high cost of health care
costs and the high oil and gas prices. If this continues, it will
put a damper on the economy.”
The
pattern of wage stagnation and decline has worsened the precarious
situation of U.S. workers. While overall real pay last declined
in the early 1990s, hourly wages either declined or stagnated
throughout the period between 1973 and 1995. Beginning in the
mid-1990s, tight labor markets finally pushed up pay, particularly
among low-wage workers. Unions were able to reverse some of the
downward trends--workers went on strike at UPS in 1997 and General
Motors to win more full-time jobs; at Bell Atlantic/Verizon, workers
struck twice to win better pay and benefits.
But
the recession of 2001 and the weak recovery since unraveled many
of these gains. Although real wages continued to grow slowly during
the recession, the economy shed large numbers of jobs, particularly
in manufacturing, which saw 41 straight months of employment decline.
At
the same time, productivity gains that emerged in the late 1990s
continued to accelerate, which meant that fewer workers could
produce more. According to the Bureau of Labor Statistics, the
4.3 percent average annual increase in productivity for 2001 to
2004 was last matched in 1948 to 1951.
This
big spike in output per hour occurred despite the sharp drop in
capital investment during the recession. Technology from Corporate
America’s late 1990s spending spree undoubtedly played some
role in the productivity increase, but old-fashioned speedup is
also indisputably responsible. In other words, Corporate America
has intensified its one-sided class war--and made major gains.
The
result is that while the U.S. economy in 2004 generated 2.2 million
jobs, that total is 1.4 million less than expected, based on averages
from previous economic recoveries. About 20 percent of the jobless
today are among the long-term unemployed--people who have been
27 weeks without a job--“an unprecedented development in
the post-[Second World War] period,” according to the EPI.
This
poor jobs picture persisted even as U.S. Gross Domestic Product
(GDP) grew at a brisk 4.3 percent. While this is less than half
of China’s booming growth, it far outpaced Germany’s
GDP increase of 1.6 percent and is ahead of Japan’s 4 percent
gain.
The numbers add up to this conclusion: The success of the U.S.
economy has been decoupled from improvements in the lives of U.S.
workers. The idea that increases in productivity will automatically
lead to wage increases and improvements in living standards--the
assumption of liberal Keynesian economists and union leaders alike--has
been shattered.
What
matters is class struggle. As the socialist economist Michael
Yates put it in a recent article on the U.S. working class in
Monthly Review, “rebuilding the power of the U.S.
working class is the only thing which can give workers any sense
of hope that the future will be in any way better than the past
30 years.”
The
challenges in doing this are profound. The lingering labor surplus,
along with the productivity boom, gave employers a powerful weapon,
even as the economy picked up steam. Unions at major corporate
employers in the airline, steel and auto industries made big concessions
on wages and benefits, adding to the economic downdraft. Capital’s
dominant position in the balance of class forces, which provoked
some resistance in the late 1990s, has been restored--and then
some.
The
latest wage statistics underline the point: It’s no longer
true--if it ever was--that a rising economic tide will lift all
boats. It’s class war from above that’s allowed America’s
rulers to accumulate their vast power--and it will require class
war from below for workers to make any significant gains.
Lee
Sustar is a regular contributor to CounterPunch and the
Socialist Worker.
He can be reached at: lsustar@ameritech.net