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Their Plan for Low-Wage America

Socialist Worker Mar 29, 2012

Jobs are coming back, but you can forget about a living wage–unless you and your co-workers are organized enough to demand one.

That's the real story behind the long-delayed rebound in employment that government statistics have been showing for the past several months.

While job creation is now strong enough to make a dent in unemployment statistics, there's still a lot of ground to make up. At the current rate of employment growth, it will take another five years to make up for the jobs lost during the Great Recession plus provide work for the young people who have entered the workforce since then, according to former Labor Secretary Robert Reich.

And the pay for those newly hired young workers will be lousy. According to the Economic Policy Institute, entry-level wages fell between 2000 and 2011–a decline that continued even during the 2002-07 economic expansion. For men with a high school education, after adjusting for inflation, starting wages are 25 percent lower than they were in 1973.

These grim prospects for young workers–millions of whom are saddled with tens of thousands of dollars in student loans they can't afford to repay–are only part of the story. The entire working class faces downward pressure on wages. Some workers are losing ground because of pay freezes or tiny raises that don't keep up with inflation. Others are suffering outright pay cuts.

And this is only the intensification of a long-term trend. As left-wing economist Doug Henwood points out, over the past decade, U.S. labor costs have fallen by 13 percent in the U.S., but rose by 2 percent in Germany, 15 percent in South Korea and 18 percent in Canada. This gap has widened since the recession began in 2008, as U.S. employers used unemployment as leverage to ratchet wages down further, grabbing almost all the increase in national wealth since 2009 for profits, according to researchers at Northeastern University.

What's more, notes the Sentier Research firm, workers' income has continued to fall during the recovery: "For the entire period from December 2007 to June 2011, real median annual household income has declined by 9.8 percent. A decline of this magnitude represents a significant reduction in the American standard of living."

Journalist Edward Luce summed up the situation in the Financial Times:

The fact that a growing share of U.S. growth will come from overseas, both via Barack Obama's export drive, which is showing results (although imports are growing faster), and through the continued globalization of U.S. companies, means U.S. workers will be competing even more fiercely with their counterparts around the world. Last year, the U.S. economy grew by 1.7 percent. Median wages fell by 2.7 percent. Expect that bifurcation to persist…

Aggregate growth is certainly returning to the U.S., although at what rate it is unclear. But for many Americans, this recovery is going to be cold and it is going to be grey. Let us hope it does not last for the rest of their lives.

Even if Barack Obama wins a second term in the White House, a federal jobs creation program is unlikely.

The Economic Report of the President–essentially the Obama administration's economic program–proposes a mix of student loans that it hopes will boost college graduation rates and raise graduates' wage-earning potential. Meanwhile, working-class high school graduates would be channeled into vocational training programs in community colleges–so that taxpayer and tuition dollars will cover the costs of job training that Corporate America should pay for.

In addition, the administration is proposing tax breaks for manufacturing companies who are already taking advantage of falling U.S. wages–a trend that the Economic Report of the President blandly describes as "a shift in unit labor costs that favors U.S. businesses over those in other advanced countries."

Another administration document, Investing in America: Building an Economy that Lasts, spells out what this means in an unabashed sales pitch to companies that might invest in U.S. manufacturing: "Between 2002 and 2010, only one of the 19 countries managed to improve its unit labor cost position in manufacturing more than the U.S."

Indeed, U.S. wages are now so low that the costs of manufacturing in the U.S. are becoming competitive with China once transportation costs are taken into account. This would have seemed inconceivable just a few years ago. But rising Chinese wages–in part because of a wave of strikes–along with higher shipping costs for Chinese goods has narrowed the gap.

Remember that the next time you hear U.S. employers or politicians bashing China for supposed unfair trade practices. These are the same people who crafted free-trade policy and channeled investment to China in order for U.S. multinational corporations to create a cheap export platform to compete with Japan and other major economic powers. It's only after the Chinese economy started threatening the U.S. in key markets that Washington changed its tune. And to make the U.S. more competitive, employers are slashing wages even as they point the finger at China.

Is there any chance that the a revived manufacturing sector will lead to a renewed golden age of prosperity? Maybe–if you own a factory, rather than work at one. Working people of a certain age can recall growing up in a society where high profits and steadily rising wages seemed to go together, and parents in factory jobs could expect their children to live better than them even if they got hired on at the same plant.

But that American dream–always out of reach for most African Americans and other minorities–was repossessed by capital in the 1970s, and loaned back to workers at a high rate of interest. People who expected to cushion retirement by using their home as an asset, or who "took money out" of their house to bolster low wages, now find themselves with nothing–or worse, in inescapable debt with an underwater mortgage. Some 11 million homes–or 22.8 percent of the total–are worth less than the money owed to lenders.

If Corporate America has its way, the manufacturing revival won't lead to the better-paid factory jobs–often unionized–that once allowed for a decent standard of living for working people. As the Wall Street Journal economics editor David Wessel put it, "Given the demands of the modern factory, it isn't going to be the ticket to the middle class for unskilled workers who haven't gone beyond high school. Pretending otherwise is foolish."

The decline in wages and the quality of work wasn't inevitable. It was the result of a well-organized and aggressive capitalist class war on labor that, for 40 years, has been rolling back the gains made by workers.

And with but a few exceptions, workers' basic organization for self-defense–unions–have been taking a pounding. In some cases, labor was simply overmatched in long and bitter struggles. But all too often, management has gotten its way because union leaders, desperate to preserve a "partnership" arrangement with employers, made concessions to try to save jobs.

The result has been both lower wages and fewer jobs, especially in the auto industry, where the United Auto Workers in 2007 agreed to starting wages that are little more than half those of experienced workers. Since then, wages freezes and pay cuts have been the norm in manufacturing, even as the economy recovered from its deep slump. Industry in the state of Wisconsin is a good example–following the wage cuts and then plant closures at the state's auto plants, unions endured a series of concessions at companies such as Kohler, Harley-Davidson, Mercury Marine and Sub-Zero.

But Wisconsin, of course, was also the center of the great labor rebellion of 2011 against union-busting Gov. Scott Walker–and that set the stage for the unions' embrace of the Occupy movement later that year.

It's clear that there's a mood of opposition among working people fed up with being made to work harder for less–if they can get work at all. It's more possible than it has been in decades to see the potential for a fighting working-class movement. From the hundreds of thousands who rallied over several weeks in Madison to the series of labor-Occupy protests last fall, it's clear that millions of workers identify with the basic Occupy message of opposition to inequality and the corporate domination of politics.

The question now is how to turn that sentiment in the streets into power on the job–rebuilding unions where they exist and organizing them where they don't. After Occupy, militant union activists who may have felt isolated in the past now know that they're going with the grain.

Unfortunately, the response of labor leaders is–once again–to put their hopes in electing Democrats in November, despite the bitter disappointment with the Obama administration's failure to pass labor law reform. In fact, politicians and employers are in lockstep in bashing unions–from demanding cuts in pay and benefits from public-sector workers to pushing anti-union "right to work" laws in longtime labor strongholds like Indiana, Minnesota and even Michigan.

Unless and until labor can draw the line, the attacks will continue. It's only by turning this kind of anger into organization and action that working people can expect to resist further attacks and make gains.

There's no predicting where or when the next galvanizing workers' struggle will take place. But the Wisconsin uprising and working-class support for Occupy show the importance of creating the network of activists that can prepare for a fightback that can reverse the tide.

This article was originally published by Socialist Worker.

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