Archive for September, 2006

The International Herald Tribune (September 6, 2006) observes that Labor Department data shows U.S. worker productivity slowing in the second quarter while labor costs rose. (Strange – my salary didn’t rise. Wonder what part of the cost of my labor rose?)

It’s not that workers are actually slowing down our productivity rate. We’re not that organized. Yet. We’re just not increasing our productivity as rapidly as we had been doing. Perhaps that’s because every mechanism—even the cyborgs our employers imagine us to be—has its maximum output limitations, and we’re reaching ours. We’re tired. Maybe that’s from the two jobs we’re having to work to even approximate the income of the one job we had in the 1990’s.

How badly are we slacking? Our productivity increased at an annualized rate of merely 1.6 percent in the second quarter after a 4.3 percent annualized rate the first quarter. Labor costs, meanwhile, rose at 4.9 percent – not so bad when you consider that in the first quarter it rose 9 percent, which was the biggest jump since 2000.

Inflation may be occurring, worries Bloomberg News: “The bigger than expected rise in labor costs, may heighten concerns that inflation will accelerate as businesses lift prices to compensate.” Right – along with the compensatory price increases for higher fuel and insurance costs. Businesses bearing the cost of tiny gains in treating workers fairly is, I’m guessing, far less than 10 percent of any consumer price inflation that businesses are passing along to us.

Wait – remind me who “us” is. “Us” would be the workers who aren’t running as fast at work as the labor costs are running up. And why are labor costs running up? Because the petro-fuel industry is reaping obscene profits from the prices it’s charging our employers and ourselves. Because the health and home insurance industry is pro-actively hedging its bet against our aging workforce’s predicted declining health and recent turbulent weather’s bludgeoning our homes. Those labor costs are somehow labor’s fault, how?

I’m waiting ….

You can’t figure it out either, huh? We’re not alone in our quandary.

Voice of America News headlined this observation just the day before Bloomberg bemoaned the labor costs: “Energy Costs Hurting US Worker Paychecks.” VOA cites National Association of Manufacturers’ statistics: “U.S. manufacturing output has grown 5.8 percent over the last 12 months. That is its strongest gain since 1998. The economy picked up 1.7 million new jobs to push unemployment below the five percent mark. The growth in productivity combined with a tightening labor market boosted worker wages by 1.7 percent. But N.A.M. president John Engler says his group’s annual Labor Day report shows workers are actually losing buying power. ‘Wages, when adjusted for inflation, are not rising. In fact, they averaged a decline of a half of one percent during that same period. The culprit, the main reason wages did not keep pace with inflation? Energy costs — they went up 23 percent last year.’ N.A.M. chief economist David Huether computes so-called ‘real wages’ by factoring in the impact of surging gasoline prices along with benefits and employer contributions. He says those ‘real wages’ have declined by nearly two percent since 2001.”

On September 4, a BBC News headline summed up the situation even more explicitly: “The end of the American dream?” That’s a rhetorical question.

The metrics the BBC cites provide the answer: “After growing at more than 3% a year in 2004 and 2005, the pace picked up to a blistering 5.6% annual rate in the first quarter of this year - although the pace has since then slipped back to 2.9%. So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI).”

While corporate America is doing well, working America is not. BBC News gives us the real numbers. “During the five years from 2000 to 2005, the US economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%. Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%. But over the same period, the median family’s income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s.”

The BBC piles on the data and the accurate interpretation of them. “Even for those with jobs, the fruits of economic growth have been more unequally distributed within the labour market. The incomes of the top 20% have grown much faster than earnings of those at the middle or bottom of the income distribution. The income of the top 1% and top 0.1% have grown particularly rapidly. From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%. The equivalent figure for median hourly wages was 7.2%.”

There’s one more productivity measure I want now. What’s the productivity metric for CEOs? Is it up or down? How can we tell? Does anyone even bother to analyze it? Turns out, someone does. Irony continues in my next blog entry….

As reported by Steven Greenhouse and David Leonhardt in The New York Times (August 28), American workers’ productivity has been rising while our rewards for those efforts have been falling. Since 2003, while hourly production per worker has risen, the median hourly wage has fallen by two percent if you factor in inflation – and if you’re salaried or wage-earning, you cannot factor it out. Think about oil company profits (benefiting executives and stockholders) and the effect of oil’s price on foods that have to be trucked to the local supermarkets of the lower-level employees of those oil companies, employees whose wages are being eroded by their leaders’ bonuses.The word “average” can conceal great inequalities. By some measures, inflation-adjusted “average” family income has risen, but that average includes enormous increases at the top one percent of the income spectrum, skewing the results. Not far down the scale, the Labor Department reports that for ninetieth percentile earners (making about $80,000 a year) pay increases have lagged behind inflation.

Picture a scale - if you like irony, picture the scales of justice. On the left, 99 percent of workers; on the right one percent of us. In 1994, the top one percent of workers received 8.7 percent of all wage income. If that ratio irritates you, get the Lanacaine before reading on, because in 2004, the top one percent make 11.2 percent of the pie. Now it’s 2006, that scale continues to tip in the same direction it’s been heading for 12 years. Where’s the justice in that?

To put the statistics in plain language, those of us without keys to the executive washroom are working harder, longer, with lower benefits and more anxiety about keeping our jobs at all, for proportionately lower income measured against the cost of living.

Why are we being smart for our employers but stupid for ourselves? Let me take a wild guess. Many of us have experienced either directly or vicariously the pain of the layoff. We’ve been downsized, and not in the Weight Watchers kind of way. Sure, we’ve lost weight, but it’s because we’re living on one salad, two peanut butter sandwiches and a glass of fat-free milk per day as we desperately seek jobs that use our highest-value skills. We’re cinching in our waistbands with safety pins, but have no safety net of health insurance or pension. We’re working two part-time jobs or one full-time job plus a part-time job just make 80 percent of our previous salary. We’ve been outsourced, and find ourselves trying to renegotiate our mortgage payments with a customer service representative whose accent makes him unintelligible.

Are you ready to use your smarts for yourself? Primary election season is here, and the general elections are coming. Both parties are the handmaidens of their corporate contributors, but at least you can get candidates’ attention while they’re running for office. Get UP-itty and go to those town-hall meetings and state your case. Individually, we can stand up and be heard. Together, we can stand up higher and speak more loudly. UP with workers. Let’s get smart for ourselves.