Thursday, July 26, 2012

Class war - report from a battle-field

Caterpillar is the global leader in producing earth-moving equipment, such as bull-dozers and mining equipment. Workers at a Caterpillar plant in Joliet, Illinois have been on strike for three months because the company wants them to take a 6 year freeze on their wages and a pension freeze. Caterpillar in 2011 had earnings of $4.9 billion last year. They had earnings north of $1.5 billion in the first quarter of 2012. They made a profit per employee of $39,000.

Why is Caterpillar, a company with such record profits, demanding that unionized workers in its Joliet, Illinois factory agree to a six-year wage and pension benefits freeze? Quite simply, because it can. Cheryl Maranto, a management professor at Marquette says “I think it’s essentially an issue of bargaining power. It’s not that the company needs those concessions. They just want them...What they’re clearly trying to do…I mean, they have a two-tier wage system…and they’re really trying to force out some of the senior people who are at the higher-level pay so that they can hire in new workers at the lower-pay levels,”

The company claims that the freeze is needed because the workers are getting paid above market rates. Did these workers not bring in record profits with their good skilled labor? The workers were directly responsible for producing the product that created these profits. What is obscene is while workers receive a wage freeze supposedly “for the good of the company”, the executives are all getting raises and bonuses and the shareholders will get a lion share of the profits in dividends and capital gains having supposedly “risked” their investment.There can is a desire to satisfy shareholders by maximizing profits, and labor is the major cost of doing business. Is this not class warfare?

Caterpillar, General Electric, and others are among the big multinational companies that are currently expanding employment in the United States. But the new jobs they are creating are usually modestly paid (often in the range of $12 to $15 an hour), and the companies are determined to keep a tight lid on future wages and benefits. For much of the 20th century, employees, many of them organized by labor unions though many not, were able to demand higher wages and benefits because corporations had few alternative sources of labor and were usually able to pass some of the higher costs on to their customers. Government played a role through the tax system, but the big redistribution programs – such as Social Security, Medicare, and Medicaid – largely benefited those not in the labor force.

Globalization changed that. First, the lowering of trade barriers created intense new competition for U.S. corporations. Those saddled with overly expensive labor contracts, such as the Big Three auto companies, found themselves unable to compete with overseas rivals. Secondly, an expanding global market for investment allowed U.S. companies to set up operations overseas and then export back to the United States or to other markets. The new trade competition forced American companies to cut costs; the new investment openness gave them an effective means for doing so. The result was a huge shift in the balance of power that strengthened global corporations like Caterpillar and weakened the bargaining leverage of their employees. Since the 1970s, corporate after-tax profits as a share of GDP have risen, with several wide swings depending on economic cycles, from an average of about 5 per cent to more than 10 per cent in 2010, the highest since records began in 1929. Wage and salary income, in contrast, has fallen steadily from close to 55 per cent of GDP in the early 1970s to less than 45 per cent today.

It has been more or less impossible for even the most powerful and well-organized unions, like the International Association of Machinists currently on strike against Caterpillar in Joliet, to resist these trends. The companies have too many options – from bringing in temporary workers to simply shutting down and moving the work somewhere else. Often the threat of relocation is enough to persuade unions to accept concessions. The effects of this reverberate through the broader economy. U.S. multinational companies have historically paid some of the highest wages in the country, 25 percent above the overall average. If wages at the biggest and best companies are fixed or falling, wages will be tamped down at smaller companies as well. And of course the general weakness of the economy and high unemployment are also suppressing wages, exacerbating trends that existed long before the 2008 financial crisis and its aftermath. Robert Bruno, a labor relations professor at the University of Illinois, said Caterpillar was trying to drive wages down to a new floor said Caterpillar sees this as ‘the new normal,’ while this union local feels you have to draw a line in the sand to hold on,” he said. “Some people are saying the union should be more deferential, more compliant, that it’s a bad time to strike. How can you counter a powerful multinational in this economy?”  Michael LeRoy, another labor relations professor at the University of Illinois, said Caterpillar has served as a model in legitimizing tough labor strategies, like take-it-or-leave-it contract offers. strikebreakers continue to be bussed into the plant, while Caterpillar is openly seeking permanent replacement workers from the surrounding area. Since going on strike, workers are only getting $150 a week in strike pay. Strikers are increasingly falling behind on home and car payments and some are facing foreclosure.

Workers at the Caterpillar factory in South Milwaukee are closely watching a labor dispute at the company plant in Illinois realising that the outcome of the dispute could be a bellwether for labor relations across the country.

While the wealthy continues to get wealthier, employees continue to fall on hard times. The actions by Caterpillar and the actions of other corporations along with governmental policies detrimental to workers are directly responsible for the increased income and wealth of the wealthy. Caterpillar workers are confronting not just a single employer but the entire capitalist economic and political system that is impoverishing workers in every country in order to enrich the wealthy few.

From here

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