National labour regulations seem to be increasingly tilting to the advantage of employers. The “labour share” of national income has been falling across much of the world since the 1980s. The Organisation for Economic Co-operation and Development (OECD), a club of mostly rich countries, reckons that labour captured just 62% of all income in the 2000s, down from over 66% in the early 1990s. A falling labour share implies that productivity gains no longer translate into broad rises in pay. Instead, an ever larger share of the benefits of growth accrues to owners of capital. In America the decline from the early 1990s to the mid-2000s is roughly twice as large, at about 4.5 percentage points, if the top 1% are excluded. The rich have done vastly better than the rest: the share of income earned by the top 1% of workers has increased since the 1990s even as the overall labour share has fallen.
Workers in America tend to blame cheap labour in poorer places for this trend but American labour productivity grew faster than worker compensation in the 1980s and 1990s, before the period of the most rapid growth in imports. Workers in many developing countries, from China to Mexico, have also struggled to seize the benefits of growth over the past two decades. The likeliest culprit is technology, which, the OECD estimates, accounts for roughly 80% of the drop in the labour share among its members. Foxconn, for example, is looking for something different in its new employees: circuitry. The firm says it will add 1million robots to its factories next year. Foxconn presently employs almost 1.5m people across China.
Cheaper and more powerful equipment, in robotics and computing, has allowed firms to automate an ever larger array of tasks. Research show that the cost of investment goods, relative to consumption goods, has dropped 25% over the past 35 years. That made it attractive for firms to swap labour for software whenever possible, which has contributed to a decline in the labour share of five percentage points. In places and industries where the cost of investment goods fell by more, the drop in the labour share was correspondingly larger.
In recent decades jobs requiring middling skills have declined sharply as a share of total employment, while employment in high- and low-skill occupations has increase. Computerisation and automation laid waste mid-level jobs in the 1990s.
Trade and technology’s toll on wages has in some cases been abetted by changes in employment laws. In the late 1970s European workers enjoyed high labour shares thanks to stiff labour-market regulation. The labour share topped 75% in Spain and 80% in France. When labour- and product-market liberalisation swept Europe in the early 1980s—motivated in part by stubbornly high unemployment—labour shares tumbled. Privatisation has further weakened labour’s hold. Reforms to give new protections for workers as a means to support the labour share might lead to an even faster shift to automation.
Technological change and rising productivity create the potential for rapid improvements in living standards yet the resulting income drop to wage and salary workers, is evidence that the promise will not be realised.
U.S. state legislators and corporate lobbies have engaged in an unprecedented attack on minimum wages that has lowered U.S. labour standards, according to new research. The Economic Policy Institute (EPI), has provided a comprehensive overview of all legislation enacted over the past two years across all 50 U.S. states. According to EPI researchers, some of the country’s largest corporate lobbies have engaged in an intense attack on U.S. labour standards and workplace protections, including minimum wage laws, the amount of paid sick leave offered, and even child labour protections. EPI says such legislative attacks have seriously undermined the ability of average U.S. citizens to achieve economic prosperity.
“What is clear from the report is that attacks on labour unions are part of a larger attempt by trade associations and corporate lobbies … to fundamentally change the labour situation in America,” Gordon Lafer, an EPI research associate and an associate professor at the University of Oregon, said.
Despite the country’s general economic growth, EPI notes that more and more people in the United States are struggling to earn a living wage.
“According to our statistics, from 1983 to 2010 the bottom 60 percent of Americans actually lost wealth, despite the fact that the overall U.S. economy has grown over this same time period,” Ross Eisenbrey, the EPI’s vice-president, said. “This is a remarkable indictment of how the economy is not working for everybody.”
Although most attacks on labour standards come through state legislatures, the report notes that the momentum behind this large legislative movement has been driven primarily by powerful national corporate lobbies “that aim to lower wages and labour standards across the country.”
Several U.S. states have already acted in one way or another by taking measures aimed at cutting minimum wage laws, considered some of the last bastions of low-wage worker protections in the country. In 2011, for instance, New Hampshire legislators repealed the state’s minimum wage, mandating that only the federal minimum wage should be heeded. South Dakota recently abrogated the minimum wage for much of its summer tourism industry.
Indeed, one of the striking features of the report is the way it sets the local data into the larger national context. Today, one out of five U.S. citizens is getting paid less than the federally mandated minimum wage. According to recent polls, workers in the U.S. are also increasingly dissatisfied with their current standards of living. As many as seven in every 10 are saying that the economy is getting worse.
Workers in America tend to blame cheap labour in poorer places for this trend but American labour productivity grew faster than worker compensation in the 1980s and 1990s, before the period of the most rapid growth in imports. Workers in many developing countries, from China to Mexico, have also struggled to seize the benefits of growth over the past two decades. The likeliest culprit is technology, which, the OECD estimates, accounts for roughly 80% of the drop in the labour share among its members. Foxconn, for example, is looking for something different in its new employees: circuitry. The firm says it will add 1million robots to its factories next year. Foxconn presently employs almost 1.5m people across China.
Cheaper and more powerful equipment, in robotics and computing, has allowed firms to automate an ever larger array of tasks. Research show that the cost of investment goods, relative to consumption goods, has dropped 25% over the past 35 years. That made it attractive for firms to swap labour for software whenever possible, which has contributed to a decline in the labour share of five percentage points. In places and industries where the cost of investment goods fell by more, the drop in the labour share was correspondingly larger.
In recent decades jobs requiring middling skills have declined sharply as a share of total employment, while employment in high- and low-skill occupations has increase. Computerisation and automation laid waste mid-level jobs in the 1990s.
Trade and technology’s toll on wages has in some cases been abetted by changes in employment laws. In the late 1970s European workers enjoyed high labour shares thanks to stiff labour-market regulation. The labour share topped 75% in Spain and 80% in France. When labour- and product-market liberalisation swept Europe in the early 1980s—motivated in part by stubbornly high unemployment—labour shares tumbled. Privatisation has further weakened labour’s hold. Reforms to give new protections for workers as a means to support the labour share might lead to an even faster shift to automation.
Technological change and rising productivity create the potential for rapid improvements in living standards yet the resulting income drop to wage and salary workers, is evidence that the promise will not be realised.
U.S. state legislators and corporate lobbies have engaged in an unprecedented attack on minimum wages that has lowered U.S. labour standards, according to new research. The Economic Policy Institute (EPI), has provided a comprehensive overview of all legislation enacted over the past two years across all 50 U.S. states. According to EPI researchers, some of the country’s largest corporate lobbies have engaged in an intense attack on U.S. labour standards and workplace protections, including minimum wage laws, the amount of paid sick leave offered, and even child labour protections. EPI says such legislative attacks have seriously undermined the ability of average U.S. citizens to achieve economic prosperity.
“What is clear from the report is that attacks on labour unions are part of a larger attempt by trade associations and corporate lobbies … to fundamentally change the labour situation in America,” Gordon Lafer, an EPI research associate and an associate professor at the University of Oregon, said.
Despite the country’s general economic growth, EPI notes that more and more people in the United States are struggling to earn a living wage.
“According to our statistics, from 1983 to 2010 the bottom 60 percent of Americans actually lost wealth, despite the fact that the overall U.S. economy has grown over this same time period,” Ross Eisenbrey, the EPI’s vice-president, said. “This is a remarkable indictment of how the economy is not working for everybody.”
Although most attacks on labour standards come through state legislatures, the report notes that the momentum behind this large legislative movement has been driven primarily by powerful national corporate lobbies “that aim to lower wages and labour standards across the country.”
Several U.S. states have already acted in one way or another by taking measures aimed at cutting minimum wage laws, considered some of the last bastions of low-wage worker protections in the country. In 2011, for instance, New Hampshire legislators repealed the state’s minimum wage, mandating that only the federal minimum wage should be heeded. South Dakota recently abrogated the minimum wage for much of its summer tourism industry.
Indeed, one of the striking features of the report is the way it sets the local data into the larger national context. Today, one out of five U.S. citizens is getting paid less than the federally mandated minimum wage. According to recent polls, workers in the U.S. are also increasingly dissatisfied with their current standards of living. As many as seven in every 10 are saying that the economy is getting worse.
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