Workers Keep Getting Shafted

In the US, as in many countries, the median wage is still below where it was before the Recession. Last month, average pay actually fell. It used to be that as unemployment dropped, employers had to pay more to attract or keep the workers they needed. There’s reason to believe the link between falling unemployment and rising wages has been severed according to Robert Reich, ex US Labor Secretary.

Millions of Americans who dropped out of the labor market in the Great Recession are still jobless. They’re not even counted as unemployment because they’ve stopped looking for work.  But they haven’t disappeared entirely. Employers know they can fill whatever job openings emerge with this “reserve army” of the hidden unemployed – again, without raising wages. Add to this that today’s workers are less economically secure than workers have been since World War II. Nearly one out of every five is in a part-time job. Insecure workers don’t demand higher wages when unemployment drops. They’re grateful simply to have a job. A majority of Americans have no savings to draw upon if they lose their job. Two-thirds of all workers are living paycheck to paycheck. They won’t risk losing a job by asking for higher pay. Insecurity is now baked into every aspect of the employment relationship. Workers can be fired for any reason, or no reason. And benefits are disappearing. The portion of workers with any pension connected to their job has fallen from over half in 1979 to under 35 percent in today.

In addition, it’s easier than ever for American employers to get the workers they need at low cost by outsourcing jobs abroad rather than hiking wages at home. Outsourcing can now be done at the click of a computer keyboard. Many workers in developing nations now have access to both the education and the advanced technologies to be as productive as American workers. So CEOs ask, why pay more? In the US a whole new generation of smart technologies is taking over jobs that used to be done only by people.  Rather than pay higher wages, it’s cheaper for employers to install more robots. The combination of advanced sensors, voice recognition, artificial intelligence, big data, text-mining, and pattern-recognition algorithms is even generating smart robots capable of quickly learning human actions.

Workers used to be represented by trade unions that utilized tight labor markets to bargain for higher pay. In the 1950s, more than a third of all private-sector workers belonged to a union. Today, though, fewer than 7 percent of private-sector workers are unionized. Corporations have steadily weakened their workers’ bargaining power, the link between productivity and workers’ income has been severed. Since 1979, the nation’s productivity has risen 65 percent, but workers’ median compensation has increased by just 8 percent. Almost all the gains from growth have gone to the top.

None of these changes has been accidental. The growing use of outsourcing abroad and of labor-replacing technologies, the large reserve of hidden unemployed, the mounting economic insecurities, and the demise of labor unions have been actively pursued by corporations and encouraged by Wall Street. Payrolls are the single biggest cost of business. Lower payrolls mean higher profits. Ordinary workers have lost jobs and wages, and many communities have been abandoned. They are being shafted.

Capitali$m can and will be replaced with a people-first socialist system when a majority of people are convinced of the need for such revolutionary change and are ready to make it happen.