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Overworked and Underpaid? Productivity Increases, But Wage Growth Declines
As Labor Day approaches, many Americans are breathing a sigh of relief for the extra day off. On a day that celebrates unions and the eight-hour work day, many workers are feeling like their hard work isn’t exactly paying off the way it used to.
Even as productivity has continued to climb, wages have been either stagnant or declining. Household income for the average working family has continued to fall, but men, latinos and those without a college education have experienced an especially sharp deceleration of wage growth since the recession, according to a new briefing paper by the Economic Policy Institute.
The Washington, D.C.-based think tank says that from 2002 to 2007, productivity rose 11 percent but the hourly wage for high school and college educated workers fell. In fact, the average median household income (adjusted for inflation) actually earned $2,000 less during that period, going from $60,804 to $58,718. For the first time, family income levels sunk below what they had been at the beginning of the economic cycle.
Typically, an era of higher productivity would also cause wages to rise as workers receive compensation for harder work. Instead, the opposite has been happening. As many companies have reduced staff to cut costs, employees have been squeezed to work longer and produce more. And with productivity falling slightly for the first time in more than a year, many workers have likely reached their threshold this past Spring.
That's because the labor isn't transferring to the employee paychecks. Nominal wage growth in the private sector was 3.4 percent before the economic crisis, but fell to 1.6 percent by the recession’s third year. Similarly, wage compensation dropped from 3.1 percent to 1.8 and most of the benefits went to the upper class. From 1989 to 2007, the top one percent of households earned 56 percent of the total income growth. The bottom 90 percent received a total of 16 percent.
This isn’t surprising since the trend has actually been ongoing for the last 30 years. The reasons wages have continued to stagnate are varied. But could the lack of wage growth be also tied to labor’s declining membership? Workers who belong to unions enjoy better pay and benefits than non-unionized employees. In a Washington Post column by Katrina vanden Heuvel, The Nation magazine editor and publisher, describes how unions were able to raise American living standards:
“But when unions represented over 33 percent of all private workers in the 1940s, they drove wage increases for everyone -- non-union firms had to compete for good workers. Now, unions struggle just to defend their members' wages and benefits. Over the past decade before the Great Recession, productivity soared, profits rose and CEO pay skyrocketed, but most workers lost ground.”
The wage stagnation and its correlation to unionization is not far fetched. Change to Win, a coalition of several union organizations, points out that the peak of real wages was in 1972 when private sector union membership was 28 percent. They write:
Workers are now earning only 83 cents of every dollar they earned more than 35 years ago, while their productivity has increased a dramatic 80%. This is the central explanation for the explosion in corporate profits and the growing income gap in America, and the reason workers in America still believe the economy is moving in the wrong direction.
Still, with less than 13 percent of the workforce belonging to a union, it’s difficult to get the same strength in numbers to raise the standard of living for everyone. The power of collective bargaining has been a central tenet to negotiating a living wage. But the small union numbers, coupled with companies invoking the current economic climate to justify concessions, has eroded the negotiating power of the average worker.
The workplace has been getting tighter to the employer’s advantage. The tight job market makes it difficult to negotiate a better wage. For every job opening, there are five unemployed people vying for that spot. In a job market like today where there is a big pool of applicants and a small number of openings, companies are able to leverage the pay and benefits on their terms.
Flexible pay scales are also on the rise, where workers have a smaller base salary in exchange for big single payment bonuses. According to Businessweek, more than 90 percent of U.S. corporations now use this plan for non-executive employees. In the early 1990s, it was less than 50 percent. And to top it off, with rising healthcare costs, companies have also shifted the burden onto workers by reducing their wages.
As a result, many are still feeling financially vulnerable despite having a job. A Gallup poll from August 16 found that 26 percent of Americans were worried about pay reductions. Not as many workers are concerned as last year but the statistic is still high compared to previous surveys. Another polls says consumer confidence is also falling to the lowest levels all year and many are saying the economy is only getting worse.
The growing anxiety is because workers have not been able to benefit from the productivity. Spurring median wage growth is a big policy concern. If households are not able to keep up with the cost of living, the decline in consumer spending could further prolong the economic recovery.
But as EPI suggests, raising the minimum wage or nudging the federal government to create job growth are some short-term solutions.
On Monday, though, workers across America will be enjoying a much-needed holiday before going back to the grind.
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44 Comments so far
Show AllIt would help if union spoke on behalf of labor in general, for all workers, but they don't. They work for their own members to hell with everyone else. Union corruption is at a high point where I live, most especially the unions representing public-sector workers. The Unions only screamed about healthcare reform when their workers' benefits were going to get taxed. The minute Obama exempted the unions the unions backed healthcare reform. The correct stance that would have helped all union members -- and everyone else -- would have been Medicare for All. I had no idea only 13% of the labor force was in a union. They hold a lot of sway in New York.
So, I'll edit this to say that union workers need to band together with all workers. There needs to be unity, because the one thing that is holding sway over all workers is the reality and the threat outsourcing. How do you fight outsourcing when the guy at the top of the heap -- Obama -- is not interested?
Look at Obama's track record and it is clear that "the guy at the top of the heap - Obama" IS interested...IN EXPANDING OUTSOURCING.
By supporting Obamacare the unions are driving more nails in their own coffins. Obamacare expands the role of employers in being the controllers of medical insurance for a majority of Americans. As long as your employer holds the medical insurance cards, you (the employee) have ever diminishing leverage, irrespective of any union you may belong to.
Look at the Coca Cola workers currently on strike. Coca Cola cut off their medical insurance. How long do you think they will be able to sustain their strike? Most workers (union or non-union) don't even consider going on strike for fear of losing their medical insurance.
See Big Dig.
"It would help if union spoke on behalf of labor in general, for all workers, but they don't. They work for their own members to hell with everyone else."
Do you like your weekends? Your workers' comp? Your 40 hour work week? Laws against child labor? Thank the labor unions.
"So, I'll edit this to say that union workers need to band together with all workers."
So I'll edit this to say that that ungrateful freeloaders who enjoy the rights and advantages that the labor movement fought for need to band together with organized labor.
I contacted my state chapter of SEIU asking for information in unionizing my workplace about a month ago, I have yet to hear a response.
I also noticed your avoidance of the point you were responding to, where union leaders destroyed the striking capability of union workers by refusal to push for single payer healthcare.
That "oversight" on your part lends even more credibility to the comment you were responding to.
Lucky; If you do hear from them tell'em to blow off! What does your facility do?, I feel certain I can recommend a real union that won't leave you with some t-shirts and a monthly bill.
>^^<
As one who is self-employed I do not have vacations, I work seven days a week just to make ends meet, I have no benefits, I have no worker's comp, no unemployment insurance. I do not, however, make the rate that I am paid. That is set by the legislature.
Unions did a lot of good things in the past. Unions today are very, very different. Google Newsday and look up what is happening at the Long Island Rail Road. Graft, corruption, nepotism and outrageous overtime, a big, big multi-year scandal regarding disability benefits. I knew a lot of these guys years ago. I could write a book about what these guys were doing while they were supposed to be working and receiving time and a half of overtime. Newsdays has the list of the salaries of these people and then the overtime -- Dozens of these people are making more than twice their income in overtime -- well over six figures. Meanwhile, the railroad gets dirtier, more and more service gets cut, stations close and the fares keep going up and up. Yes, there is a big problem with management, but it's also well-known that much of management consists of former union members. Believe me, it's a very cozy, cozy relationship. It's destroying the railroad and people who depend on it, but at some point all this greed is going to backfire.
Oh, and just to let you know, if you're not a son, daughter, or have some other strong connection to an LIRR worker or someone in the MTA your chances of getting one of these "gem" jobs is slim to none. If you're asking why the LIRR doesn't hire more workers to cut down on overtime? Just ask the union leadership and their members. They don't want their generous overtime messed with.
I'll stand by what I said. There are good unions and if they want to remain viable than their corrupt brethren are going to have to clean up their act. Unfortunately, it may be too late for that. In my neck of the woods there's growing anger and it's directed at management and the unions.
"As one who is self-employed I do not have vacations, I work seven days a week just to make ends meet, I have no benefits, I have no worker's comp, no unemployment insurance. I do not, however, make the rate that I am paid. That is set by the legislature. "
As someone else who is self-employed, I can agree with most of what you say up front, but I do not understand the last two sentences (above). How does the legislature set the salary of someone who is self-employed?
And, if you do not have workmen's compensation it is because you are not contributing to the fund. In fact, if you have your own business (even with only one employee), I believe that you are supposed to be filing a variety of forms (and checks) with the state that would provide workmen's comp if you need it.
But if you are a "cash-only" guy, and are flying under the radar, you cannot expect anyone to sympathize with you for not having those benefits.
Unions have gone so far downhill, they rerely manage to represent their so-called membership anymore. If you have the bad luck to represented by SEIU your pay has fallen off a cliff, and medical and pension contributions are already up 10% without the tea-baggers out to take even more.
State, City and Fed workers are no longer well off, unions have better things to do, they'll at best send you a pamphlet on orginizing "you are the Union" if I am then why am I paying those asses to colude with the bosses to cut our pay and benefits even further.
MOUs are a large part of the problem, we no longer have Contracts that can't be ignored. Just MOU gentlemans agreements, with clowns who are no longer gentlemen, more like straw bosses. Mine even prefers the monicer Boss-W.
It's getting to be time for the plantation slaves to take back the fields. Breaks, lunches and holidays are falling off the calendar at a distressing rate. Cost of living Increases, Defined Benifit Pensions? you'll need a histroy book soon to look up what these things were.
Unhappy labor day is more like it!
>^^<
Agreed. Pre-capitulation and narrow focus by unions, failure to organize, are big problems for us.
Joe
My right-wing, "christian", blue collar but union-hating brother in Stafford, VA proudly proclaimed that he was taking his family on their summer vacation soon - a 4-day weekend in nearby Virginia Beach. That is his summer vacation.
I just got back from Toronto - sadly only 3 days. There are many good things to say about Toronto, but what struck me the most is how people's moods were vastly more upbeat than the US. The surly, short-tempered attitude of someone being worked to death so typical of the US worker was nowhere to be seen.
Not to mention that Canadian bank regulations were not decriminalized (euphemistically called deregulation) during the past 30 years, the way American bank regulations were; there were no sub-prime loans to destroy the Canadian real estate market; thousands of Canadians have not been losing their jobs (and medical insurance)each day for the past two years: Canadian college students continue to get jobs in their field when the graduate, rather than continuing to sling hash or be unemployed like their US counterparts; fewer older Canadian workers are delaying or cancelling their retirement plans...the list goes on.
There have been hardships. The area in which I live was heavily impacted when Americans suddenly stopped buying lumber for houses. It took two years to clear all the backlog in the pipeline cut to American lengths and find new customers in China and cut to the dimensions they want. The hardship was compounded by two years of scanty salmon returns. Little by little the guys are being called up again, the lumber trucks are getting out there again, the fish came in strong this year. Still lots of For Sale signs on houses, RVs, and trucks. U-hauls and moving trucks are still leaving town but not quite so many as last year. People are beginning to relax a little. Perhaps the town will survive.
In my little slice of America, all the RV dealerships have gone out of business. More Forclosure signs or just empty houses than for sale signs are all over. Homeless people live in parks, after awhile they disappear and more take thier place. Grass growing in parking lots of empty department stores and people living in RVs live there sometimes though not for long. I'm glad they stop building those cheap crapy houses that are three feet apart, this is some of the best farmland in the world and its being exploited and replace by big box stores which will also go out of business one of these days. The air is so bad they created a hazardous catagory though it usually tops out as unhealthy for sensitive groups. I think the worst part of all of it is the lack of community which is so evident. The hospital that treats the medically indigent is like one of those RV dealerships and people congregate at the doors. There are people that take food to the parks but there is no real compassion, everyone is just hoping it doesn't happen to them.
Yeah, that fear kills any real caring, people pull away from the ones who just are not making it, almost as if they carry some virus that can be caught.
Seems to be everywhere but America, even Greece in generial has more upbeat people. Americans seem to beat down, either lost hope or just waiting for the other shoe to fall, like me waiting for their job to be eliminated. Hell! I can see the contractors that will be taking my job soon in the next cube.
Great to be an American. Not! as we get squeezed tighter and tighter. we watch the individual explode, and wonder if/when it'll be us. Or if we can gracefully be swept out with the trash.
I see in other countries I see others standing up, I can take a bit of pride in that as a human at least. Not all of us will go quietly into that dark night.
Whats Next? thats the universal question.
>^^<
With the decease in union membership and power, so has its influence with the Democratic party and mainstream media.The unions were once a powerful source for educating the public.
Akito: The problems are apparant. But what we need are solutions.
And this trend WILL keep continuing, far, far into the future, mark my words. We are a falling empire, a falling nation, a falling economy, and knee-deep in the downward spiral. There will be no end to it. And it is 100% the fault of the American sheeple, for continuing to - every 2-4 years - vote for the "lesser evil" whenever they get sick of the "other" team, which are actually one and the same team.
"When Americans get tired of Coke, they switch to Pepsi. When they get pissed off at Pepsi, they switch back to Coke."
Morons. Reap what you sow.
"When fascism comes to America, it will be wrapped in the flag, carrying a cross."
Sinclair Lewis, "It Cant Happen Here", 1935
And Glenn Beck is the poster boy.
After the republicans take control of congress next year the real fireworks will begin. Violence will follow.
Sorry but Ronald McReagan has that title, once the sheeple elected a horses ass actor as administrator of our nation it was pretty much over. That Rush and Geln Beck are allowed public forums is a disgrace to intellegent conversation, not that we have much of that left on either side.
When the time comes, will anyone even remember we had something different, or want it back?
>^^<
"We are careful to point out that no single flood, storm or drought can be blamed on climate change, but the trend is getting hard to ignore." - excerpt from Guardian UK
We are careful to point out that no single incidence of domestic violence, suicide, foreclosure or bank robbery can be blamed on the current economic climate, but the trend is getting hard to ignore.
Individuals are breaking all over the country. How much longer will Americans continue to ignore the obvious?
Maybe when their TVs get repossessed?
This is a tragedy that just happened on Long Island this past week. I haven't read any further reports but it goes like this: A house burned in Lindenhurst (South Shore). A man was found in an SUV at a beach, unconscious from overdose of prescription drugs. In the back was his dead wife wrapped in a blanket, apparent homicide. He is in serious condition. Arson-murder-attempted suicide? One incident.
And then there was this:
"Alex and another neighbor, James Lambrecht, who lives two houses down from the fire, said the couple used to entertain friends with barbecues in the backyard, where they had a well-tended lawn and a pool.
But about a year ago, that changed.
The yard became overgrown. The pool remained covered. The parties stopped."
Again, one incident.
I wish I had an answer on your last question.
One good thing happened yesterday. The newly organized Domestic Workers United in New York won recognition and some fundamental rights, like one day off per week and 3 days paid leave per year. They now have standing and representation to take abusive employers to court, for instance. It is not much, but when you have had no rights, it is a start.
If domestic workers, each isolated in a household and working at the pleasure of who knows who, can organize, then anyone can. I did not see the talented organizer Aijen Poo on any of the TV broadcasts, but both she and the workers deserve a big round of applause.
Now, can we start to revive the concept of weekends, which we did not have until the unions fought for it? So many workers have lost, in actual practice, weekends, paid vacations and sick time. This is very bad for mental and physical health, and for family happiness.
Joe
I heard this good news yesterday.
To commonsenseparty,
As long as the republicans can blame the democrats and get away with it.......
or until the democrats grow a spine and a synapse
The main reason labor unions failed in Amerikkka (aside from the corruption of the labor bosses by avarice and mendacity) was the unions' inability to form "One Big Union," as advocated in the early 20th century by Eugene V. Debs and the Industrial Workers of the World (IWW). The notion of One Big Union was one of true solidarity that would allow any worker to join thus creating an irresistible powerhouse controlled by workers.
The system of craft unions that has been the traditional model in Amerikkka is too fractured for the workers to make and keep major strides in pay and benefits. The workers must come together to initiate general strikes to cripple the plutocratic oligarchy.
We must take back the government that was stolen by plutocrats who have used the money they made off the backs of workers to bribe crooked politicians.
duplicate
Yes, The One Big Union is organized industrially rather than by craft thus fostering solidarity and clout. American workers would do well, as a start, to celebrate themselves on May 1 as the rest of the world does rather than "Labor Day" which was designed for them by the bosses.
Probably end up like SEIU and others, run by some college-boy staffer, that never did a lick of work ever. Then the paid staff year by year just take over till the membership is only a cash cow that regurgitates money every month, so the new entitled officers can lie back and live easy. Except when they meet their buddy bosses behind closed doors to ink the concessions for the next MOU. Every few years. or like the UAW has invented self renewing MOUs so nobody has to meet ever again.
>^^<
I also learned today that CEOs of companies that laid off the most workers were paid (notice I did not say "earned") 42% more than their counterparts in other companies. They averaged 12 million per year as opposed to approximately 8.5 million for the others.
That is because if you lay off people, force the remaining ones to pick up the extra work for no extra pay and cut product quality and customer service, you are considered a hero of cost cutting and are rewarded. The effect on the workers, the customers, the products or the community at large are not part of the equation.
Joe
JC, I saw that same information but didn't hear about it in the mainstream news. I was laid off and filed for unemployment. I just "love" the ridiculous stuff I'm forced to read as I confirm my registration, about how much they're willing to help me build my resume and provide workshops, etc. to match me with the right employer. This is accompanied by photos of smiling people in suits and other professional attire, obviously thrilled to be working for whatever someone is willing to pay them-- because let's face it, that's the current state of the workforce these days. It's a bit insulting and degrading; we're all treated the same- as if we lack skills to find suitable work, as if there's some great company out there just dying to give us the perfect job that will give us the opportunity to showcase our talents.
NMBill, in one class I taught recently there were three friends, lively and literate late middle-aged women who lost their jobs as editors or copy editors when the publishing company they worked for closed down, laying off everyone. The young person at the unemployment told one of them that the way to get a job is to dye her hair and get on Facebook to show she was young and hip. Meanwhile publishing houses have closed one after another in New York City, making competition for the jobs very fierce. Whatever jobs there are go to "interns" or "trainees" who get little or no pay. Years of experience are generally door slammers.
Luckily this funny lady understood how ridiculous the bright-side (thanks Barbara Ehrenreich) analysis by the unemployment cheerleader was, and we had a laugh. My ex-students are scrambling for odd jobs to do at home - part time, here and there, hourly, no benefits. Nobody sees their hair.
Joe
What about the fact that American's are no long simply competing for jobs against other Americans? We are now competing against dirt cheap Asian labor. I can speak from personal experience. My last job shipped part of my job to India. My current job is dying to ship most of my work to Singapore.
You may be payed crap and have no healthcare but at least you are not falling for those commie unions.
What's new, Pussy Cat? This is a process that's been going on for quite a while, say, maybe about the time of the Nixon presidency; certainly in the Reagan domain. It just burst into full bloom during the Cheney/Bush regime, and was capped off with the tax cut for the super rich. Now, if we follow the Repuglican lead and don't let those tax cuts FOR THE RICH expire at the end of the year, we'll really move this nearly nouveau Oligarchy that much closer to their goal of eradicating the middle class so that there will only be the SDuper Dooper Rich and the rest of us slaves.
The Democrats have not showed enough guts to stifle those obstructionist G.O.P. ers ("Greedy Old Parasites"), but if we have any hope of avoiding a REAL CATASTROPHE, we need to elect an even greater majority in the Senate and the House and tell Obama to show more backbone and demand it of the rest of the Dems.
The statistics lie. Things are far worse.
http://www.youtube.com/watch?v=acLW1vFO-2Q
""koalaburger September 1st, 2010 10:49 pm
You may be payed crap and have no healthcare but at least you are not falling for those commie unions."
Yeah, thank your idea of 'God' for THAT (!)
~
I had hoped that the national labor unions had learned their lesson, but last night on Keith Olberman's program Richard Trumka of the AFL-CIO was on kissing Obama's and the Democrats asses and was telling how the unions will be going to the wall for the Democrats again! I guess they enjoyed the bitch slapping they got after the primary vote in Arkansas! Well, I guess stupid is as stupid does! Our only hope now is that the rank and file doesn't follow the lead of the ass kissers, and vote for third party candidates!
Trumka's no fighter just another porch dog, that needs to be put out to pasture.
>^^<
AFL-CIO chosses their leader like most all International Unions, Musical Chairs, when the music stops last one with a chair wins.
(Nicer than the truth, the last one with his lips on the last presidents ass)
The 06/02/2007 edition of BusinessWeek reported on "Phantom GDP." The economist Susan Houseman found a glitch in the way the labor department records data. It frequently attributes work done in other countries for US companies as work done in the US by US workers. This has artificially raised US productivity rates and the entire GDP, making it a Phantom GDP. Columnist / economist Paul Craig Roberts is one of the few to comment on this statistical anomaly.
If Phantom GDP is considered, the American worker may be overworked and underpaid. But productivity may not be rising. The American worker may be tapped out!
Thanks for that information. I believe, from experience, that productivity has also gone up domestically as remaining workers pick up the duties of those who are laid off.
Joe