Hard times for workers on Labor Day 2010
On Labor Day 2010, the state of America's workers is appalling.
Millions have lost their jobs. Millions have had their lives put on hold or thrown into reverse.
Granted, it's a global recession. The state of the world's workers -- at least in the advanced democracies -- should be equivalently appalling. But it's not. The Great Recession has taken a far greater toll on our nation's workers than on workers in similar countries, even those whose economies have dipped more steeply than ours.
Consider: As of this year, U.S. gross domestic product is about 1 percent beneath its 2008 peak, compared to a drop of roughly 2 percent in France and Germany and 5 percent in Britain and Japan. But U.S. unemployment has increased roughly 5 percentage points since 2007, compared to just 1 point in France and Japan and 2 in Britain. In Germany, unemployment has actually dropped a point since the recession began.
No wonder Christina Romer confessed bewilderment at the scope of American job losses in her valedictory speech as head of the president's Council of Economic Advisers last week. American employers have responded to recession with far more layoffs than their counterparts in comparable or even worse situations in other nations.
One reason for this anomaly is that productivity has surged in the United States, enabling employers to maintain output with far fewer workers. For those workers still on the job, though, this story seemingly should have a happy ending: Sustained production with fewer workers should equal higher wages, should it not?
It should, but it hasn't. As Andrew Sum and Joseph McLaughlin of Northeastern University's Center for Labor Market Studies have documented, pretax corporate profits increased $388 billion from the low point of the current recession, the second quarter of 2009, to the third quarter thereafter, while wages increased just $68 billion. At a comparable point in the 1981-82 recession, corporate profits came to just 10 percent of the combined uptick in profits and wages. This time around, they amount to 85 percent.
If you've wondered how big banks' profits have rebounded to pre-crisis levels and how American corporations have come to be sitting on $1.8 trillion in cash -- even as unemployment remains well above 9 percent -- wonder no more. They have pocketed their revenue, neither resuming lending (if they're banks), nor rehiring laid-off workers nor giving raises to those who have continued to work for them.
A similar tale can be told about employers and health insurance, the costs of which have continued to rise. It's not the employers, however, who have borne those increases. A survey, released Thursday by the Kaiser Family Foundation and the Health Research & Educational Trust, shows that employee premiums rose 13.7 percent over last year, while the amount that employers contributed dropped -- dropped! -- 0.9 percent.
Only a purblind ideologue could miss the pattern here. American employers -- more than employers in other nations and more than American employers in earlier downturns -- have imposed the costs of the recession and, increasingly, the costs of doing business, on their workers, and kept for themselves damn near all the proceeds from doing business.
What gives? Are American employers meaner than their European counterparts and American forebears? I doubt it. The difference is that American workers have markedly less power than their European counterparts and their American forebears.
That's partly because unemployment remains so high here. More fundamentally, though, the U.S. private sector is almost entirely -- 93 percent -- nonunion. Unlike European workers, unlike their own parents and grandparents who lived in a much more heavily unionized America, U.S. workers are now powerless to stop their employers from pocketing all the change.
The source of this problem is outlined in two reports scheduled for release Monday from two very different organizations, the liberal Human Rights Watch, and Freedom House, an organization with a staunch Lane-Kirkland-esque antipathy toward authoritarian regimes left and right: Through the weakness of our labor laws, the reports say, private-sector American workers can no longer form unions. Human Rights Watch documents how corporations that are model (and highly profitable) employers in Europe and frequently collaborate with unions there descend to American employer norms -- denying workers the right to join unions -- when they come over here. Freedom House, citing the near-impossibility of forming unions in this country, laments that the United States cannot be classed among the 41 nations that afford their workers full freedoms.
A union-free America. Growth down a little, employment down a lot. Profits and productivity up, wages flat. Health-care costs up for workers, down for employers. The return of a thriving middle class? Dream on.
And a happy Labor Day, one and all.