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Thursday, Oct. 30, 2014

Richard Davis: Feeling squeezed? It's not just the recession

By Richard Davis, For the Deseret News

Published: Wed, Sept. 3 4:55 p.m. MDT

 American workers are in serious trouble today, and Congress and the president need to do more to protect working families.

American workers are in serious trouble today, and Congress and the president need to do more to protect working families.

(Shutterstock)

On Monday, I asked a friend what he was going to do this Labor Day. He answered that he might ride up the canyon or maybe just nap. He said it was a bit ironic that he was not going to labor on “Labor Day.” It does seem ironic, but that is the point.

First, it is a point many people today miss because we take for granted what people over 100 years ago did not. Then, national holidays were less frequent. There were Independence Day and Thanksgiving, but there was no Memorial Day, Martin Luther King Jr. Day or Columbus Day. And a six-day work week was standard, as was a 10-hour work day.

Labor Day became a national holiday in 1894 to honor the contributions of ordinary workers who have made America economically great. It is a time to rest but also a time to reflect on the status of American workers today. And that status is depressing.

Ordinary workers in the United States have suffered in recent years. According to a new report by the Economic Policy Institute, real hourly wages fell last year for nearly all workers. In fact, wages have fallen for the past several years. But the lack of growth in income for Americans isn’t just recession-related. Rather, it is part of a long-term trend of workers getting underpaid for the work they do.

It is true that the recession had a severe impact on people’s wages. Between 2007 and 2012, the average annual family income of the middle fifth of American families (the middle class) fell by 1.7 percent. However, the real problem of wage stagnation has happened over a longer period. Between 1947 and 1979, the average annual family income for that income group rose by 2.4 percent. However, between 1979 and 2007, family income rose by only sixth-tenths of one percent.

The poor — those in the bottom fifth of annual family income — are even worse off. While their income rose by 2.5 percent between 1947 and 1979, it did not increase at all over the next 28 years. And it declined by 2.7 percent between 2007 and 2012.

Put succinctly, American workers today are receiving fewer of the benefits of their labors than their grandparents and great-grandparents did. Why is this happening? It may be easier to say what is not causing it.

It is not because American workers are lazier and less productive. Over the past 34 years, U.S. productivity has increased by 65 percent. Yet wages for 80 percent of workers have risen by just 8 percent.

Nor is it that corporations are doing poorly and therefore need to pay workers less. With the exception of 2009 and 2010, corporate profits have risen steadily since the mid-1980s. Indeed, in 2013, after-tax corporate profits were the highest since 1965.

Simply put, corporate profits are not reaching the workers. Last year, the compensation laborers receive as a share of the national economy was at its lowest point since 1948. Even worse, some highly profitable companies are laying off workers. Since 2012, United Technologies, which manufactures high-tech equipment for the military, laid off 7,000 workers while its annual revenue increased by $15 billion in seven years.

Such statistics can seem distant, but they represent the reality of millions of American households struggling to make ends meet. American families hear many political and economic leaders blame the recession for their economic woes. But the recession is a cover for a deeper and harsher trend — the undermining of the economic status of American workers.

And the result is harder times for those workers and their families. It means facing ever-increasing debt to help children pay for college. It means forgoing medical visits because copayments and deductibles keep increasing. And for many families it means juggling the costs of basic needs to pay the mortgage, take care of the utilities, and buy food and clothing.

American workers are in serious trouble today. Congress and the president need to do more to protect working families. Unfortunately, I hold out little hope they will do so anytime soon.

Richard Davis is a professor of political science at Brigham Young University. His opinions do not necessarily reflect those of BYU.

Recommended
1. Roland Kayser
Cottonwood Heights, UT,
Sept. 3, 2014

It is an accepted truism of economics that as productivity increases, wages can increase without generating inflation. From 1940-1980 productivity increased sharply and wages increased in lockstep. From 1980 onward, productivity kept on increasing but wages flatlined or went into outright decline. Why? Because corporations decided that all productivity increases would go to profits, not to wages.

If you are a middle income worker, you would be making $12,000 per year more than you do now if the distribution of income were the same today as it was in 1980.

2. marxist
Salt Lake City, UT,
Sept. 3, 2014

"...it is part of a long-term trend of workers getting underpaid for the work they do."

YES! And one of the reasons there is no immediate fix to this problem is the compromise the Democratic Party has made with the big banks. Remember, Bill Clinton signed the repeal of Glass-Steagel. The cozy relationship the Clintons built with the banks stinks. The Democratic Party is no longer capable of defending the interests of working class people. It's time for socialist parties to reappear.

3. anti-liar
Salt Lake City, UT,
Sept. 3, 2014

The problem is Greed, abetted by the false notion, embraced by many Republicans and Libertarians, that Greed is fundamentally impossible within the framework of "Capitalism," and "Free Market." Many truly believe that morally, "anything goes" as far as how one treats one's employee, as long as one can manage to stay out of jail. In other words, it may not be okay to throw one's employee into the pit, but it is okay to dig a pit for him.

Thus we have a veritable epidemic of almost unbounded Greed in this country and especially in Utah, birthplace of the Utah Compact, HB116, and other immigration-law anti-enforcement ploys, all of which were designed primarily to drive wages down by facilitating illegal immigration in this state. Thus Utah at once has among the lowest wages in the nation, and also the fastest-growing illegal-alien population in the union.

"And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God."

4. BioPowertrain
Detroit, MI,
Sept. 3, 2014

This is how it will go down: the American worker will eventually have had enough. They will then organize and re-vitalize American unionization. The unions will amass voting power and use it to exert political influence, with dollars, votes, or both.

Then, and only then, will Congress and the President do something about any of it.

I challenge any conservative reader, staff or guest writer (including the author), and/or the editorial board to explain to me how else this will ever happen.

Bring It!

5. ordinaryfolks
seattle, WA,
Sept. 3, 2014

Of course there is little hope for the average American worker. The average American politician is in thrall to the average American corporation. And the average American corporation is in thrall to the average American billionaire (well maybe a few multi-millionaires as well). And the average American voter generally listens to the siren song of the average American conservative politician who plays his average American corporatist song. I really don't know what it takes to wake up American voters to their continued support of policies that go against their own self interest. And I am starting to care less about this.

I am sure that we will soon be inundated by posts from the newly minted Tea Party apologists that suggest that this editorial is a call for communism or some other evil. This, of course. will lead to the destruction of American society, rape and pillage, stealing your guns, Bible burning and forcing us to marry someone of the same sex. And I am sure that the majority of us will listen to that inane message, and continue the long march to self induced serfdom.