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End the inequity: Let workers share in the wealth

“The sight of bulging corporate coffers co-existing with a continuous stagnation in Americans’ living standards could become politically untenable.”
Thus is Business Week’s unsurprising conclusion in its cover story last month on stagnating American wages.
Business Week, finally waking up and smelling the coffee burning, is just reporting what American workers have known for years: We’re not getting a fair share of corporate profits.
Last year, hourly wages of production and non-supervisory workers rose 2.6 percent; prices rose 2.5 percent. That left workers with a whole 0.1 percent increase in purchasing power. In real terms, that means a worker with a $400 weekly paycheck took home an extra 40 cents. Not even enough for a cup of that burned coffee.
Meanwhile, big corporations and their top executives are doing quite well, and getting a lot of help from the anti-worker Congress, whose Republican leadership has been churning out proposals for company unions and repeal of the Davis-Bacon and Service Contract acts, and who last year filibustered to kill the Workplace Fairness Act, which would have banned striker replacements.
With profits at a 45-year high, low unemployment and a weak dollar, American companies continue to lay off workers and slash the wages of those who remain. While Republicans offer a “Contract With America” that says nothing about jobs, employers are “tearing up pay systems and job structures, replacing them with new ones that slice wage rates, slash raises and subcontract work to lower-paying suppliers,” according to the Business Week report.
For nearly half a century, an uneasy truce held between employers and their employees. A powerful American union movement protected and ensured workers’ rights to their share of the growing economic pie. That truce has been violated by employers since the early 1970s, when they first began using the threat of foreign competition to demand wage concessions. The result is that American workers today actually have less buying power than they did in 1972, while corporate profits are rolling in at record levels.
Earlier this year, Business Week reported an “astonishing” 40 percent gain in corporate profits. This follows two years of increases: 19 percent in 1993 and 20 percent in 1992. The magnitude of these gains has been corroborated by other business publications, including Fortune magazine.
Productivity, too, was up last year. New technology, working smarter, and better utilization of plant and equipment contributed to boosting the above-average growth of goods and services produced each hour.
Booming profits and rising productivity mean that the economy is capable of providing a substantial increase in the buying power of all Americans. It also means that both profits and wages can rise without price increases. It is the rising tide that floats all boats promised 15 years ago by Ronald Reagan.
But productivity gains have not been used to raise worker buying power. Instead, price increases have canceled wage gains, turning productivity increases into higher profits for employers.
The bottom line is that workers can’t afford to buy new products and services. The fact that more and more Americans are foregoing that new car or refrigerator is a serious national economic problem, threatening what Business Week calls a “downward spiral.”
“When all companies slice pay, they undercut consumer buying power and further exacerbate price competition– just the opposite of the old Henry Ford strategy of paying workers well so they could buy his cars,” the magazine reports.
This rapid increase in profits without a corresponding growth in the buying power of workers is unique in the decades since World War II. While purchasing-power growth usually lags profits, the lag never has been this great or this long.
A fundamental shift has occurred: American workers, who built the world’s most productive economy and who up until now shared at least partially in the wealth, have been cut out of the loop. Now, the world’s most affluent nation is producing only for the benefit of a tiny minority of the nation’s citizens, while everyone else’s living standards, vacation time and job security are being systematically driven downward.
This is happening here in Rochester, and it is happening right under our noses. You may have noticed picket lines around town recently; you will see even more in the months ahead. Local building-trades unions have embarked on a series of campaigns to unmask the non-union contractors who are driving down the wages of hardworking local construction workers.
Whether it is Benderson Development Co. Inc., Gypsum Systems Interiors Ltd. or another company, the story is the same: Many non-union contractors subsidize their low bids by paying substandard wages and benefits. The contractors often are not even local firms–Benderson, for instance, is from Buffalo–and often hire workers from outside the Rochester area. These workers take their money home with them, negatively affecting our community.
Even worse, some of these contractors cut corners and fail to train their workers properly. Penny-wise and pound-foolish, or to put it another way, you get what you pay for.
The irony of it all is that small business–which comprises the backbone of American business–has much more in common with ordinary working people than it does with the captains of industry. As their giant ships churn the economic waters, small business and workers alike struggle to keep afloat. And like the millions of laid-off workers, many small businesses are capsizing and going under these days.
Let’s share the wealth. There is enough to go around. It’s right and it’s fair, but if that is not enough, consider these words of Frederick Douglass in 1871: “Assault compels defense. … (T)here can be no peace without justice, and hence the sword.”
(Ronald Pettengill is president of the Rochester and Vicinity Labor Council, AFL-CIO.)


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