When do workers get their share?
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| Fri, 05-28-2004 - 3:23pm |
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Despite recent good news on employment growth, the current economic recovery, now approaching its third year, remains the most unbalanced on record in respect to the distribution of income gains between corporate profits and labor compensation. Essentially, rapid gains in productivity have been translating into higher corporate profits without increasing the wage and salary income of American workers.
The chart below shows growth in corporate profits and total labor compensation (the sum of all paychecks and employee benefits in the U.S. economy) over the last 12 quarters; measuring profit growth since the peak of the last recovery in the first quarter of 2001.*
Corporate profits have risen 62.2% since the peak, compared to average growth of 13.9% at the same point in the last eight recoveries that have lasted as long as the current one. This is the fastest rate of profit growth in a recovery since World War II.
Total labor compensation has also turned in a historic performance: growing only 2.8%, the slowest growth in any recovery since World War II and well under the historical average of 9.9%.
Most of this growth in total labor compensation has been accounted for by rising non-wage payments, like health care and pension benefits. Rapidly rising health care costs and pension funding requirements imply that these higher benefit payments are not translating into increased living standards for workers, but are rather just covering the higher costs of health care and pension funding. Growth in total wage and salary income, the primary source of take-home pay for workers, has actually been negative for private-sector workers: -0.6%, versus the 7.2% gain that is the average increase in private wage and salary income at this point in a recovery.
These are ominous signs, suggesting a new march toward greater inequality in the American economy. Worse, the growth in profits combined with a drop in wage and salary incomes suggest that the recovery has a narrow base, with most American consumers only able to increase their purchasing power through debt. Wage growth is not just fair, it is also necessary for a more sustainable recovery.
http://www.epinet.org/content.cfm/webfeatures_snapshots_05272004

From a (hopefully) objective standpoint, though, a business is a business for the purpose of profit. And, if they can keep people in their employ for minimal pay, they will. We've become very complacent as a society, with the mindset "I could lose my job if I speak out" or similar situations.
We fantasized one day about a major national "worker walkout" where, at the stroke of 1:00 or 2:00 PM EST, every hourly worker in America would walk off the job to protest their shoddy treatment, erosion of compensation, elimination of promised benefits, and embezzlement of retirement funds.
Ah...what a wonderful fantasy!
Thank you. So it's not my imagination or just my section of the country. People I know who have been unemployed at some point in the past 3 years are making much less when they finally find work. My estimate was they were making 1/3 less than before. In addition, the new jobs usually don't include health insurance or they have to pay a much larger amount. One guy took a 30% paycut and has to pay $300 for minimal health insurance that he used to get free. He had no choice but to accept the job because his unemployment benefits had run out long ago and he was desperate. He was one of the unemployed who had dropped off the unemployment radar. When I hear that the economy is doing well, I wonder where. Certainly not here. It appears that corporations and those in the upper income are doing well but the working man had lost ground. The gap between rich and poor seems to have gotten larger. Is there going to be a middle class left?
No, it is probably not coincidental it definitely reflects the corporate leaning of GWB. We have from deregulation to no regulation, and looking the otherway if there's fraud. This is a short term boon for corporations, and their greed may come back to haunt them.
What bothers me the most is that American's continue to buy even though they can only support it through debt. America has always been a land of "things will get better," so with that belief they fail to recognize the problems on the horizon. Why does the middle class continue to support Bush, when his only concern is his peers even though he tries to convince us that it benefits all.
Indeed this does seem to be a problem on the horizon. What happens when people are so indebt that can't support a middle-class life-style? What is going to happen to the high-flying corproations when people can't afford their products. The American dream is disappearing; we seem to be heading for another "gilded age" where the wealthy amassed fortunes while the people slave.
Job cut plans rise
Announcements by major U.S. firms climbs for second straight month, employment firm says.
http://money.cnn.com/2004/06/01/news/economy/challenger/index.htm?cnn=yes
The number of job cuts planned by U.S. employers rose for the second straight month in May as firms announced plans to cut more than 73,000 jobs, an outplacement firm said Tuesday.
U.S. businesses announced 73,368 job cuts in May, up from 72,184 job cuts in April, a gain of 1.6 percent, according to Chicago-based Challenger, Gray & Christmas, which keeps track of monthly job-cut announcements.
May's announcements were 6.9 percent higher than those of May 2003, when 68,623 cuts were announced.
Through the first five months of 2004, employers have announced 408,392 job cuts, an average of 81,678 per month, or about 28 percent lower than the 114,163 pace in the first five months of 2003.
But the 12-month moving average of announcements rose to 89,500 from 89,105 in April, the first gain in the moving average since December.
And the number of job-cut announcements per month remains well above pre-recession levels of about 51,000 per month, CEO John Challenger said in a release.
"Overall, job cuts are down from last year and significantly lower than the record numbers we saw in 2002 and 2001, but there are still some worrisome trends," Challenger said.
Challenger cited recent heavy job-cutting announcements in retail -- 10,868 announcements in May -- and financial services -- 6,113 announcements in May -- and industrial goods -- 6,734 cuts in May -- as worrisome signs for the health of the labor market.
Still, the job market is much improved from a year ago. Non-farm payrolls have grown by more than 250,000 jobs in each of the past two months and have added more than 700,000 jobs this year, according to the latest data from the Bureau of Labor Statistics.
On Friday, the BLS is scheduled to report on May unemployment and non-farm payroll growth. Economists, on average, expect the jobless rate to hold steady at 5.6 percent and for about 215,000 new jobs to be created.
In May, Challenger, Gray & Christmas also kept track of hiring plans for the first time and found that 55,307 new jobs were announced. Like the job-cut data, this number is not seasonally adjusted, and offers no information about when those jobs will actually be created.
Florida led the nation in job-cut announcements in May, with 12,874. Virginia followed with 11,277 announcements, Pennsylvania had 8,020, Illinois had 6,445 and Michigan had 4,683.