Productivity rises as US workers see real income cut

Original article by Jerry White, via World Socialist Web Site:

Corporations continue to slash tens of thousands of positions while workers still on the job are working harder for less money, according to reports on the US economy released this week.

It’s interesting. The bosses have cut the base of the middle class by cutting jobs. They’ve managed to keep up their profits by forcing an increase in productivity, even though there are more resourceful ways of increasing productivity. For example, ensuring that employees have an open and clean working environment, which would allow them to feel comfortable while they carried out their daily tasks, thus increasing productivity naturally. This is due to the positive impact the work setting has on the productivity of the worker. Something as simple as having tidy work surroundings can positively affect the mental health and wellbeing of employees with some companies using services similar to to provide a clean and morale-boosting workspace. Adding furniture or expanding on an already existing workspace could also help improve and increase productivity. If you’re looking to improve the productivity of your office, visit Increasing productivity in the workplace can make such a difference when it comes to boosting staff morale and getting tasks done to a higher standard. It can be as simple as companies implementing technologocal solutions like the ones you can find on sites like or even just holding meetings and setting deadlines.
The problem, of course, is that one hyper-productive person making $40k leaves less money to be spent on the economy where 2 would have $80k. It’s good for the bottom line in the short term, but spending via debt is a dangerous way to keep an economy afloat.

The job-displacement firm Challenger, Gray & Christmas reported that businesses announced 88,736 job cuts in August, up 12 percent from last year. The total number of layoff announcements in the summer months of May to August rose to the highest level in six years, when the economy was recovering from the 2001 recession.

What hyper-productivity allow the bosses is the chance to cut down the unions. With so many people looking for a good paying job, unions are scared to fight for the economic well-being of their workers. The reason: There’s a readily available poll of scabs willing to work for them just so they can have a good job. To a point, you can’t expect a worker who’s not had a job for a long period of time not to be tempted to scab, but it reinforces the bosses’ strategy.

The ADP survey, which generally underestimates actual job losses, reported that private sector employment fell by a total of 33,000 jobs in August. The goods-producing sector cut 78,000 jobs, including 56,000 jobs in manufacturing, which saw its 24th consecutive monthly decline. The generally lower paying service sector added 45,000 positions in August, ADP reported.

Think of it: Two years of declines in manufacturing employment. Two freakin’ years. It’s enough to make the blood boil.

A report released by the US Federal Reserve Wednesday, based on a survey of its 12 district banks, noted that the service sector was “slowing” and the factory sector was “weak.” The real estate sector, it said further, showed no sign of bottoming out and lending activity was weak.

What’s going to bring our economy out of the dumps? It’s clearly not going to be the private sector. The housing ‘boom’ which turned out to be a ‘bubble’ was what kept the economy’s head above water the past few years. We know how the popped bubble has left that part of the economy.

The Labor Department reported Thursday that non-farm business productivity jumped at an annual rate of 4.3 percent in the second quarter, almost double the initial estimate of a 2.2 percent increase. Compared to the second quarter of 2007, productivity rose 3.4 percent, well above the average 2.5 percent rate between 2000 and 2007. This led unit labor costs to fall at an annual rate of 0.5 percent, also faster than expected.

Fewer workers, working longer hours and getting more done. Hooray for the workers, I suppose. It’s not a good sign for the larger economy.

There is an ongoing debate over whether to increase interest rates because such a move would lead to a further tightening of credit, worsen the position of the dollar and undermine any US economic recovery. Nevertheless the Fed is committed to move swiftly at the first sign of so-called wage inflation.

Wage inflation. You know: Where you get increases to your pay in an amount greater than the rate of inflation. The bosses think that’s a bad thing.

This has been its policy since the early 1980s, when then-Federal Reserve Chairman Paul Volcker-appointed by the Democratic Carter administration-increased interest rates to 20 percent and deliberately provoked the deepest recession since the 1930s. Plant closings and mass unemployment were used as a battering ram to break the resistance of the working class and roll back wages and living standards.

Yay Jimmy! Well, not really. Volker allowed the seeds of the Chicago School sickness to be implanted in the economy (not that greed hasn’t been a driving force for the bosses for time immmemorial).

In 1978, 6 out of 10 labor contracts included cost-of-living adjustments to protect workers from the ravages of inflation. By 1988 that figure fell to 4 out of 10. Today, the unions have abandoned any such demands and the labor bureaucracy has negotiated one contract after another-in auto, telecommunications and other industries-that slashes the real income of their own members.

What choice do they have? I’m not sure that they do. There would have to be a mass strike action across the board for strikes to work, IMHO. I’m not sure that the Unions would cooperate in a way to make this happen.

Corporations are also continuing to shift the burden of health care costs and pensions onto the backs of their employees. A survey by the Mercer consulting firm released Thursday said 59 percent of companies intend to keep down rising health care costs in 2009 by raising workers’ deductibles, co-pays or out-of-pocket spending limits.

That’s more money coming out of your pockets and going into the bosses. Period.

The corporate assault on workers’ living standards has enjoyed the active support of both big business parties and will continue whether a Democrat or Republican wins the presidential election in November. It is significant that Volcker-who engineered the frontal assault on the working class in the 1980s-is now a prominent adviser to Democratic presidential candidate Barack Obama.

Hmmmm…not a good sign.

“While productivity growth or output per worker rose by 71% from 1980 to 2005, the real compensation of non-supervisory workers comprising 80% of the work force grew by 4%. The gap in the manufacturing sector was even greater: productivity rose 131%, while compensation of non-supervisors grew only 7%.”

Wow…a 4% increase in wages over 25 years. Think about that. It’s a .16% increase in real wages each year. I wonder if CEO pay has kept to that rate. Yeah, right.

This has produced a vast transfer of wealth from working people to the richest layers of the population. The report continues, “The share of national income accounted for by the top 1% of earners (as reported on tax returns) reached 21.8% in 2005-a level not seen since 1928. In addition to high labor earnings, income growth at the top is being driven by corporate profits which accrue mainly to those with high labor earnings. In 2006, corporate profits totaled 12.4% of national income, a level not reached in 50 years.”

Think about how this effects you.

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1 comment

  1. We’re over a barrel, and the bosses are lubing up!

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