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Labor Day: A Day to Reflect On Why Workers Don't Matter Much Anymore

September 7, 2015


By Joe Rothstein
Editor, EINNews.com

Labor Day, 2015, and the business pages are puzzled by this question: How come, with the unemployment rate down to 5.1% and the U.S. economy growing, worker pay continues to stagnate?

A lot of explanations are offered. Automation. Robotics. The Internet. Cheap foreign sweatshops....all influence the changing U.S. job market. But at the heart of the problem is this: Management has done such an effective job of busting up organized labor that the average worker has little bargaining leverage. It’s become so one-sided that many politicians now take the occasion of Labor Day to honor the efficiency of American business.

Since the depth of the Great Recession in 2008, the official unemployment rate has been cut in half. But the majority of those new jobs have been in the lowest paying sectors of the economy. According to a recent report from the National Employment Labor Project, if you back out part-time workers who really want full time jobs, the unemployment rate is closer to 10%.

The U.S. economy has grown by more than 60% over the past 20 years, a rate of about 3% each year. But worker compensation has barely budged. And it’s getting worse.According to the Economic Policy Institute between 2007 and 2014 median worker wages and benefits declined as much as 4%. The decline was steepest for those who could least afford it, the bottom 40%.

Does it make a difference whether a worker is organized as a member of a union? Yes, it does. The median yearly earnings of a union worker is more than $47,000. The non-union worker, $37,000. That’s nearly a 30% difference. And it shouldn’t be surprising. In the entire history of the U.S., workers who organize to negotiate with management do better than those who rely on the tender mercies of their employers to be generous.

What’s been happening over the past few decades is best summed up by Warren Buffett’s frequently cited pithy, not-so-tongue-in-cheek analysis: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

Too strong? Hardly. The law entitles workers to organize without management interference. But laws are only as effective as their enforcement, and over the past decades management has routinely flouted the law, fired organizers and faced no consequences. Workers are entitled to wage and hour protections. But over past decades management has shed “employees,” by the millions, adopting the fiction that they are “contract workers,” without any protections.

The Blackstone Group of New York, for example, owns dozens of companies and has investments worth hundreds of billions of dollars. Many of its holdings are well known, such as Hilton, many not so well known. Blackstone is so profitable that its CEO, Stephen Schwarzmann, had compensation of about $650 million last year. This is a company that routinely dodges employment law by working through temporary employment agencies.

How does an individual worker stand up against it? How do you fight a class war if you’re not sufficiently organized against those who define success exclusively by how much value they can create for shareholders? Unions once forced management to live by a broader standard, one where shareholders, employees and the community all contributed and shared in the company’s success.

In the August 31 New Yorker, writer Evan Osnos has a perceptive take on the Trump phenomena. His article is titled, “The Fearful and the Frustrated.”

The “fearful” in the article include many white segregationists who consider the influx from Mexico and the Latin American countries as a mortal threat to their children and grandchildren. Unlike historic racism, many oppose Latin immigration because they see it as a wave that will swamp white European majority U.S. When that happens they fear that those of color will use their new power to take retribution on Caucasians for so many years of racial abuse.

The frustrated are those who can’t seem to get ahead because the elite in business, politics and the media have stacked the deck against them. The fearful and the frustrated, Osnos’ article argues, are the core of Trump’s support.

But it’s not the immigrants who represent the threat to struggling workers and their families. It’s the business culture that’s narrowed its vision to one goal and one goal only---fattening the bottom line. The immigrants are as much the victims as those doing the immigrant bashing.

Rather than take their fears and frustrations out on immigrants, those who see Trump as their best chance for a better life should be organizing the way their parents and grandparents did, as workers who bargain with management for a more level playing field, not patsies who swallow the bait that all unions are bad and all politicians are corrupt. For those who fear for their children and grandchildren, the way things are going there's a far better chance that future generations will be underpaid serfs to the oligarchs than victims of racial abuse to a new immigrant wave.

Workers will continue losing unless they realize that this is a class war, not a racial one. You can’t win a war that you don’t fight.

(Joe Rothstein can be contacted at joe@einnews.com)