workers freedom

economics as if workers mattered

Monthly Archives: March 2018

Clawing our way out of economic misery

In yesterday’s New York Times, economics columnist Eduardo Porter’s headline is “Pay Raises are back, but are they here to stay?” (Last week he was pondering what the U.S. will do when the next recession hits, sooner than we expect, given the massive deficits the Trump administration is running up during these times of “prosperity” [for the very few].) He acknowledges that hourly pay declined “mercilessly” since the early 1970s for many years, before bottoming out in 1995. Today, we are seeing pay hikes again, and inflation-adjusted wages are 3 percent higher than they were in 2000 (and almost back to 1973 levels, though many, many workers are still worse off than they were then). But he fears the good times are coming to an end. Economic growth is slow, investment is down – leading to slumping productivity. Workers have lost leverage to demand better pay (he blames globalization, automation, and ownership concentration). “For workers to reap a larger share of the spoils of growth, they must claw back the bargaining power they lost.” He cites studies suggesting that the unemployment rate would have to drop to 0 to enable workers in the bottom tenth of wages just to hold their own against rising prices. The Economic Policy Institute suggests sharp increases to the minimum wage, barring mandatory arbitration, limits on subcontracting, and stronger unions. Economists from the University of Chicago have pressed for more competitive labor markets, including an end to non-compete agreements and employer collusion to hold down wages. Rebalancing the labor market to enhance workers’ power, Porter concludes, “might not only improve the way the pie is shared but also make it bigger.”
Or we could organize at the point of production and use direct action and solidarity to make a change. It seems to be working for teachers in West Virginia…