Labor Day- we need to turn the tables of the last 40 years

As we celebrate our 3-day weekend, let's take a moment to realize why we should celebrate Labor in America, and why we need the balance of power in this country to shift back toward the people who actually work. The numbers over the last 40+ years tell an obvious story.

Here’s a look at worker productivity, which has increased strongly and steadily since 1992.

Change in productivity, U.S.
1970Q2 - 1979Q2 +19.2%
1979Q2 – 1989Q2 +15.4%
1989Q2 – 1999Q2 +21.7%
1999Q2 – 2009Q2 +29.1%
2009Q2 – 2014Q2 +6.6%

But real incomes haven’t kept the same path, despite the theory of marginal product of labor, which says one should be paid in direct proportion to their increased productivity. Table B-15 of this year’s Economic Report of the President has this information

Change in real average hourly earnings, private sector U.S.
1970 - 1979 -0.5%
1979 - 1989 -7.8%
1989 - 1999 +3.5%
1999 – 2009 +7.4%
2009 – Dec 2013 -0.7%

Also, note that real average hourly earnings were down every month between March and May, and haven't risen since February. Only a slightly longer average work week has allowed real average weekly earnings to nudge up by 0.3% in the last 12 months. (don't spend it all in one place).

This flies in the face of the Marginal Revenue Productivity Theory of Wages, which says if you are able to crank out 10% more items and sell it at the same price, you should be paid 10% more. That hasn't even come close to happening.

On a related note, look at the decline in wages as a % of Gross Domestic Income since 1970 (scroll across to get the full info).



Now, compare it to the amount of corporate profits in the same time period (again, scroll across).



I don't think inflation has caused profits to go up to 23 times the amount that we had in 1970. Those changes didn’t happen in a vacuum. And neither did this.

% of workforce that were members of unions
1970 27.8%
1984 19.1%
1998 13.9%
2013 11.3%

There is a direct link to the lower rates of unionization, the lower share of wages going to workers, and the higher levels of corporate profits. And no, it hasn’t trickled down and made us all millionaires through Wall Street magic. This was a STRATEGY by corporate oligarchs to take away workers' power through union-busting and other "race to the bottom" maneuvers such as deregulation and outsourcing.

And it needs to change. NOW. There are far too many owners of businesses these days that resemble the Wanek family, who owns Ashley Furniture. These people claim they "can't compete" with other furniture businesses, get a $6 million tax write-off from the state for promising ONLY to lay off half of their workers, and then they kick back $20,000 to Scott Walker’s campaign for governor. All while the average worker at Ashley’s facility in Arcadia makes $10.88 an hour!

And oh yeah, the stock market keeps going up to record levels, as “job creators” decide they would rather gamble the money in the market. And the "free market" is manipulated, as the 30 companies that make up the Dow Jones Industrial Average chose to spend to spend $211 billion in 2013 to buy back their own stock, in order to encourage other people to buy in. These choices are what our tax code and oligarchs encourage over actually paying the people that made those profits possible, and hiring more to increase production.

There are a few promising signs for 2014 so far, as wages and salaries were up 3.76% over the first seven months of the year (before inflation), but it’s not enough to kick the economy up to the next level. Increasing the minimum wage is far overdue, particularly given the lack of increases in wages from the “free market” over the last 5 years, a development that has helped to keep an economy reliant on consumption from returning to full employment.

We also need more workers to stand up and demand that they get back what they have put into their everyday work. Waiting for the corporate bosses to trickle-down a reward for you doing the right thing has not helped the vast majority of this country for the better part of two generations. So why not band together to receive what you have earned? It sure beats the way we’re going.