Labor Day blues

It’s been a rough four decades for labor. President Ronald Reagan ushered in the modern era of taking away the rights of workers and handing them to employers in 1981. That’s the year he fired 13,000 air traffic controllers belonging to Professional Air Traffic Controllers Organization (PATCO), who guided the nation’s airplanes as they took off and landed.

PATCO had supported Reagan during his election campaign the previous year. But in 1981 the PATCO employees went on strike, demanding better pay, better working conditions and a 32-hour work week. Reagan declared the strike a “peril to national safety” and ordered them to return to work. When the vast majority refused, he fired them and prohibited them from working for the federal government for life.

Many analysts say this sent a signal to private employers that employees didn’t really have as many rights as people assumed. Alan Greenspan, the chair of the Federal Reserve, speaking about Reagan’s reaction to the strike years later, said, “His action gave weight to the legal right of private employers, previously not fully exercised, to use their own discretion to both hire and discharge workers.”

These days it is not unusual for employers to ask employees to sign away their rights before being hired, and certainly the prevailing trend among private employers has led to circumstances not seen since the depths of the Great Depression in the 1930s.

According to the think tank Economic Policy Institute  (EPI), union membership in 2015 was at about 11% of jobs in the United States, about the same rate as in the 1930s; in the 1950s the rate was about 33%. The share of income going to the wealthiest 10% of earners in the United States in 2015 was about 47%, about the same as it was in the 1930s; in the 1950s the rate was 31%.  

EPI says, “Income disparities have become so pronounced that America’s top 10% now average more than nine times as much income as the bottom 90%. Americans in the top 1% tower stunningly higher. They average over 40 times more income than the bottom 90%. But that gap pales in comparison to the divide between the nation’s top 0.1% and everyone else. Americans at this lofty level are taking in over 198 times the income of the bottom 90%.”

One way to address the 40-year slide in the wellbeing of the working and middle class would be to significantly increase the federal minimum wage, which has been stuck at $7.25 per hour since 2009. Many states have moved to increase the minimum wage; New York State’s minimum in most of the state will increase until it reaches $15 per hour. But many states, including Pennsylvania, use the federal minimum. The value of the federal minimum wage peaked in 1968. If the federal minimum wage kept pace with inflation and the growth in productivity, the real rate would have been increased to $19.33 an hour by 2017.

But the current administration and Congress in Washington are not likely to make any move that’s intended to improve the salaries of the lowest-paid workers in the country. In fact, many large employers received a windfall this year because the of the Republican Tax Cut and Jobs Act. The White House at the time assured the public that 70% of the savings would go to creating new jobs and giving employees raises. That did not happen. The lion’s share of the savings went into stock buyback programs, benefitting large investors and top executives, not employees.

So now we’re fully recovered from the Great Recession, which came about because of bad behavior on the part of banks and insurance companies, and the unemployment rate has reached a historic low of 3.8%. Yet incomes for most U.S. workers are still stagnant. 

Jared Bernstein, an economist and former advisor to Vice President Joe Biden, wrote in a recent opinion piece in The New York Times, “Stagnant wages for factory workers and non-managers in the service sector—together they represent 82% of the labor force—is mainly the outcome of a long power struggle that workers are losing. Even at a time of low unemployment, their bargaining power is feeble, the weakest I’ve seen in decades. Hostile institutions—the Trump administration, the courts, the corporate sector—are limiting their avenues for demanding higher pay.”

The only way this is likely to change is when more people demand it at the ballot box.


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