Sunday, January 13, 2013

Record Profits/Falling Wages

An article from the NY Times on falling wages in America.  And it's worse than the data show for ordinary Americans because even the reduced wages paid out are paid at a higher and higher share to the CEO and other already highly compensated individuals.  For the middle class and poor it's really falling off.

If wages aren't going to go up even when profits are at record levels, when will they?  The answer is they won't go up until workers figure out a way to strengthen their bargaining position.  It doesn't matter that profits are high.  What matters is management has workers isolated, and so they are going to continuously press to reduce compensation regardless of the profits.  They'll use low profits as an excuse to cut wages, and then when profits return they just won't give wages back, or possibly will continue to cut.  They can, so they will.  That's natural.  If you stand alone you can't resist their concentrated power, and workers today stand alone now that unions have been mostly undermined. But if you join together you can resist them.

It's the only way to stop the trend.  Organization.  And that's why unions are demonized so extensively in corporate sources (media, right wing think tanks), and why people who so desperately need unions hate them regardless and perceive them to be the problem.  Unions are a threat to the short term profits of investors, so the propaganda apparatus is paid to criticize them.  The propaganda has been very effective, even with the very people who need unions most.

We know unions work.  Unions ended child labor, created weekends, created safe working conditions, created the 40 hour work week, all things that don't exist in the third world where right wing anti-union policies have been imposed for so long.  These weren't gifts from above.  People organized and fought for them.  Why should the owner want to spend money and create a safer environment?  He's not going to give it to you.  You have to demand it, and to do that you have to organize.  It's the same pattern I see not only in the US, but in every other country I've looked to.  You have to give the owner an incentive to make a concession.  Threaten his revenue stream.

Our choices are to sit back, fail to organize, and watch things continue as before or organize, fight back, and once again see ordinary people share in the wealth generated in this country.  There's really no other alternative.


Chad said...

Can't agree with you more on this - workers should unite as a group to make sure their voice is heard, but not under the current Management/structure that is out there today.

Unions have unfortunatley lost their way due to money, power and corruption that seems to accompany any successful group.

It would be nice to see a new 21st century union rise from the ashes of today's dying organization. One that polices itself and works hand in hand with business owners/management. If a CEO gets a 25% bonus then every productive employee should enjoy the same bonus.

As you know I grew up in a Union family - both dad and brother worked for Ford. Both of them are open and honest that thier union over protects bad workers, they negotiate for foolish benefits and they add significant costs to everything they touch. The stories I have first hand to the stories my dad and brother used to tell would turn any normal persons stomach. Once you were in the union at Ford - you were almost untouchable and could get away with such garbage.

It sure would be nice to have someone looking out for the workers for sure, but with all that said I would prefer it to be 100% voluntary of course. A well ran union should have nearly 100% voluntary participation if done right.

Chad said...

Without good motivated workers any CEO/owner worth their salt would tell you that they have nothing. Some don't care and want every dime they can get which sucks. My free market side tells me that only gives another competitor the opportunity to produce the same product for less, but reality is that it is difficult to start a new business to start competiting today.

On a little bit of a flip side - if I may JC. One thing we talk about a lot at my company - probably 2 or 3 times a month minimum is the fact that there seems to be no stability right now. We just closed out on our best year ever and yet we are struggling with the idea of adding any more people (that we desperately need FYI) to the fold. Our accountant is looking at all the new regulations, taxes, Obama Care, Social Security and it is scary as hell. A couple bad months or a principal goes down and we could be in a world of hurt in a hurry. So in this uncertain environment do we take the risk of adding more people which costs a lot of money and time to train or do we hold on until their is more certainty - more stability? When you have a President/Government that firmly believes that taxation, regulation and debt spending is the solution - it just does not give anyone any confidence at all to grow, expand and share the revenue.

Jon - all BS aside my friend. We are just scared that this good run is going to end and we need to be prepared to take care of ourselves and our employees when that day comes. No confidence is a bad bad thing for businesses.

The decisions being made at the Government level are not going to lift the hiring freeze/situation. If they came out and offered a tax break for any company that hired x% per year (also retaining that number) then that could help. How about a tax holiday for any new business for the first 3 years?

You've got a great point here so you have to ask why aren't the businesses hiring? You can say it is greed and in some cases you would be right, but I am saying it is much deeper. I think its fear, its a lack of confidence and it is an anti-business attitude that the President/Democrates have that is really a problem. I am not letting the Republicans off the hook either for some of their crap, but at least it seems that they really want to get out of the way to create more jobs.

Anyhow - just a plain old honest evaluation sir.

HispanicPundit said...

You need to be more global in your analysis. Remember, companies are heavily outsourcing today. You just can't look at US wages. Look internationally and you quickly see that wages in the developing world have been increasing dramatically. Take China, see here, as an example. Keep in mind that China bans unions - and yet what is the result? Drastic wage increases! Just as basic economic theory predicts.

Now, lets assume that wages for the middle class have stagnated. Even assuming so, I would consider this a better situation - raising people out of absolute poverty is far more important than raising the riches of the already rich (the USA middle class).

HispanicPundit said...

After I read your post, continuing through my blog feed, I came across this post by economist Jeffrey Smith, from the University of Michigan.

Read his reaction to the union article. Same reaction I get when I read your economically dubious comments. Also, if you have time, read the article itself. Sheds light on why many consider union members thugs.

Jon said...

I think you are right to point out that incomes have risen without unions. Unions were also illegal in the Soviet Union and wages did rise. I will grant your point that it can happen. Notice though that what follows at your link is another story. Wages are rising because employers must compete for workers and unemployment is low. Is that why? China is a highly interventionist government. They are a government that is sensitive to outside perceptions, so negative publicity is a big deal for them. Apple and Foxconn know that their government can punish them, and that affects profits. How do we know that isn't what's really happening. As a side note I was just told a couple of days ago by a Chinese friend that unemployment is EXTREMELY high in China. He told me that the official figures are pure lies, just like their frequent bogus reports on air pollution that you may have seen recently. So I think your author may be basing his claim on questionable data. I'm not saying I know, but it's questionable.

Your next link regarding the 40 hour work week is I think a case where again a story is offered to make it appear unions didn't play a decisive role in the shortening of the work week and also weekends. Here's what we do know. Where unions don't exist 40 hour work weeks don't exist (except maybe in the former Soviet Union, when a highly interventionist government can act as a check on the forces aligned against the workers). Unions fought hard for a 40 hour work week, it was achieved, and now the capitalist wants to say the union isn't responsible. I see it as kind of unfalsifiable. In economics you can always attribute results to different causes because things are so complex, and US economic departments, often deeply in bed with corporate money, tend to offer the kinds of causes the corporate world prefers. Let's at least agree on the basic facts. 40 hour work weeks didn't exist prior to unions. Today they exist mostly in places with a good union history or union presence, and are pretty much lacking where there are no unions. Those are the facts. If you want to deny the role of unions I can't stop you because economics is not science.

Examinator said...

Here again is how topics are reduced to the ridiculous.
First and foremost The argument that wages go up without unions therefore unions are unnecessary is absurd. For example in the topic so far you've looked at wages and maybe hours of work. If that is all unions do!
The one factor perhaps the most important factor unions get involved in... Occupation Health and Safety.
HP you cited China as a place where wages rose without Unions.
Take a look at their industrial death stats. God only knows what information you're reading but it is a Known factor that over 600 Chinese miners are killed in Industrial accidents per year. Their mine safety is um well non existent.
If we look back on US steel the bosses locked out and sent in thugs to break up union strikes. BTW the other major topic was the conditions.
US mines in some states are well Almost Dickensian.
The court record are full of injured employee suing for compensation ...who do you think backs a good number of these cases?
If you want to talk about Foxx industries and Apple be advised that wages were only part of the problem. Length of shifts and working conditions.
Chad talks his usual self interested spin.
I.e. how many executive get killed or injured, deaffened/ blinded or given diseases Like black lung,Mesothelioma,Aspestosis, Carpal tunnel, Syndrome, back injuries,'occupational deformaties'? and the list goes on and on and on?
I'll bet money that Chad got more of a bonus that the guys/gals on the line. Yet he won't be near cripple or have tinitus by the time he's fifty or at risk from dying from the job! Both get 25% ...the exec gets what $2-5 million and the one taking the risk shortening their active life gets er $6-8 k. Give over Chad!
The hard facts are that almost every safety improvement has been as a result of Union backed court case.
Lets get real US Industry (bosses)have had to a lose a court case or have it mandated around them.
The accounting/ risk management technique is called "bean counting" i.e. it is more profitable to fight and pay claims than make the short they are putting a value on a persons life/'s no longer a matter of just selling labor.

As for Chad's we're fearful the good times might end ...Flash they always do! Apart from that You have the right to go into business but NOT to guaranteed longevity.. Its called risk.

Jon said...

HP, why do you think outsourcing has had the effect of improving wages in China and India, but not elsewhere, like Haiti and Latin America. Latin America particularly when it was more run by right wing US backed dictatorships? And why did S Korea and Japan grow so rapidly even though they did it without sending US manufacturing there? Their growth in my view has more to do with IP. Under IP taking US manufacturing can lead to growth, but also you can have growth without taking US industry. So I reject your premise that US losses are necessary to produce Chinese gains. Of course the people that gain the most from it (the owners) try to spin their exploitation as if it is benevolence.

Examinator said...

Foxx industries were pure wage slavery that's not an advantage.
I'd suggest that the crew actually read some non US media on their circumstances...(I recommend the British Guardian on the event).
Oh by the way Foxx industries are now installing robots ...their staff levels will be slashed by 80 odd %. Ya the Chinese workers gain all right.
Perhaps HP & Co can explain to the families of the 112 burnt to death seamstresses how they were advantaged by USA executives' largess. Remember that sweat shop made clothes for up market fashionable brands like Disney so the US and tourist consumers could impulse buy the same garments at 30+ times mark up? Where's the USA and tourist value? there's a word for it Tourist trap!

Examinator said...

the reality is that the winners are the capitalists and their executives.
Jon how many shares do you have in say Disney? Enough to have a say?
refer the comment by HP about one phone and 1 vote.
I'd ask him who he thinks really benefits! I'd suggest that he looks at the figures on how many Americans have shares.
As for pension plans etc of the profit how much actually get to the small pension holder...hint the managing corp gets most of the profit do the math. The actual dividend paid to the pension holder is but a tiny% of that previous mention #0Times plus mark up or even the profit.

Chad said...

Ex - Interesting. I was the guy "on the line" one point in my life sir, I choose to pull myself of the rope to success. I lived in my car, ate hot dogs, baked beans for dinner while risking my life on a high rise buildings, cleaning chemical tanks and picking up garbage - don't preach to me you pompous ass.

We all - each one of us - have a better version of ourselves looking at us in the mirror. I choose to introduce myself to that guy and will not say I am sorry.

As for my bonus - as for my earning bonus I received in 2012, as a direct results of my companies involvment for a certain principal mill we work with their sales have increased from $4.5 million prior to our involvment to a robust $28.7 million in 3 years time. The employee pool at the mill went from 7 to 38. What is that kind of growth worth - are we a valuable part and should we not be rewarded for those results sir? The mill paid us no additional money for the growth and the bonuses we enjoyed came from our company through commission sales. The owner of the mill enjoyed a great year (bought a new plane I heard) - and like Romney - he was at the mill maybe 2 or 3 times all of last year, but he is the owner and bully for him. Unlike you and Jon who blame that guy for his wealth while being absent - we (as I preach) see an opportunity that we are exploring - we aren't sitting around pointing fingers we are looking into that - more to come on that front.

I have not a single ounce of remorse for the bonus amount I received this year because it was earned. On the back of a guy swinging a wrench yep, on the hands of a guy I will never meet in a melt mill yep, but they also recieved a salary for their efforts and if they earned a bonus - great, if they didn't then maybe they need to hone their skill set to get one or maybe they should take a risk and do it themselves just like I did.

BTW nearly all of the mill employees sent us personal notes, Christmas Cards and even a couple sent gifts to show thier appreciation for our efforts. We have no connection to their contracts with the mill for their compensation, but they understand fully that we bring in the business otherwise no matter how dirty the get, no matter how good they are at turning a wrench or cutting a tube they will not have a job. No matter how many years might be shaved off their life they understand what their skill set allows them to do. If their skill set could sell they'd be selling instead they have limited skills to sell and they need us to make those skills necessary even at the expense of their health which is their choice and not mine - I was there in the mud and muck at one time.

BTW - we also look for talent inside the mill labor pool - we have hired two employees out of the mill who showed some skill level appropriate for a new position, up the ladder into a larger role giving anyone willing to work hard a decent shot a little more then they can take it from there.

Risk is all we know Ex, you need not tell us that. The point you flat our missed is due to the idea that taxation, regulation and debt spending is the way to go there is no confidence out here in the real world hence low opportunity. With low opportunity comes low compensation - if there were jobs available everywhere then employers would be forced to compensate higher to keep quality employees otherwise their product might suffer. Today with the high unemployment there is no need to worry about a guy on the line because he's not going anywhere and there are 25 guys that can do the same thing he can for the same money chopping at the bit to get some work (some guys are that way anyhow).

Jon's point about big bonuses for exec's - I don't like that much either to be honest - I'd rather and would rather give employees a bump, but you can't force them to pay more - you just can't, but you can take the boot off the throat of new, young and different business people to compete.

Examinator said...

Thanks for that.
With all due respect:
Regardless of you or I were once on the line.
The comments were about The general situation. Not specifically you it wasn't an attack on you personally just your *argument* and micro selectivity of your style of argument!
People are essentially the same we just vary by degree personal attack are pointless. My frustration with you is simple the above not as a person. BTW it is YOU who exudes righteousness.
FYI you are wrong when you say all people have a better view of them selves than the mirror.
You should look at the national statistics on depression both chronic and episodal.
Notwithstanding our origins the points still stand. You simply don't want to address the *issues* raised. The why is speculation.

Chad said...

What is interesting about Ex is that when it suits his narritive he can talk about his personal experiences at naseaum, but for others it is off topic.

In truth I am on topic - I have no control over what others do only what I do. My example destroyed your narrative.

As far as the mirror comment - I guess your right I did mispeak slightly. In the mirror - somewhere in the background - there is the person you can be. There is almost no limit to what a human being can accomplish - unfortunately we have so called 'professionals' that will (for a couple hundred bucks of course) assign a multitude of clinical names to whatever made up disease there is out there. Half of our issues today is the medical field and specifically the physco (logists) willing to blame a persons problem on every single person except the damn person in the mirror. Kids got a learning disorder, eating disorder, he is an intrevert, extervert, he is addicted to video games - any excuses a person needs for their failure - they will dial one up with the help of the great and powerful Oz's out there.

The strong and the successful don't use excuses - if they are down in the dumps they pick themselves up, kick their own ass and we don't cry/whine about it. Oh goodness I can just see it now - here comes Ex pulling up his medical studies to show that high stress leads to alcoholism, drugs and some other medical issue of some kind.

Examinator said...

Thank you for your feedback. Not that any of it is particularly insightful what it does highlight is your lack of abstract and lateral thinking. Superlatives nuances and context are well foreign languages.

In a practical sense it is the difference between sympathy and empathy.

Sympathy is cheap easy and non committal it is being sorry for someone. By definition that puts you (in your mind) in a position of superiority KNOW THE TRUTH and that is my way. As such anyone who doesn't do it your way is some how lessor to be pitied 'poor weak or dumb Bastard.

Conversely empathy is putting your self in *their position and appreciating their circumstances, their context*, walking a mile in their shoes so to speak.
You sadly don't have very much of that.
Everything you think or feel is largely for you ...I.e. your children make, YOU FEEL GOOD. You feel in charge the leader of YOUR family.
Not I talk about OUR family OUR children.
If your children don't succeed you will see it as THEIR FAULT and they have disappointed YOU, FAILED YOUR EXPECTATIONS.
If they succeed you will be proud that YOUR parenting got them there.

Sorry old bean, I make no apologies for not agreeing with you. I see a world of hurt coming your way and you won't understand why. And that makes me sad not because I'm better but because I can see context and consequences.

BTW my narrative(?)(goodness what you mean by that ) is geared to offer insight in to what makes me who I am. it helps with empathy or understanding.
Many of the examples are human/personal real world examples that illustrate the nuanced point.
Life isn't black or white it is infinite shades of grey that is a nuanced concept you simply lack the ability to understand or empathise with.
BTW Egocentricity is in extreme cases is a key determinate for both narcissism and sociopathy.
I am examinator ant because I examine and that In the final analysis in the scale of things I can identify with the ant.
Like castes in ants I have specialisations.

I write this for others, in the hope they may see the finer lines that are invisible to you.

Chad said...

Appreciate your insight - from my perspective I happen to have a similar fear for you. As you search so hard and deep for shades of grey you more often than not allow for a new shade of grey to be created when the answer is much much closer to the black and the white. Your kind of talk confuses kids - it gives them excuses, clinical terms for failure and it makes things like collecting a free government check socially acceptable. It makes things like being gay as normal as apple pie. Even though I have gay friends, until a gay couple has the ability to concieve and have a child then no one can ever tell me it is natural. Natural does not cause the end of a species. Yet we are forced to accept such behavior by society, by guys like you that will call us some name if we don't like it or agree with it.

What is a bit odd is for all your grey area search, for all of your ability to examine the ultimate truth as you say - it is a bit funny that you are unable to see that you too have been brainwashed. This is exactly what the Liberal/Progressive movement wants Ex and you fell lock step into the fold yet you claim to be a thinking and an examinator. I personally believe that you are just another sheep in the flock tearing at the very fabric of family, hard work, discipline and common sense. All of those things existed in the great men and women before us and slowly through time and grey area thinking the water has become some muddy those of us who still believe in the founding principals are now the enemy. Your fear is my fear - with guys like you out there they are going to try and force them to accept the ideology of this society, but hopefully they can stand up and can stand their ground.

I am absolutely okay with everything being about me and my family because it is all about us. If people would just take care of their own responsibilities we would be a far better place in a hurry.

I really see a revitalization coming. Like fashion that comes then it goes then it comes back again, but I really do see that the next great movement in this country will be to go back to more traditional values. America has gone through the experimental phase forcing all people to accept a few peoples wishes - now it seems like people have become so desensitized that no one cares anymore. We accept that someone is a freak - they just don't get hired. Grabbing a government check is starting to get old for the working people - voices are starting to get louder.

You stay in the grey and I am happily going to stay closer to the black or white of things. It is a clearer picture to follow.

Good day sir.

Examinator said...

our children are 40YO, 32yo, 29and 27
I think they are a bit old to be confused by me.
The reality is they are all very self-willed and self motivated. I stopped trying to tell them anything years back. They do come for advice which they duly note end in many cases put their own spin on and goodness knows what they do ...they don't always tell me and I don't ask unless I get the signal to do so.
At 62 I'm semi retired. Given the age of your children I'm guessing I've been where you are going. When coupled with 20 years, off and on, crisis intervention counselling. An eclectic life ranging from an outrider on a sewerage pumper truck, chicken slaughterer etc... small shopping chain store owner... exce in computer and later High security storage and now partner in a consultancy, I think I can rightfully claim that I've been there done that and the tee shirt that says so hides the scars ;-)

Clearly I've made some good decisions and some shockers.
The shockers were generally though or because of things (nuances externalities ) I didn't know. I make no whinges , complaints for me I take as good as I give.
my hope is simply by using skills of 46 years and having seen more wrinkles on a theme, than most people can imagine. Much of Sigma 6 Business methodologies is revamping of older techniques. My 32YO son gotd the prospectus because his boss wanted him to take it until my son had already complimented many of the principals already. Then he went through the short comings ...much of it is presentation and hype a bit like Dale Carnegie's book 'how to win friends and influence people' overly simplistic and out of date.
Two final points I've LEARNED and BECOME who I am today from examining facts event and issues as objective as possible and considering the contexts. That means deciding on all the facts not looking for Black or White quickie fixes/answers. i.e. what works in one situation isn't necessarily either gonna work or appropriate in another.

If some one can learn from my Experience and can avoid similar complications then all the better. If not then I hope to learn from them. (this I've already said before in many ways and times)
The over riding concern for you is that you dismiss too many things because you don't understand them in context. i.e. psyco(ology).
Many of the factors you ignoring/dismissing are scientific and irrefutable Like genetics, epigenetics, behavioural psychology etc.
There is a world of differnce between an opinion and Fact. the former doesn't need facts or proofo