Commentary: Job insecurity and lower wages plague the American worker

Teresa Ghilarducci

Teresa Ghilarducci Professor, Economics, Schwartz Centre for Economic Policy Analysis

Every economics student knows that when demand outpaces supply, prices should go up. But, despite an historically low 3.9 per cent unemployment rate in the United States, the “prices” for American workers – their wages – are stagnating. Why?

There are two reasons: One pertains to measurement, the other to power.

The first explanation is admittedly superficial and bypasses the capital-labour conflict altogether. It is possible, though unlikely, that labour-market tightness is being misread and that many people who want jobs are not being counted.

The second reason is more profound: Simply put, labour has lost, and capital has won. Consider the evidence:

From 1973 to 2013, hourly compensation of a typical US worker rose just 9 per cent, while productivity increased 74 per cent, putting little pressure on prices but dramatically boosting profits.

Of course, this raises another question: Why might capital be stronger than labour? There are four main explanations.

STAGNANT WAGES

First, unions are weaker today than in the past. Between 1979 and 2013, the share of private-sector workers in a union fell from about 34 per cent to 10 per cent for men, and from 16 per cent to 6 per cent for women. This has not only hurt workers on the job; it has also damaged labour's ability to lobby for higher minimum wages.

Government policy and corporate power have eroded unions’ influence, and laws and regulations have made owning capital more rewarding than ever relative to working.

For example, the 2017 GOP tax bill was sold to the public with the claim that cutting corporate taxes would give companies room to raise wages and keep profits steady. Instead, wages haven’t budged, and profits have soared.

Second, even with low unemployment, workers are insecure at work. While two thirds of Americans say this is a good time to find a quality job, just as many people fear losing their job now as in 1991, when the unemployment rate was 7 per cent, or nearly double what it is today.

The third explanation is the rise of super firms. These very large companies – think of Facebook, Amazon, Apple, Netflix, and Google (the FAANGs) – are consolidating monopoly power. 

While the technology the FAANGs deploy and the scale at which they operate have lowered consumer prices, this come at the high cost of suppressed wages for workers – who of course are the consumers.  

Finally, most new jobs today pay poorly. In fact, among the ten occupations now recording the most employment growth, only three – software developers, registered nurses, and managers – pay above-average wages.

With productivity decoupled from pay because of the rise of super firms and government policies tilted in favour of capital, popular and voter outrage should come as no surprise. But whether protest will lead to meaningful political reform or more of the same remains an open question.

***

Reposted from Channel News Asia



Posted In: Allied Approaches

Union Matters

Uber Drivers Deserve Legal Rights and Protections

By Kathleen Mackey
USW Intern

In an advisory memo released May 14, the U.S. labor board general counsel’s office stated that Uber drivers are not employees for the purposes of federal labor laws.

Their stance holds that workers for companies like Uber are not included in federal protections for workplace organizing activities, which means the labor board is effectively denying Uber drivers the benefits of forming or joining unions.

Simply stating that Uber drivers are just gig workers does not suddenly undo the unjust working conditions that all workers potentially face, such as wage theft, dangerous working conditions and  job insecurity. These challenges are ever-present, only now Uber drivers are facing them without the protection or resources they deserve. 

The labor board’s May statement even seems to contradict an Obama-era National Labor Relations Board (NLRB) ruling that couriers for Postmates, a job very similar to Uber drivers’, are legal employees.

However, the Department of Labor has now stated that such gig workers are simply independent contractors, meaning that they are not entitled to minimum wages or overtime pay.

While being unable to unionize limits these workers’ ability to fight for improved pay and working conditions, independent contractors can still make strides forward by organizing, explained executive director of New York Taxi Workers Alliance Bhairavi Desai.

“We can’t depend solely on the law or the courts to stop worker exploitation. We can only rely on the steadfast militancy of workers who are rising up everywhere,” Desai said in a statement. 

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