WHO's WINNING THE CLASS WAR? "We're More Productive," by Bob Herbert

Editor's note, by Kyle Kilpatrick
The following editorial by Bob Herbert appeared in the April 5, 2004 edition of the Walworth Times and is offered here as a thought piece for liberals and conservatives alike.


THE NEW YORK TIMES
April 5, 2004
We’re More Productive. Who Gets the Money?

by Op-ed Columnist

By Bob Herbert

It’s like running on a treadmill that keeps increasing its speed. You have to go faster and faster just to stay in place. Or, as a factor worker said many years ago, “You can work ‘til you drop[ dead, but you won’t get ahead.”

American workers have been remarkably productive in recent years, but they are getting fewer and fewer benefits of this increased productivity. While the economy, as measured in gross domestic productivity, has been strong for some time now, ordinary workers have gotten little more than the back of the hand from employers, who have pocketed an unprecedented share of the cash from this burst of economic growth.

What is happening is nothing short of historic. The American workers’ share of the increase in national income since November 2001, the end of the last recession, is the lowest on record. Employers took the money and ran. This is extraordinary but few people are talking about it, which tells you something about the hold that corporate interests have on the national conversation.

The situation is summed up in the long, unwieldy but very revealing title of a new study from the Center for Labor Market Studies at Northeastern University: “The Unprecedented Rising Tide of Corporate Profits and Simultaneous Ebbing of Labor Compensation—Gainers and Losers from the National Recovery in 2002 and 2003.”

Andrew Sum, the center’s director and lead author of the study, said: This is the first time we’ve ever had a case where two years into a recovery, corporate profits got a larger share of the growth of the national income than labor did. Normally labor gets about 65 percent and corporate profits about 15 to 18 percent. This time profits got 41 percent and labor [meaning all forms of employee compensation, including wages, benefits, salaries and the percentage of payroll taxes paid by employers] got 38 percent.”

The study said: In no other recovery from a post-World War II recession did corporate profits ever account for as much as 20 percent of the growth in national income. And at no time did corporate profits ever increase by a grater amount than labor compensation”

In other words, an awful lot of American workers have been had. Fleeced. Taken to the cleaners.

The recent productivity gains have been widely acknowledged. But workers are not being compensated for this. During the past two years, increases in wages and benefits have been very weak, nonexistent. And despite the growth of jobs in March that had the Bush crowd dancing in the White House halls last Friday, there has been no increase in formal payroll employment since the end of the recession. We have lost jobs. There are fewer payroll jobs now than there were when the recession ended in November 2001.

So if employers were not hiring workers, and if they were miserly when it came to increases in wages and benefits for existing employees, what happened to all the money from the strong economic growth?

The study is very clear on this point. The bulk of the gains did not go to workers, “but instead were used to boost profits, lower prices, or increase C.E.O. compensation.”

This is a radical transformation of the way the bounty of this country has been distributed since World War II. Workers are being treated more and more like patrons in a rigged casino. They can’;t win.

Corporate profits go up. The stock market goes up. Executive compensation skyrockets. But workers, for the most part, remain on the treadmill.

When you look at corporate profits verses employee compensation in this recovery, and then compare, as Mr. Sum and his colleagues did, with the eight previous recoveries since World War II, it’s like turning a chart upside down.

The study found that the amount of growth devoured by corporate profits in the recovery is “historically unprecedented,” as is the “low share…accruing to the nation’s workers in the form of labor compensation.”

I have to laugh when I hear conservatives complaining about class warfare. They know this terrain better than anyone. They launched the war. They’re waging it. And they’re winning.