The offshoring of high productivity, high value-added US jobs has destroyed the labor movement. How much luck will labor leaders have organizing people who hold part-time jobs as waitresses, bartenders, hospital orderlies, and retail clerks? As I have pointed out for years in
my reports on the monthly payroll jobs reports, the United States now has the labor profile of a Third World country.
The absence of jobs that can support an independent existence and family life is the reason that more Americans aged 24-34 live at home with parents than live independently. The absence of jobs is the reason the labor force participation rate has declined for years. The absence of jobs that pay sufficiently to provide discretionary income is the reason the economy cannot grow.
Looking at last Friday’s BLS payroll report, the jobs are in the lowly paid, part-time service sector. The goods producing sector of the economy lost 24,000 jobs. The jobs are in retail trade, health care and social assistance, waitresses and bartenders, and government which is tax supported employment.
Let’s honor Labor Day by reviewing what’s happened to wage-earners in the eight years since central banks “saved the financial system” with free money for financiers: wage-earners have taken a beating and been dumped in a ditch. It’s really very simple: wage-earners have seen their real earnings (as measured by purchasing power) stagnate or decline while those chosen few with access to near-zero interest borrowed capital have seen their net income and wealth explode higher.
Do the math, people: annual wage increases once real-world inflation is factored in (roughly 7% to 10% annually for those who rent, have significant healthcare expenses or buy higher education) are either negative or are measured in the hundreds of dollars–in other words, trivial increases for all but the very top echelon of wage earners.
Increases in wealth for those with central bank-supplied free money for financiers are measured in the millions of dollars. Even small-fry with capital invested in bubble markets have experienced gains in the hundreds of thousands of dollars–entire lifetimes of earned income for those earning $25,000 to $35,000 annually.
There are forces at work that are beyond the power of central banks: the technologies of automation, robotics and software are replacing human labor not just in low-skill sectors but increasingly in sectors that provided the bulk of middle class jobs.
One reason why automation is gaining ground is the soaring cost of healthcare (paid by the employers and employees in America, except for those on federally funded Medicaid). Healthcare expenses are labor overhead–employers don’t pay labor overhead on robots or software.
While wage earners see their tiny raises wiped out by inflation, employers see their total compensation costs skyrocketing due to employee healthcare expenses.
Then there’s globalization. Capital and technology are mobile, labor is not. Capital and technology can chase higher returns anywhere on the planet, but most workers cannot easily move to another country, and then move again a year later, and so on in an endlessly disruptive search for higher returns.
“The labouring man will take his rest long in the morning; a good piece of the day is spent afore he come at his work; then he must have his breakfast, though he have not earned it at his accustomed hour, or else there is grudging and murmuring; when the clock smiteth, he will cast down his burden in the midway, and whatsoever he is in hand with, he will leave it as it is, though many times it is marred afore he come again; he may not lose his meat, what danger soever the work is in. At noon he must have his sleeping time, then his bever in the afternoon, which spendeth a great part of the day; and when his hour cometh at night, at the first stroke of the clock he casteth down his tools, leaveth his work, in what need or case soever the work standeth.”
– James Pilkington, Bishop of Durham, 1570.
One of capitalism’s myths is that it’s reduced the burden of human toil, but what it’s actually done is create a vast potential for that reduction. The profit motive hamstrings and misdirects technological innovation under capitalism – but nonetheless progress drives forward at a breakneck pace. We can produce more than previous generations dreamed of, using only a fraction of the labour-power. Keynes famously predicted that by the dawn of the 21st century, this trend would leave us working just 15 hours per week. But what has capitalism actually done, historically, to the working day? During the industrial revolution, it averaged 12-14 hours, sometimes stretching to as much as 16 hours. This was a change on an almost unimaginable scale from the pre-capitalist world.
We often imagine the life of serfs under feudalism to have been one of misery and hardship, and this is not without an element of truth. But one of the hardships we tend to imagine, the image of a peasant farmer toiling wearily from dawn to dusk in the field, is a myth. According to Oxford Professor James Rogers, the medieval workday was not more than eight hours. The worker participating in the struggle for the eight-hour day during the late nineteenth century, therefore, was “simply striving to recover what his ancestor worked by four or five centuries ago.” This persisted into the early modern period, where workers refused to venerate their work beyond its due, and held fast to breaks in the working day that made their lives more tolerable, as James Pilkington’s remarks demonstrate. It was the advent of industrial capitalism that saw workers plunged into extreme working days, by what were, in Eric Hobsbawm’s phrase, “quite plainly the forces of hell”. Working class resistance gradually pushed the length of the working day back, first through the Ten Hours Bill (an achievement of Chartism) and eventually through to the famous demand “8 hours for work, 8 hours for rest, and 8 hours for what we will”.
This post is late, of course, because it would be inappropriate to spend Labor Day laboring on a blog.