Both of my local papers—the Saint Paul Pioneer Press and the Minneapolis StarTribune—ran this New York Times story this week, on their front pages, above the fold. The story outlines an International Labor Organization (ILO) report finding that Americans are working more hours than their counterparts in other countries.
Unfortunately, the full text of the report, “Key Indicators of the Labor Market 2001 - 2002” is not available until its scheduled release during the Global Employment Forum, November 1 - 3, 2001 in Geneva. So, what follows is commentary based on the Times’ reporting on an ILO press release.
Americans work 137 hours more per year than the Japanese and a whopping 499 hours more than the Germans. According to the economist that managed the report, Americans are working harder than ever because they’re “eager to make the best impression, to put in the most hours.” Bullshit. Americans are working harder only because they have to in order to maintain a basic standard of living.
Here’s an even better quote from Patrick Cleary, senior vice president for human resources policy at the National Association of Manufacturers: “Clearly, for most of these years the increase in hours tracks outstanding economic performance in the United States, which translates into more income for all those workers, so we don’t see this necessarily as bad news at all.”
America has indeed enjoyed outstanding economic performance, but relatively few of her citizens have participated in the benefits of that economic performance. More on this later. The people who benefited most from America’s outstanding economic performance were the stockholders and corporate executives.
Amusingly, this disparity is no secret. Even mainstream economists like Lester Thurow acknowledge that 86% of the stock market gains during the most recent bull market went to the richest 10% of the population. Today, according to the Federal Reserve’s Survey of Consumer Finances, America’s richest 1% own more than 40% of the country’s wealth, roughly double the ratio in 1979.
Similarly, corporate executive compensation is also no secret. According to this report from the Institute for Policy Studies (IPS), executive pay rose 571% between 1990 and 2000, while workers’ pay grew only 37% during the same time period. To put this in perspective, according to the IPS report, if the average annual pay for production workers had grown at the same rate as that of the corporate executives, their average yearly earnings last year would have been US$120,491 instead of the actual average of US$24,668. Had the minimum wage grown at the same rate as corporate executive compensation, it would now be US$25.50 per hour instead of the actual US$5.15 per hour.
The New York Times article continues its fine tradition of paying homage to the market by comparing the length of vacations Americans take (2 - 3 weeks) relative to Europeans in general (4 - 6 weeks) and, gasp!, the French 35-hour workweek.
Thomas Frank, in last year’s One Market Under God, points out that mainstream American journalists have taken it as their personal mission to ridicule France for retaining strong labor unions and an intact welfare state. The great difference between France and America with regard to these issues is that the French were actually allowed to vote on them in 1997. The French voted to reverse their government’s course of widespread privatization and deregulation, a referendum never proffered to the American citizenry. The French have reaped the contempt of the American mainstream press ever since.
Juliet Schor, Boston College sociology professor and author of The Overworked American, says the increased hours are a direct result of American workers being financially squeezed during both booms and busts: “In expansions, companies keep giving more work to their workers, and in the recessions, there will be downsizing and fewer people working, but the workers who remain have to work longer hours to retain their jobs.”
The good news, according to the New York Times article cited earlier, is that the International Labor Organization report found America to lead the world for productivity per worker. “Productivity per American worker in constant 1990 dollars,” according to the report, “was US$54,870, about US$1,500 more than Belgium, the No. 2 nation.”
Don’t beat your chest just yet, bucky. France and Belgium both were found to have higher rates of productivity per hour, even though their workers labor far fewer hours.
What the report doesn’t show, and what the New York Times predictably and skillfully avoids mentioning, is that although American productivity is up, real American wages are down.
While corporate executives were enjoying unprecedented salaries, they were simultaneously reducing their workforce. According to the IPS report, a total of 52 American companies laid off more than 1,000 workers so far this year, while the chief executives of these companies enjoyed an average compensation of US$23.7 million, fully 80% more than the average CEO compensation package. While their employees received raises of 3% - 4%, before they were laid off of course, the executives saw 20% increases in compensation.
Real wages—adjusted for inflation—were 12% lower in 1998 than they were in 1973, according to Shifting Fortunes, published by United for a Fair Economy. Productivity grew more than 30% during the same period.
We Americans have come to worship the market and the “New Economy” as more democratic than our elected government. Too bad the “New Economy” is a sad fraud perpetrated upon us by the corporations that no one elected. Thomas Frank nails it eloquently:
“Markets may look like democracy, in that we are all involved in their making, but they are fundamentally not democratic…. The logic of business is coercion, monopoly, and the destruction of the weak, not ‘choice’ or ‘service’ or universal affluence…. Markets are interested in profits and profits only; service, quality, and general affluence are different functions altogether. The universal, democratic prosperity that Americans now look back on with such nostalgia was achieved only by a colossal reining in of markets, by the gargantuan effort of mass, popular organizations like labor unions and the people themselves, working through a series of democratically elected governments not daunted by the myths of the market.”
As for solutions, here’s a good start:
- Immediately institute a mandatory policy assuring a living wage for all workers.
- Immediately start invoking the revocation of the corporate charter as an ultimate corporate punishment, what Dave Winer calls a “corporate death penalty.” We don’t need two or three Microsofts, we need zero Microsofts.
- Immediately fast-track and pass Rep. Martin Sabo’s (D-Minnesota) Income Equity Act of 2001 (H.R. 2691) limiting corporate executive compensation.
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