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Friday, April 16, 2004  

Opinion: Who gains from higher productivity?

On last night's Nightline, Ted Koppel talked to people we don't normally see on television. The episode was called "On the Edge" and the transcript should soon be available. The working poor described their experiences -- pay day loans with interest rates that would choke a giraffe, a rip-off income tax 'refund' program perpetuated by H.R. Block, working hard and never getting ahead.

Trish Wilson is interested in a recent column by Bob Herbert (pictured) that considers who benefits from increases in productivity. With productivity on the rise, the lot of workers should be improving, eh? Herbert says it isn't and explains why, with the support of a new study from Northeastern University. It turns out that the people who profit as a result of increased productivity are those who are already considerably more than solvent. Why aren't I surprised?

Trish Wilson's Blog: Productive American Workers Not Reaping the Benefits Of Their Labor

Bob Herbert's New York Times Op-Ed, We're More Productive. Who Gets the Money? (April 5, 2004), described the American worker treadmill that has resulted in more productivity. However, American workers are not reaping the rewards for their work. Corporations are - to the detriment of hard-working men and women.

American workers have been remarkably productive in recent years, but they are getting fewer and fewer of the benefits of this increased productivity. While the economy, as measured by the gross domestic product, 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 very 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 the Simultaneous Ebbing of Labor Compensation - Gainers and Losers from the National Economic 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 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 greater amount than labor compensation."

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

Please recall that I had posted in both in the comments section of my earlier post about Bush's misleading rising jobs statistics that since the Great Depression and WWII, the U. S. has suffered a series of devastating deficits. Herbert writes that "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, or 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 net 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."

The money from the strong economic growth Bush has boasted about has not gone to American workers. It was "used to boost profits, lower prices, or increase C.E.O. compensation."

Read the rest of Herbert's piece. And, drop by Trish Wilson's Blog. The proprietor has the blogger blues. Cheer her up.

The rare look at the real lives of America's least compensated workers on Nightline last night should have awakened anyone from torpor. We are usually told the poor deserve their poverty because they don't strive hard enough. However, the people profiled in the episode belie that rationalization in every way. Here's hoping agenda setters watched the program instead of changing channels.

Reasonably related

Learn more about low-wage workers who qualify for the Earned Income Tax Credit.

•Up by your bootstraps. Beneficent billionaires. Early to bed and early to rise. Perhaps it is time to debunk the American dream.

•One of the first contretempts I encountered as a blogger was when I wrote an entry lauding op-ed writer Bob Herbert. It set several of the Right blogosphere's least capable people after me. They followed me from around at comments on other blogs, name-calling and lambasting. At least one set up a hate page based on my praise of Herbert. Why does Herbert bother people like that so much? I believe it is because he is everything they aren't: very bright, an excellent researcher and an incisive writer. And something else, he is African-American. That shouldn't matter, but it does. The blogosphere is quite a haven for bigotry. Any person of color with ability and a mind of his or her own pays the price for that, whether as a blogger or as a source.

4:15 PM