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May 11, 2005

Wages Falling

Corporations Reaping Gains from Growth

From the Financial Times:

Inflation rose 3.1 per cent in the year to March but salaries climbed just 2.4 per cent, according to the Employment Cost Index. In the final three months of 2004, real wages fell by 0.9 per cent.

The last time salaries fell this steeply was at the start of 1991, when real wages declined by 1.1 per cent.

But the real story is not this fall in wages but the fact that this comes amid continuing productivity growth. Employees are working more efficiently, but they aren't getting the benefit:
Since 2001 productivity has been rising at an annual average of 4.1 per cent, while compensation growth has averaged just 1.5 per cent, leaving workers with just over a third of the benefit from rising efficiencies.

In the previous seven business cycles, by contrast, workers reaped about 75 per cent of the benefit of increasing efficiencies. “Businesses have clearly managed to gain the upper hand,” says Lawrence Mishel, president of the Economic Policy Institute, a Washington think-tank.

Read that again.

Usually, workers get 75% of gains in growth from productivity. But this cycle they are only getting a third, an extreme level of hyperexploitation of their work by employers.

But what do you expect from a recovery where the Bush administration has helped airlines destroy worker pension systems. It was announced yesterday that United would be allowed to drop its pension obligations, leaving it to taxpayers to pick up the tab -- with the 120,000 United employees seeing a severe drop in pension payments.

From Day One of his administration, Bush has been leading an assault on workers rights in order to restrict their ability to negotiate for their share of productivity gains. As this data shows, his Presidency has been a success for its corporate backers.

Posted by Nathan at May 11, 2005 07:18 AM