LABOUR around the world is under pressure as capital, broadly, is going through a crisis that it itself has created. Capital, adhering to one of its classic approaches, is increasingly putting the burden of its sin on labour: decreasing or stagnant real wages, squeezing out more and more from labour in the name of higher productivity, bringing unions under the sway of capital, decline in collective bargain, deunionisation, changes in work rules, and others. As a rule of science, capital’s craftsmanship created reaction: action acharnae, action desperate. There have been many protests by labour since the Chicago factory seizure by workers that reflect the reality. The Philadelphia transportation workers’ strike early November was one of the many.
The Global Wage Report 2008/09 of the International Labour Organisation predicts that ‘difficult times lie ahead for workers.’ Economic growth, slow or negative, and volatile prices, the report says, ‘will erode the real wages of many workers, particularly the low-wage and poorer households.’ The report estimates based on wage data for 83 countries, representing about 70 per cent of the world’s population, that in 2009 wages would grow at best by 0.1 per cent in industrial countries and by 1.7 per cent globally. Revised figures, however, released after the preparation of the report suggested that wages in 2009 would in fact decline by 0.5 per cent in industrial countries and grow by no more than 1.1 per cent globally. The base for this estimation was IMF estimates and forecasts of global economic growth and wages. The report says: ‘Estimates for African and Middle Eastern countries are less robust and are therefore not reported.’ In many countries, it says, the middle classes will also be seriously affected. While discussing the major trends in wages in 1995–2007, the report says there was low wage growth in the majority of countries. During the period 2001–07, it estimates real average wages grew by 1.9 per cent per year or less in half of all countries. Among developed countries, ‘wages in the median country grew by about 0.9 per cent per year. Comparable figures were 0.3 per cent in Latin America and the Caribbean, 1.7 per cent in Asia, and a much higher 14.4 per cent in the Confederation of Independent States and non-EU Central and South-Eastern European countries…’ Globally, according to the report, wage employment accounts for about half of total employment and this share is growing almost everywhere for both women and men.
Real wages growth, the report says, was close to 0 per cent in Japan, Spain and the US, but reached 10 per cent per year or more in China, Russia and Ukraine. Wage growth close to the median of about 2.0 per cent per year was observed in countries as diverse as India, Mexico, Poland and South Africa. It says: In 1995-2007, when GDP per capita grew by an extra 1 percentage point, average wages only increased by an extra 0.75 percentage points. The so-called ‘wage elasticity’ of 0.75 confirms that wage growth has lagged behind GDP per capita, and suggests that the growth in real wages lagged behind productivity growth. Over time, this elasticity has declined from 0.80 per cent during 1995–2000 to 0.72 per cent since 2001. Almost three-quarters of countries experienced a downward trend in the share of GDP distributed to wages, compared to profits and other forms of income. While wages are less than perfectly responsive during times of economic expansion, they tend to become overly responsive in times of economic decline. Typically each extra 1 per cent decline in GDP per capita leads to a fall in wages of 1.55 per cent, the report observes. Since 1995, inequality between top wages and bottom wages has increased in more than two-thirds of the countries for which data were available. Among the developed countries, Germany, Poland and the US witnessed the most rapid increase in gap between top and bottom wages. Other regions, particularly Argentina, China and Thailand, also had sharp increase in inequality. A number of countries including Brazil, France, Indonesia and Spain succeeded in reducing wage inequality although inequality remained at a high level in Brazil and Indonesia. The pay gap between genders was also high. In the majority of countries, women’s wages represented on average between 70 per cent and 90 per cent of men’s, but it was not uncommon to find much lower ratios in other parts of the world, particularly in Asia, the report says.
Income inequality
INCOME inequality grew dramatically in most regions of the world and was expected to increase due to the ongoing financial crisis, according to the World of Work Report 2008: Income inequalities in the age of financial globalisation. The report by the ILO’s International Institute for Labour Studies notes that ‘a major share of the cost of the financial and economic crisis will be borne by hundreds of millions of people who haven’t shared in the benefits of recent growth.’ The income gap between poorer and richer households, it says, widened significantly between the early 1990s and 2007. Moreover, ‘workers obtained a smaller share of the fruits of economic growth as the share of wages in national income declined in the vast majority of the countries for which data was available.’ ‘The ongoing global economic slowdown’, the report says, ‘is affecting low-income groups disproportionately. This development comes after a long expansionary phase where income inequality was already on the rise in the majority of countries.’ A joint study by the ILO and the World Trade Organisation secretariat recognises the concerns about the effect of international trade on wage inequality (M Jansen and E Lee, Trade and Employment: Challenges for Policy Research, ILO, and WTO, 2007).
‘In countries with unregulated financial innovation,’ the World of Work Report found, ‘workers and their families became increasingly indebted… to fund housing investment and consumption. With stagnant wages, this was key to sustain domestic demand. However the crisis has underlined the limits to this growth model. Between 1990 and 2005, approximately two thirds of the countries experienced an increase in income inequality. The incomes of richer households have increased relative to those of the middle class and poorer households. Likewise, during the same period, the income gap between the top and bottom 10 per cent of wage earners increased in 70 per cent of the countries for which data are available. The gap in income inequality is also widening – at an increasing pace – between top executives and the average employee.... [I]n the United States in 2007, the …CEOs of the 15 largest companies earned 520 times more than the average worker. This is up from 360 times more in 2003. Similar patterns, though from lower levels of executive pay, have been registered in Australia, Germany, Hong Kong (China), the Netherlands and South Africa.’
In 2007, on the basis of a survey finding Reuters reported from Boston: 64 per cent of top executives even view CEO compensation as excessive. Today the salaries and bonuses of top executives are opposed by the common people in advanced capitalist countries. The bank employees’ unions organised protests against high bonuses. The AFL-CIO joined in at least one such protest in Chicago.
Excessive income inequalities, the World of Work Report notes, could be associated with higher crime rates, lower life-expectancy, and in the case of the poor countries malnutrition and an increased likelihood of children dropping out of schools for the purpose of earning for families. ‘Even in those countries where wages are likely to increase in aggregate,’ the Global Wage Report notes, ‘some workers will suffer from real wage declines. In particular, the impact of food price inflation will be greater for poor workers and households in developing countries as these groups spend a much higher proportion of their incomes on purchase of food.’ It was found that expenditure for food was less than 20 per cent of total expenditure in Denmark, the Netherlands and Switzerland while it was more than 60 per cent in many developing countries. The ratio exceeds 70 per cent in a number of countries including Armenia, Niger and Romania. The increase in food prices in these countries threatens the health of poor households. ‘Higher food prices’, the report says, ‘will not only translate into worse diets for poor households, they will also lead to cuts in the purchasing of other goods and services that are vital for the well-being of family members. Women, especially pregnant women and nursing mothers, as well as children, are likely to be worst hit.’ To cope with the situation, the less earning women ‘take on more paid work – often informal and casual – lengthening further their already long working days.’
Minimum wages and collective bargaining
Minimum wages, the Global Wage Report observes, have been reactivated in recent years ‘to reduce social tensions resulting from’ the increasing ‘inequalities in the lower half of the labour market.’ Globally, in 2001-07, minimum wages were raised by an average of 5.7 per cent per year, in real terms. This contrasts with some previous periods when the real value of the minimum wage had declined. Real gains for minimum wage earners, according to the report, were substantial both in developed countries and the EU (+3.8 per cent) and in developing countries (+6.5 per cent). Minimum wages have also increased relative to average wages, from 37 per cent in 2000–02 to 39 per cent in 2004–07, a 2 percent gain up to 2007. Then, the Great Financial Crisis came in with its heavy hands that almost bankrupted Iceland, Greece and Italy. Without credible enforcement mechanism, according to the report, provisions for ‘minimum wages too often remain a “paper tiger” rather than an effective policy.’ There are evidences from a number of countries that ‘non-compliance can be extremely high, especially in developing countries.’
Collective bargaining coverage, according to the report, has declined. In many countries it is low and decreasing as a consequence of a number of factors including the increase in the number of workers in smaller firms or under atypical forms of contracts. It remains high in a few countries including Denmark, Finland, Portugal, Slovenia, Spain and Sweden. European countries recently experienced decline in collective bargaining coverage and the increase in the number of ‘working poor’ in the unregulated part of the labour market, and these have created strong social tensions. A few countries including Argentina and South Africa have stimulated collective bargaining.
‘[F]reedom of association’, the Global Wage Report says, ‘remains a challenge.’ Capital, by contrast, is free to get united, speculate, create havoc, submerge, and have the privilege to get bailed out. ‘Government intervention in trade union activities’, it says, ‘remains a recurrent problem and the number of complaints received by the ILO concerning acts of anti-union discrimination and interference has increased. Several countries also continue to exclude important categories of workers from the right to collective bargaining, particularly domestic workers, agricultural workers, seafarers and public servants. In some countries, murder of trade unionist also remains a serious concern.’ The ground reality in many poor countries, faced by trade unionists there, is much more difficult, and full of cruelties.
The report recommended ways should be negotiated ‘to prevent a further deterioration in the share of wages relative to the share of profits in GDP… [T]he levels of minimum wages should be increased wherever possible to protect the purchasing power of the most vulnerable workers.’
The Global Wage Report 2008/09 of the International Labour Organisation predicts that ‘difficult times lie ahead for workers.’ Economic growth, slow or negative, and volatile prices, the report says, ‘will erode the real wages of many workers, particularly the low-wage and poorer households.’ The report estimates based on wage data for 83 countries, representing about 70 per cent of the world’s population, that in 2009 wages would grow at best by 0.1 per cent in industrial countries and by 1.7 per cent globally. Revised figures, however, released after the preparation of the report suggested that wages in 2009 would in fact decline by 0.5 per cent in industrial countries and grow by no more than 1.1 per cent globally. The base for this estimation was IMF estimates and forecasts of global economic growth and wages. The report says: ‘Estimates for African and Middle Eastern countries are less robust and are therefore not reported.’ In many countries, it says, the middle classes will also be seriously affected. While discussing the major trends in wages in 1995–2007, the report says there was low wage growth in the majority of countries. During the period 2001–07, it estimates real average wages grew by 1.9 per cent per year or less in half of all countries. Among developed countries, ‘wages in the median country grew by about 0.9 per cent per year. Comparable figures were 0.3 per cent in Latin America and the Caribbean, 1.7 per cent in Asia, and a much higher 14.4 per cent in the Confederation of Independent States and non-EU Central and South-Eastern European countries…’ Globally, according to the report, wage employment accounts for about half of total employment and this share is growing almost everywhere for both women and men.
Real wages growth, the report says, was close to 0 per cent in Japan, Spain and the US, but reached 10 per cent per year or more in China, Russia and Ukraine. Wage growth close to the median of about 2.0 per cent per year was observed in countries as diverse as India, Mexico, Poland and South Africa. It says: In 1995-2007, when GDP per capita grew by an extra 1 percentage point, average wages only increased by an extra 0.75 percentage points. The so-called ‘wage elasticity’ of 0.75 confirms that wage growth has lagged behind GDP per capita, and suggests that the growth in real wages lagged behind productivity growth. Over time, this elasticity has declined from 0.80 per cent during 1995–2000 to 0.72 per cent since 2001. Almost three-quarters of countries experienced a downward trend in the share of GDP distributed to wages, compared to profits and other forms of income. While wages are less than perfectly responsive during times of economic expansion, they tend to become overly responsive in times of economic decline. Typically each extra 1 per cent decline in GDP per capita leads to a fall in wages of 1.55 per cent, the report observes. Since 1995, inequality between top wages and bottom wages has increased in more than two-thirds of the countries for which data were available. Among the developed countries, Germany, Poland and the US witnessed the most rapid increase in gap between top and bottom wages. Other regions, particularly Argentina, China and Thailand, also had sharp increase in inequality. A number of countries including Brazil, France, Indonesia and Spain succeeded in reducing wage inequality although inequality remained at a high level in Brazil and Indonesia. The pay gap between genders was also high. In the majority of countries, women’s wages represented on average between 70 per cent and 90 per cent of men’s, but it was not uncommon to find much lower ratios in other parts of the world, particularly in Asia, the report says.
Income inequality
INCOME inequality grew dramatically in most regions of the world and was expected to increase due to the ongoing financial crisis, according to the World of Work Report 2008: Income inequalities in the age of financial globalisation. The report by the ILO’s International Institute for Labour Studies notes that ‘a major share of the cost of the financial and economic crisis will be borne by hundreds of millions of people who haven’t shared in the benefits of recent growth.’ The income gap between poorer and richer households, it says, widened significantly between the early 1990s and 2007. Moreover, ‘workers obtained a smaller share of the fruits of economic growth as the share of wages in national income declined in the vast majority of the countries for which data was available.’ ‘The ongoing global economic slowdown’, the report says, ‘is affecting low-income groups disproportionately. This development comes after a long expansionary phase where income inequality was already on the rise in the majority of countries.’ A joint study by the ILO and the World Trade Organisation secretariat recognises the concerns about the effect of international trade on wage inequality (M Jansen and E Lee, Trade and Employment: Challenges for Policy Research, ILO, and WTO, 2007).
‘In countries with unregulated financial innovation,’ the World of Work Report found, ‘workers and their families became increasingly indebted… to fund housing investment and consumption. With stagnant wages, this was key to sustain domestic demand. However the crisis has underlined the limits to this growth model. Between 1990 and 2005, approximately two thirds of the countries experienced an increase in income inequality. The incomes of richer households have increased relative to those of the middle class and poorer households. Likewise, during the same period, the income gap between the top and bottom 10 per cent of wage earners increased in 70 per cent of the countries for which data are available. The gap in income inequality is also widening – at an increasing pace – between top executives and the average employee.... [I]n the United States in 2007, the …CEOs of the 15 largest companies earned 520 times more than the average worker. This is up from 360 times more in 2003. Similar patterns, though from lower levels of executive pay, have been registered in Australia, Germany, Hong Kong (China), the Netherlands and South Africa.’
In 2007, on the basis of a survey finding Reuters reported from Boston: 64 per cent of top executives even view CEO compensation as excessive. Today the salaries and bonuses of top executives are opposed by the common people in advanced capitalist countries. The bank employees’ unions organised protests against high bonuses. The AFL-CIO joined in at least one such protest in Chicago.
Excessive income inequalities, the World of Work Report notes, could be associated with higher crime rates, lower life-expectancy, and in the case of the poor countries malnutrition and an increased likelihood of children dropping out of schools for the purpose of earning for families. ‘Even in those countries where wages are likely to increase in aggregate,’ the Global Wage Report notes, ‘some workers will suffer from real wage declines. In particular, the impact of food price inflation will be greater for poor workers and households in developing countries as these groups spend a much higher proportion of their incomes on purchase of food.’ It was found that expenditure for food was less than 20 per cent of total expenditure in Denmark, the Netherlands and Switzerland while it was more than 60 per cent in many developing countries. The ratio exceeds 70 per cent in a number of countries including Armenia, Niger and Romania. The increase in food prices in these countries threatens the health of poor households. ‘Higher food prices’, the report says, ‘will not only translate into worse diets for poor households, they will also lead to cuts in the purchasing of other goods and services that are vital for the well-being of family members. Women, especially pregnant women and nursing mothers, as well as children, are likely to be worst hit.’ To cope with the situation, the less earning women ‘take on more paid work – often informal and casual – lengthening further their already long working days.’
Minimum wages and collective bargaining
Minimum wages, the Global Wage Report observes, have been reactivated in recent years ‘to reduce social tensions resulting from’ the increasing ‘inequalities in the lower half of the labour market.’ Globally, in 2001-07, minimum wages were raised by an average of 5.7 per cent per year, in real terms. This contrasts with some previous periods when the real value of the minimum wage had declined. Real gains for minimum wage earners, according to the report, were substantial both in developed countries and the EU (+3.8 per cent) and in developing countries (+6.5 per cent). Minimum wages have also increased relative to average wages, from 37 per cent in 2000–02 to 39 per cent in 2004–07, a 2 percent gain up to 2007. Then, the Great Financial Crisis came in with its heavy hands that almost bankrupted Iceland, Greece and Italy. Without credible enforcement mechanism, according to the report, provisions for ‘minimum wages too often remain a “paper tiger” rather than an effective policy.’ There are evidences from a number of countries that ‘non-compliance can be extremely high, especially in developing countries.’
Collective bargaining coverage, according to the report, has declined. In many countries it is low and decreasing as a consequence of a number of factors including the increase in the number of workers in smaller firms or under atypical forms of contracts. It remains high in a few countries including Denmark, Finland, Portugal, Slovenia, Spain and Sweden. European countries recently experienced decline in collective bargaining coverage and the increase in the number of ‘working poor’ in the unregulated part of the labour market, and these have created strong social tensions. A few countries including Argentina and South Africa have stimulated collective bargaining.
‘[F]reedom of association’, the Global Wage Report says, ‘remains a challenge.’ Capital, by contrast, is free to get united, speculate, create havoc, submerge, and have the privilege to get bailed out. ‘Government intervention in trade union activities’, it says, ‘remains a recurrent problem and the number of complaints received by the ILO concerning acts of anti-union discrimination and interference has increased. Several countries also continue to exclude important categories of workers from the right to collective bargaining, particularly domestic workers, agricultural workers, seafarers and public servants. In some countries, murder of trade unionist also remains a serious concern.’ The ground reality in many poor countries, faced by trade unionists there, is much more difficult, and full of cruelties.
The report recommended ways should be negotiated ‘to prevent a further deterioration in the share of wages relative to the share of profits in GDP… [T]he levels of minimum wages should be increased wherever possible to protect the purchasing power of the most vulnerable workers.’
In the centre of the centre
Long working hours, squeezing of necessary labour time, capital’s increased appropriation of labour even during labour’s hard time could very well push workers in increasing number to defend and advance their interest and will bring in audacity to fight, writes Farooque Chowdhury in conclusion of an essay serialised in two parts
THE overall reality of inequality and poverty in the centre of the centre of the world system is no exception. It is the labour that is under pressure. With wave of layoffs and devastated household budgets the recession has widened the gap between the richest and poorest in the US. While poverty jumped sharply to 13.2 per cent, an 11-year high, income at the top 5 per cent households, those making $180,000 or more, was 3.58 times the median income, the highest since 2006. The wealthiest 10 per cent, those making more than $138,000 each year, earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008. That ratio was an increase from 11.2 in 2007. On the basis of newly released census figures AP reported on September 29:
Pharr, Texas, and Flint, Michigan each had more than a third of its residents on food stamps, at 38.5 per cent and 35.4 per cent, respectively. Use of food stamps jumped 13 per cent last year to nearly 9.8 million US households, led by Louisiana, Maine and Kentucky. The increase was most evident in households with two or more workers, highlighting the impact of the recession on both working families and unemployed single people. HH income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade’s worth of gains to hit the lowest level since 1997. Large cities such as Atlanta, Washington, New York, San Francisco, Miami and Chicago had the most inequality. …Declining industrial cities with pockets of well-off neighbourhoods, such as Pittsburgh, Cleveland and Buffalo, N.Y., also had sharp disparities. Tampa-St. Petersburg, Orlando, Bradenton and Palm Bay experienced gains in the share of poor residents. Twenty-one states and the District of Columbia had higher poverty rates than the national average. These include Mississippi (21.2 percent), Kentucky, Arkansas and Louisiana (each with 17.3 percent). In 2007, it was 19 states and the District of Columbia that ranked above US poverty.
This reality was identified long ago by John Bellamy Foster and Fred Magdoff. Referring to Longer Hours, Fewer Jobs (Monthly Review Press, 1994) by Michael D Yates and to The Confiscation of American Property (Palgrave Macmillan, 2007) by Michael Perelman, Foster and Magdoff write in their The Great Financial Crisis: ‘Stagnation in the 1970s led capital to launch an accelerated class war against workers to raise profits by pushing labor cost down. The result was decades of increasing inequality.’ Citing the Economic Report of the President, 2008 Foster and Magdoff said: ‘[R]eal wages of private nonagricultural workers in the United States (in 1982 dollars) peaked in 1972 at $8.99per hour, and by 2006 had fallen to $8.24 (equivalent to the real hourly wage rate in 1967), despite the enormous growth in productivity and profits over the past few decades.’ They, referring the correspondents of the New York Times, Class Matters (Times Books, 2005) and International Perspectives on Household Wealth (Edward N Wolff, ed., 2006), said: ‘This was part of a massive redistribution of income and wealth to the top. Over the years 1950 to 1970, for each additional dollar made by those in the bottom 90 per cent of income earners, those in the top 0.01 per cent received an additional $162. In contrast, from 1990 to 2002, for each added dollar made by those in the bottom 90 per cent, those in the uppermost 0.01 per cent (today around 14,000 households) made an additional $18,000. In the United States the top 1 per cent of wealth holders in 2001 together owned more than twice as much as the bottom 80 per cent of the population. If this were measured simply in terms of financial wealth, i.e. excluding equity in owner occupied housing, the top 1 per cent owned more than four times the bottom 80 per cent. Between 1983 and 2001, the top 1 per cent grabbed 28 per cent of the rise in national income, 33 per cent of the total gain in net worth, and 52 per cent of the overall growth in financial worth.’
‘The glaring increase,’ writes Yates, ‘in economic inequality evident in the United States over the past thirty years has finally made it into the pages of the major media. … The growing economic divide has also caught the attention of a few prominent economists, like Joseph Stiglitz and Paul Krugman. Even Treasury Secretary Henry Paulson has admitted that inequality is on the rise….Since the mid-1970s the owners of the means of production have waged unrelenting warfare against workers and their unions, and the results are everywhere apparent – workingmen and women have become more and more subservient to the vagaries and cruelties of marketplace’ (Introduction to Yates edited More Unequal: Aspects of Class in the United States, Monthly Review Press). The state of labour in the periphery and near-periphery of the world system is no less miserable.
Long working hours
AN EXAMPLE will show the pressure on middle class family in the centre of the centre of the world system, and will help understand the suffering of the working class families earning less or are laid off. A family in New Richmond, Wisconsin, had more than $100,000 debt five years ago. ‘Through frugality, determination and hard work,’ they are now – other than a mortgage – debt-free. The family’s lifestyle was not lavish living, with twin daughters, in a rented 1,000 square foot town home. The husband worked as a chemist with an environmental testing laboratory, and the wife, a stay-at-home mom, home-schooled their daughters. ‘The accumulation of day-to-day expenses left the family going a bit more into debt each year.’ They had to eliminate discretionary spending, begin buying generic food and frequent thrift stores for clothing purchases, stop exchanging Christmas and birthday gifts with each other and their relatives. Even with the drastic cutbacks, they could not cover the $2,000 they were sending each month to be distributed to their creditors. The sum amounted to about half of the take-home pay. So the husband took on a second job cleaning a local grocery store several nights a week from midnight to 4:30am. He would arrive home from his day job, eat dinner, catch a few hours of sleep and head to work. After his shift, he would go back home, sleep a few more hours and then get up for his day job. The work schedule for one was gruelling while the other managed just about everything at home on own.
The example tells the realities of: (1) long working hours, (2) squeezing of necessary labour time, (3) capital’s increased appropriation of labour even during labour’s hard time. And, the ILO reports show: (1) growth in productivity does not increase real wages, (2) while wages experience a downward trend and turn responsive to economic decline profit declines to share sufferings.
This gradually emboldening reality will push workers in increasing number to defend and advance their interest and will bring in audacity to fight. As Frank Brinkman, a Philadelphia union member said. ‘We have to stand up for our rights.’ It is, as history suggests, actually part of capital’s journey ad finem, to the end.
THE overall reality of inequality and poverty in the centre of the centre of the world system is no exception. It is the labour that is under pressure. With wave of layoffs and devastated household budgets the recession has widened the gap between the richest and poorest in the US. While poverty jumped sharply to 13.2 per cent, an 11-year high, income at the top 5 per cent households, those making $180,000 or more, was 3.58 times the median income, the highest since 2006. The wealthiest 10 per cent, those making more than $138,000 each year, earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008. That ratio was an increase from 11.2 in 2007. On the basis of newly released census figures AP reported on September 29:
Pharr, Texas, and Flint, Michigan each had more than a third of its residents on food stamps, at 38.5 per cent and 35.4 per cent, respectively. Use of food stamps jumped 13 per cent last year to nearly 9.8 million US households, led by Louisiana, Maine and Kentucky. The increase was most evident in households with two or more workers, highlighting the impact of the recession on both working families and unemployed single people. HH income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade’s worth of gains to hit the lowest level since 1997. Large cities such as Atlanta, Washington, New York, San Francisco, Miami and Chicago had the most inequality. …Declining industrial cities with pockets of well-off neighbourhoods, such as Pittsburgh, Cleveland and Buffalo, N.Y., also had sharp disparities. Tampa-St. Petersburg, Orlando, Bradenton and Palm Bay experienced gains in the share of poor residents. Twenty-one states and the District of Columbia had higher poverty rates than the national average. These include Mississippi (21.2 percent), Kentucky, Arkansas and Louisiana (each with 17.3 percent). In 2007, it was 19 states and the District of Columbia that ranked above US poverty.
This reality was identified long ago by John Bellamy Foster and Fred Magdoff. Referring to Longer Hours, Fewer Jobs (Monthly Review Press, 1994) by Michael D Yates and to The Confiscation of American Property (Palgrave Macmillan, 2007) by Michael Perelman, Foster and Magdoff write in their The Great Financial Crisis: ‘Stagnation in the 1970s led capital to launch an accelerated class war against workers to raise profits by pushing labor cost down. The result was decades of increasing inequality.’ Citing the Economic Report of the President, 2008 Foster and Magdoff said: ‘[R]eal wages of private nonagricultural workers in the United States (in 1982 dollars) peaked in 1972 at $8.99per hour, and by 2006 had fallen to $8.24 (equivalent to the real hourly wage rate in 1967), despite the enormous growth in productivity and profits over the past few decades.’ They, referring the correspondents of the New York Times, Class Matters (Times Books, 2005) and International Perspectives on Household Wealth (Edward N Wolff, ed., 2006), said: ‘This was part of a massive redistribution of income and wealth to the top. Over the years 1950 to 1970, for each additional dollar made by those in the bottom 90 per cent of income earners, those in the top 0.01 per cent received an additional $162. In contrast, from 1990 to 2002, for each added dollar made by those in the bottom 90 per cent, those in the uppermost 0.01 per cent (today around 14,000 households) made an additional $18,000. In the United States the top 1 per cent of wealth holders in 2001 together owned more than twice as much as the bottom 80 per cent of the population. If this were measured simply in terms of financial wealth, i.e. excluding equity in owner occupied housing, the top 1 per cent owned more than four times the bottom 80 per cent. Between 1983 and 2001, the top 1 per cent grabbed 28 per cent of the rise in national income, 33 per cent of the total gain in net worth, and 52 per cent of the overall growth in financial worth.’
‘The glaring increase,’ writes Yates, ‘in economic inequality evident in the United States over the past thirty years has finally made it into the pages of the major media. … The growing economic divide has also caught the attention of a few prominent economists, like Joseph Stiglitz and Paul Krugman. Even Treasury Secretary Henry Paulson has admitted that inequality is on the rise….Since the mid-1970s the owners of the means of production have waged unrelenting warfare against workers and their unions, and the results are everywhere apparent – workingmen and women have become more and more subservient to the vagaries and cruelties of marketplace’ (Introduction to Yates edited More Unequal: Aspects of Class in the United States, Monthly Review Press). The state of labour in the periphery and near-periphery of the world system is no less miserable.
Long working hours
AN EXAMPLE will show the pressure on middle class family in the centre of the centre of the world system, and will help understand the suffering of the working class families earning less or are laid off. A family in New Richmond, Wisconsin, had more than $100,000 debt five years ago. ‘Through frugality, determination and hard work,’ they are now – other than a mortgage – debt-free. The family’s lifestyle was not lavish living, with twin daughters, in a rented 1,000 square foot town home. The husband worked as a chemist with an environmental testing laboratory, and the wife, a stay-at-home mom, home-schooled their daughters. ‘The accumulation of day-to-day expenses left the family going a bit more into debt each year.’ They had to eliminate discretionary spending, begin buying generic food and frequent thrift stores for clothing purchases, stop exchanging Christmas and birthday gifts with each other and their relatives. Even with the drastic cutbacks, they could not cover the $2,000 they were sending each month to be distributed to their creditors. The sum amounted to about half of the take-home pay. So the husband took on a second job cleaning a local grocery store several nights a week from midnight to 4:30am. He would arrive home from his day job, eat dinner, catch a few hours of sleep and head to work. After his shift, he would go back home, sleep a few more hours and then get up for his day job. The work schedule for one was gruelling while the other managed just about everything at home on own.
The example tells the realities of: (1) long working hours, (2) squeezing of necessary labour time, (3) capital’s increased appropriation of labour even during labour’s hard time. And, the ILO reports show: (1) growth in productivity does not increase real wages, (2) while wages experience a downward trend and turn responsive to economic decline profit declines to share sufferings.
This gradually emboldening reality will push workers in increasing number to defend and advance their interest and will bring in audacity to fight. As Frank Brinkman, a Philadelphia union member said. ‘We have to stand up for our rights.’ It is, as history suggests, actually part of capital’s journey ad finem, to the end.
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