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Middle Class Fighting for Crumbs

April 09, 2013 By Lee Egerstrom, Economic Development Fellow

If you recall childhood experiences with sharing, like splitting a cookie with four friends, one would almost always have to settle for crumbs.

This is America's economic experience today. Now, three or four playmates get crumbs while one or two lucky members snarfe down a modest share and one gets all the chocolate chips. We in Minnesota are only slightly better off than our fellow Americans. A big reason for this slight advantage is that labor hasn’t lost as much collective bargaining power in Minnesota as in at least half of the U.S. states.

New contracts and membership growth in the first quarter of this year appear to be adding union members although gains are offset by Minnesota losses in public service employment at the local, state and federal levels.

“We can’t say we’ve turned the corner yet,” said Brad Lehto, Minnesota AFL-CIO chief of staff. “We hope we’ve bottomed out. At least, it does appear the labor movement is stabilizing.”

What happens from this point on will be greatly influenced by public service investments and state and local bonding for infrastructure projects, Lehto said. The cloud over the economy comes from Washington where Congress will either agree to compromise and stimulate the economy, or drag down the economy further through ill-conceived austerity measures, he added. 

Former Secretary of Labor Robert Reich, now at University of California Berkeley, also made that point in a recent blog on the U.S. labor market's weak March growth. The U.S. jobless rate fell slightly to 7.6 percent because a half million people stopped looking for work, not because American business created a modest 88,000 new jobs, he said.  

“We’re experiencing the burden of austerity economics and the continued scourge of widening inequality,” Reich wrote. “Both are squeezing average Americans.”

Organized labor is important when it comes to closing the wealth gap. Union agreements become benchmarks for determining compensation, health and pension benefits, and workplace conditions for manual laborers and white-collar workers alike. These collective bargaining agreements influence compensation packages in non-unionized shops, depending on skill, education level and other criteria. Thus, labor agreements have far greater influence on Minnesota and the nation's economic health than the mere number of people directly involved in a particular contract, as U.S. Bureau of Labor Statistics (BLS) data show.

The impact of declining union membership is dramatically shown in the Spring 2013 edition of the CWA News, the newspaper of the Communications Workers of America. Using BLS data, CWA notes that American workers would be making an average of $1,183 per week, instead of $637 per week, had inflation-adjusted wages kept pace with worker productivity gains since measurements began in 1947. On that score alone, workers – and by extension the middle class – have lost more than $500 per week in compensation,

Moreover, CWA shows that American workers covered by collective bargaining agreements have fallen to 11.3 percent of the workforce. That hasn’t happened in countries with strong to fairly strong middle classes.

Using Organization for Economic Cooperation and Development (OECD) data, CWA noted that 67.7 percent of Swedish workers are covered by collective bargaining, 54.6 percent of Norwegians, 35.6 percent of the Irish, 28.8 percent of Canadians, 25.8 percent in the UK, 20.8 percent in New Zealand, 19 percent of the Japanese, 18 percent of Australians, and 15 percent of Chileans.     

      

A video using government data and academic studies shows who gets all the chocolate chips if we use a playground cookie analogy. Middle class earners have fallen from making 62 percent of household income in 1970 to only 45 percent in 2010, based on Census data. The upper class grew from taking 29 percent of incomes in 1970 to 46 percent in 2010.

The talk about the shrinking middle class is real. Labor’s importance for the entire economy should be obvious. As Reich observed in his April blog, “…it’s impossible to have a buoyant and sustained recovery without a large and growing middle class.”

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1 Comments:

  • RRobert Nepper says:

    April 16, 2013 at 10:04 am

    The middle (an lower classes) will continue to “fight for crumbs” as you put it, until we wise up and restore creative freedom for our inventors who create most of the new jobs. If we lift the severe restrictions on our employed inventors by passing the proposed “Use or Return” initiative (SF 21), we might create enough new industrial jobs to force up wages and salaries.

    Had Marty Cooper worked for any major Minnesota company his invention of the cell phone most likely would have been claimed and then SCUTTLED as “science fiction!” Under current rules employers are allowed to claim and then CRUSH any employee inventon they so choose so no one can create new jobs with them!

      Fortunately, Marty worked for Motorola which appreciated his creativity and supported his invention rather than SQUASH it. So we now have that TRILLION-dollar worldwide industry today!

      Think of tis situation every time you use your cell phone and then urge your state lawmakers to revive and PASS the no-cost Creative Freedom Act, SF 21!