Stagnant wages aren't a bug. They're a feature

The new wage numbers came out today, and they disappointed again.

Economists had projected a 3.2% rate of increase in productivity and a 0.3% rise in labour costs.
Versus a year-ago, productivity was 1.5% higher and labour costs 0.7% lower.
In parallel, hourly compensation was only up by 0.8% and down by 1.1% when adjusted for changes in the price level.

November recorded the slowest pace of wage growth in the past three years.
wages1.jpg
Year after year economists admit to how "puzzled" they are by stagnant wages. It's a real "mystery" to them. Then they go ahead and predict that wages are about to shoot higher, just like they predicted the year before, and the year before that.
They are consistently wrong because their paychecks depend on not understanding their jobs.

For instance, economists and politicians are unanimous in declaring free trade as a universal good. Any worker with more than two functioning brain cells can tell you it isn't.

Efforts to renegotiate NAFTA have so far mostly ignored the paramount issue — the outsourcing of industry and jobs to Mexico because of its very low wages and lack of labor rights.
...With wages around a dollar an hour, the U.S. “Big Three,” Japanese and German companies moved production to Mexico, with suppliers swarming in mass alongside. Low wages in Mexico are ingrained in a labor structure where workers have no rights. They labor under so-called protection agreements between the employer and a “union” attached to the government. There are thousands of these “agreements” often signed before there were any workers or without their participation or consent. Complaints by employees on working conditions were invariably thrown into a dark hole composed of labor boards controlled by the government or CTM and the hostile company. Industrial wages in Mexico in real-dollar terms have gone down in the 25 years of NAFTA, even as productivity has gone up 80 percent. A new $1 billion BMW plant recently opened shows this trend continuing — wages will range from $1.10 to $2.53 per hour according to a review from Bloomberg.
So far, there has been a broad failure to face up to this issue during the current negotiations to revamp NAFTA.

Wages are a reflection of leverage. More productivity doesn't mean increased wages anymore than more corporate profits turn into wages. When you take away power from workers, when you make them nothing but a collection of individuals, they are weak.
Lowering taxes and cutting regulations on corporations won't turn into better pay either. Despite the lies coming from Republican mouths.

Profit margins increased after the Great Recession and over the past 6 years have been above 9%. However in this timeframe wage growth has been around 2%. One of the reasons for the bounce back in margins and increased company profitability is due to wage growth being low. Just because a company were to make even more money shouldn’t change this trend.

Besides the ability of economists, politicians, and the news media to ignore this basic and indisputable fact, there is also selective amnesia.
That's why I enjoyed this letter to the editor.

During that meeting, we provided Smith and Walker with some studies and analysis, one of which was done by the Higgins Labor Studies Program, University of Notre Dame, public commentary, dated Jan. 3, 2012, titled “Right to Work Lowers Wages — And That’s a Fact,” written by Marty Wolfson.
We pointed out to them that there was quantitative data that showed that states that became right-to-work saw a corresponding reduction in wages for union and non-union workers alike of $1,500 per year, according to Notre Dame’s Higgins Institute. They both seemed to understand that going right-to-work would slow their constituents’ wage growth, but they saw that as a positive. They said it would make it more attractive for businesses to come to Indiana.
Let me repeat that. They chose to enhance corporate profits over the wages of their constituents. That means every year, hard-working Hoosiers will slowly fall further behind workers in non-right-to-work states, because the system has been rigged against them by this state’s Republican-controlled Legislature.
As I said, the slowed wage growth of Hoosiers is not a bug; it is a feature.

The next time you hear a politician, economist or pundit say something about the need to "be more competitive", it simply means cutting your wages. It's part of the plan.

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as long as workers don't organize...

Under a Labor Department rule change proposed Monday, employers could ask employees who earn a salary of at least the federal minimum wage of $7.25 per hour, and also earn tips, to pool the tip money and share it with colleagues who don't earn gratuities. That practice was barred in 2011 by President Obama's Labor Department, which said that tips belonged to the employee who earned them, and could only be legally pooled with other employees who received tips.
...
But the National Employment Law Project, a progressive group, said the move would give employers too much discretion over how to allocate the tips their workers earn.
"Tips belong to the workers who have earned them -- period. But today the Trump Labor Department has proposed a pathway for employers to keep the tips for themselves," NELP director Christine Owens said.
The organization pointed to a line in the Labor Department document, which specifically says that managers could use pooled tip money to make structural improvements, like expanding the dining area, or to lower menu prices.
"Crucially, the rule doesn't actually require that employers distribute pooled tips to workers," said Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute, in a statement.

The solution isn't to raise the minimum wage.
The solution is for workers to organize into unions.
The former is something granted/mandated by the government.
The latter comes from workers being empowered.

Clearly, workers have been unable to take home a fair share of the new value they were creating. Why? One big potential culprit is the decline of labor unions. Unions use strikes and other collective action as a bargaining chip to force employers to raise wages. For this reason, union workers get paid about 22 percent more than non-unionized workers. Even non-union workers often benefit from unions setting the bar higher for wages. But unionization rates, never more than 50 percent, have declined to a negligible level in the U.S. private sector

union.PNG

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Segment of Tucker Carlson with Professor Mark Blyth to help paint part of the picture on wages. Crazy times.

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@MrWebster
after Michael Hudson and Steve Keen.

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for credit/debt. Which is also another big feature. Bastards.

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detroitmechworks's picture

to be stable.

And I include the service in that because I didn't make nearly enough money to take hire someone to take care of my kids and do a decent job. Only folks in my budget were not folks I wanted watching my kids.

Own a house? Never been on my radar my entire life.

Of course, every time wages DO rise in a location, every corporate slimelord raises their prices, and blames the law. Often the beneficiary of the new "raise" ends up with less actual spending power than before...

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You can't expect to wield Supreme Military power, just cause some corporate tosser lobbed a contract at you!

thanatokephaloides's picture

@detroitmechworks

I don't think I've EVER made enough, my entire working life... to be stable.

And I include the service in that because I didn't make nearly enough money to take hire someone to take care of my kids and do a decent job. Only folks in my budget were not folks I wanted watching my kids.

Own a house? Never been on my radar my entire life.

I resemble those remarks! And I did what I was supposed to do, too: avoided debt, children, and obligations until I had a stable, prosperous livelihood. Went to such school as I could afford, etc. No help. Good opportunities went to "men with families", which meant married with children before seeking a livelihood!

AAaaaauuuughhh!!

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"Some members of the government are now investigating opioid pain killers but they are investigating the wrong thing. Despair-masking drugs are not the problem. Despair is."
-- featheredsprite

detroitmechworks's picture

@thanatokephaloides I'm going to burn through my entire repertoire at this rate.

Of course, in the American Rat Race, it's now blatantly obvious how the game is rigged...

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8 users have voted.

You can't expect to wield Supreme Military power, just cause some corporate tosser lobbed a contract at you!

@detroitmechworks
odd coincidence that after the fact, the actors portraying the Footlights team were generally rather more successful than the actors portraying the Scumbag students.

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5 users have voted.

Sigh

snoopydawg's picture

@detroitmechworks

except for when I first started working and had a sweet part time job that made lots of tax free money. I've only paid off two cars in my long list of keeping up with everyone else. My first and last cars. 20/20 hindsight is a bitch.

The PTB have talked people into believing that unions are terrible and they get paid too much money. This has erased the memory of what unions did for everyone. This type of propaganda war has happened in too many areas.

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a longtime oligarch eugenics plan is already well underway

earth is the insane asylum for the universe

detroitmechworks's picture

@snoopydawg to not have to think of money. I can't stand money. I hate it with a passion. Would that money could be relegated to a small subculture of fetishists. Oh god I think My communist leanings showed there! QUICK! Something that shoes my love for Capitalism!

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10 users have voted.

You can't expect to wield Supreme Military power, just cause some corporate tosser lobbed a contract at you!

thanatokephaloides's picture

@detroitmechworks

What a joy it would be... to not have to think of money. I can't stand money. I hate it with a passion. Would that money could be relegated to a small subculture of fetishists. Oh god I think My communist leanings showed there! QUICK! Something that shoes my love for Capitalism!

Or, as they put it about 100 years ago:

Wink

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"Some members of the government are now investigating opioid pain killers but they are investigating the wrong thing. Despair-masking drugs are not the problem. Despair is."
-- featheredsprite

snoopydawg's picture

@detroitmechworks

They say that money can't buy happiness, but I'd like the chance to prove them wrong. It might not buy happiness, but it definitely relives stress that comes from not having it. Smile

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a longtime oligarch eugenics plan is already well underway

earth is the insane asylum for the universe

The Aspie Corner's picture

@snoopydawg

The PTB have talked people into believing that unions are terrible and they get paid too much money. This has erased the memory of what unions did for everyone. This type of propaganda war has happened in too many areas.

For instance, idiots post memes saying "Trump built that" or some other nonsensical shit like "Bernie Sanders never had a job or invented anything". Given how blatantly incompetent Trump has been throughout this clusterfuck presidency, I find it very hard to believe he ever did anything, ever.

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divineorder's picture

@detroitmechworks son/daughter in law have been having a very similar experience with rents and childcare costs.

We are childless by choice, live on Social Security and the piss poor little TX teacher pension. We were lucky to work 8n Austin where they voted to have both SS and Teacher Retirement taken out of checks.

Even though we worked in a
'Right To Work State' and were not able to have a real union like teachers in California etc, we did benefit in Austin from very strong teacher organizations that fought for wage increases, healthcare, and against all manner of national state local attacks on our jobs.

From that base of security we were able to buy and sell 12 homes over the years, and retire at age 55. Unlike most of our friends and family, we have always been VERY extremely frugal and are debt free.

Whatever success we have had in our lives has been in a large part made possible by local affiliates of the national unions NEA/AFT.

I bring this example forward at a time when our defined benefit pension is under continued attack, and our retiree health benefit is being reduced hand hanging on by a thread. Not to mention the horrors that the colleagues we left behind have faced from budget cuts and testing.

GJ is completely correct about the importance of organizing.

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A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

Meteor Man's picture

A good read at Counterpunch about how we got to this sorry state of affairs. The article has a concise history of the rise of corporate power that led us to this point and this conclusion:

The fusion of the corporation and the state, not free-market capitalism, is the true political economy of the U.S.

The way forward:

Corporate power has created a world so unequal that there is no way to change it within the existing political framework. Teams of researchers using data that span thousands of years have concluded that the current extremes in wealth are setting the stage for conflict. In The Great Leveler, historian Walter Scheidel, concludes that only mass mobilization wars, transformative revolutions, pandemics or state collapse have redistributed wealth once it has reached current extremes.

The rough road ahead:

Of the most likely outcomes that lie ahead transformative revolution and transformative social movements like Standing Rock, are our best chance to minimize violence, reduce harm and create a better world.

https://www.counterpunch.org/2017/12/06/how-corporate-power-killed-democ...

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Cali Kush: a bowl a day keeps the doctor away.

divineorder's picture

@Meteor Man

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A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

EdMass's picture

I never got a COLA raise after the late 1990's.

After, the only way to get a raise was to change jobs/companies.

Coincidentally, this all transpired with the demise of pensions.

Unless of course you worked for the Gubmint in which case you got your COLA, you got your pension and you got your unused sick days...

Funny that.

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“Breaking News: The United States political system has been arrested for fraud, treason, and premeditated murder of democracy.” -- Big Al

Stop The War!

The Aspie Corner's picture

@EdMass Especially for those of us who happen to be differently abled...unless you count the contract work deals that Voc Rehab sometimes get, all with the 'promise' that you'll be hired after three to six months. I had 2 of these, and was never hired either time.

Sure, there are plenty of postings on Indeed, Career Builder and the like, but no one who posts these damn things actually wants to hire anyone. The job descriptions and requirements get more ridiculous every year. And if you're unable to get a drivers' license or a working vehicle, you'll never get hired anywhere in some places, even if it's for medical reasons you can't drive.

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EdMass's picture

@The Aspie Corner

I am now 62. Vital. Healthy. Good Looking!

Unemployed for 5 years.

Why?

Too old. No matter the pay/commission plan it is somehow beneath me. They don't want to hire someone who will be dissatisfied.

I want the job. I determine dissatisfaction.

You just don't want to be sued for age discrimination you fucks.

Or of course you can hire a 22 year old for 1/5 of the pay and "groom them" into the perfect one.

When I rule the World, this will be different.

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“Breaking News: The United States political system has been arrested for fraud, treason, and premeditated murder of democracy.” -- Big Al

Stop The War!

The Aspie Corner's picture

@EdMass I'm only 33. My work history is, at best, spotty. Yet, while supervisors I've had over the last several years have always had good things to say and while I excelled at the last 2 jobs I've held, getting hired is impossible for the reasons I mentioned in my last post.

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Wink's picture

raise was a feature! I was so happy to help out the 1%.

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the little things you can do often are more valuable than the giant things you can't! - @thanatokephaloides. All about building progressive media. (-1.9) On Twitter @winkradio.

ggersh's picture

Year after year economists admit to how "puzzled" they are by stagnant wages. It's a real "mystery" to them. Then they go ahead and predict that wages are about to shoot higher, just like they predicted the year before, and the year before that.
They are consistently wrong because their paychecks depend on not understanding their jobs.

For instance, economists and politicians are unanimous in declaring free trade as a universal good. Any worker with more than two functioning brain cells can tell you it isn't.

Free trade the fallacy only works for corporations, it was just a real poor marketing tool, also a tool for wage arbitrage in which corporations are
free to move jobs to lowest cost producer along with the lowest regulations
which leads to destroying mother earth much quicker.

"Free Trade" is just wrong on every level.

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“Those who don’t study history are doomed to repeat it. Yet those who DO study history are doomed to stand by helplessly while everyone else repeats it.” Unknown.

divineorder's picture

@ggersh

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A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

GreyWolf's picture

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