Stocks Are Booming, But Pay Checks Weak

Unemployment in the US has been under 6% since 2015. In 2017, it hit its lowest in 16 years, 4.2%, close to full employment.

People are not feeling it in their paychecks, however. Wage growth is “out of whack,” according to Mitchell Hartman of Market Place Media, at 2%, .5% lower than the inflation rate.

In an era of rising socialist sentiments, a burning question is — why aren’t jobs working for the people?

Wage growth is 'out of wack,' according to Mitchell Hartman of Market Place Media, at 2%, .5% lower than the inflation rate.

Experts claim that uncertainty and low productivity are to blame, but productivity has been rising since the 1970’s while wages have remained stagnant; and the stock market has been rallying, garnering huge profits for Wall Street, betraying a sense of uncertainty.

So what gives?

The US Values Academics Over Workers

Manufacturing is gone, or so they say. New socialists claim that the changes in industry toward automation will lead to massive unemployment, a post-work society, and necessitate a welfare state.

But, leaders in the industry told another story on NPR’s 1A program on Labor Day.

America has a skills gap.

There are 6 million jobs waiting for qualified candidates, and 7 million unemployed people, according to 1A’s guest Nicholas Wyman, of the Institute for Workplace Skills and Innovation. A significant portion of these jobs are in manufacturing, and can lead to a six figure job, without a degree.

Manufacturing jobs don’t look the same as they did generations ago. Assembly lines are high-tech, but there are many important functions that people need to do, like programming, oversight, and repair. Welding and machinists are in high demand across the industrial field as well, said 1A guest Christine Scullion.

There are 6 million jobs waiting for qualified candidates, and 7 million unemployed people.
Kathryn Bullington, IVN Independent Author

The jobs are out there, but workers are simply not going into them.

“Manufacturing has a perception problem,” said Scullion. “There is a stigma to going to vocational school, or to not going to college.”

In addition, said Robert Lerman, of the Urban Institute, the US puts “almost all funding and orientation into the education only basket.” Companies are looking for employees with mastery of hands-on skills, and that is something that higher education does not provide.

Guests on the program stressed the need for robust registered apprenticeship programs in the US, similar to those in Switzerland, Canada, and Australia.

Those countries have an average of 4 million apprentices, versus the US’s 400,000.

We have to get rid of the stigma, the guests said, that a person without a 4-year degree contributes less to society.

Outsourcing Depresses Wages

True to the socialist critique of capitalism, large companies today maximize profits for themselves, and their shareholders, by cutting their workforce.

In today’s economy, that means outsourcing jobs that are not “core competencies,” according to Neil Irwin’s recent New York Times article.

Today's big companies, like Apple, outsource these positions to private contractors, who often pay less, provide no time off, education assistance, or upward mobility.
Kathryn Bullington, IVN Independent Author

Depressed wages, and lack of mobility are contributing factors to the US’s crushing wage gap, according to the article. Industries like Kodak, a generation ago, directly employed positions like janitors, customer service call centers, warehouse workers, and distributors.

Those positions came with paid vacation, tuition support, and opportunities to move up within the company. Today’s big companies, like Apple, outsource these positions to private contractors, who often pay less, provide no time off, education assistance, or upward mobility.

The top ten tech companies today employ 1.5 million workers, compared to the top 10 companies in 1979 that employed 2.2 million.

“The drop in big companies’ practice of paying relatively high wages to their low- and mid-level workers could have accounted for 20 percent of the wage inequality increase from 1989 to 2014,” the article said.

Not Enough Workers Demand a Higher Wage

In 2014, socialist and former Occupy activist, now Seattle Councilwoman Kshama Sawant, won her political seat by staging demonstrations for a city-wide $15/hr minimum wage. She got what she and her supporters demanded. Since then, several strikes have taken place in big companies like McDonalds and Wal-Mart, demanding higher wages, and rights to unionize.

The top ten tech companies today employ 1.5 million workers, compared to the top 10 companies in 1979 that employed 2.2 million.
Kathryn Bullington, IVN Independent Author

McDonalds and Wal-Mart responded moderately to worker’s demands, increasing minimum wages some, and adding some perks, like education assistance and paid time off. Contrary to naysayers, who thought that higher wages would negatively impact the companies, McDonalds’s and Wal-Mart are seeing lower turnover rates, and higher customer satisfaction — which translates into higher profits for the moguls.

Wage workers in these companies, however, are still vying for $15/hr, and rights to unionize.

Historically, unions have mitigated the natural tendencies of companies to abuse workers’ rights, but today, remarkably few workers are unionized.

In the 1950’s, close to 40% of the US workforce was unionized. Today, that figure is less than 6%.

There are many theories to why union membership has declined, including but not limited to: stronger legislation for workers’ rights, legislation against unionization, global competition, young workers’ unfamiliarity with unions, better employers, and worker dissatisfaction with union leadership.

Whatever the case, it is clear that the persistent and widening wealth gap in the US can be traced to low wages, and fewer supportive jobs.

Power of Employers Must Be Matched by Power of Workers

Employers cannot legally stop employees from unionizing, and as Fredrick Douglas famously said, “Power cedes nothing without demand.”

Perhaps we don’t need to change our entire political and economic systems to effect the desired change the people are looking for. Perhaps we simply need a more courageous workforce, and a higher appreciation for labor.

Photo Credit: a katz / shutterstock.com