Text version of the Militant, a socialist newspaper  
the Militant, a socialist newspaper
about this site directory of local distributors how to subscribe submit a photo or image order bundles of the Militant to sell
news articles editorials columns contact us search view back issues
The Militant this week
Workers face grinding pressures on wages, jobs
Real wages drop in U.S. over a year, as medical costs rise
Back on job, Utah miners face war by Co-Op bosses
Socialists say: ‘Massive public works program! Full cost-of-living protection! Raise minimum wage!’
In Oak Ridge, Tennessee, speech, Bush outlines U.S. gov’t progress in ‘war on terror’
Socialist Workers ballot drive in New York is ‘stunning success’: 28,000 sign in 12 days
Washington threatens Sudan with sanctions  
U.S. gov’t imposes steep fines for unauthorized trade with Cuba
Perspectiva Mundial
Submit Letter to the editor
submit forum
submit to calendar

A socialist newsweekly published in the interests of working people
Vol. 68/No. 28August 3, 2004

lead article
Workers face grinding pressures on wages, jobs
Real wages drop in U.S. over a year, as medical costs rise
Thousands of unemployed New Yorkers line up to attend job fair in February. Systemic erosion of capitalist economy is at root of crisis for working people.

The real wages of workers have been declining over the past several months in the United States, dropping below where they were at the end of the last recession in November 2001. In addition, the official unemployment rate remains at 5.6 percent, the same level as when the upturn in the current business cycle began almost three years ago.

Although overall real earnings—wages adjusted for inflation—have not registered a big drop, 1.4 percent over the past year, these figures do not tell the full story of the economic grind that most working people face as a result of the systemic erosion of the capitalist economy. The wage gap continues to grow between the lowest-paid workers and better-paid layers of the workforce. To make ends meet, millions have to work two or even three jobs. And many working people are getting deeper into debt just to pay for basic necessities.

According to figures released July 16 by the U.S. Bureau of Labor Statistics (BLS), real average weekly wages have steadily fallen over the past seven months, dropping by 0.8 percent in June alone, after a smaller decline in May. Inflation, which, according to BLS figures, has fluctuated around 2 percent over the last half decade, rose to an annual rate of 4.9 percent in the first half of 2004, largely due to increases in fuel prices.

The minimum wage, which has not been raised in seven years from $5.15 an hour, has steadily fallen in value over the past three and a half decades. In real terms, the minimum wage is now two dollars an hour less than it was in 1968.

More workers are staying in the workforce past the official retirement age because they need the money.

And the cost of medical care is rising, while the number of people lacking health insurance has grown. Nearly 82 million residents of the United States—one out of three people under the age of 65—were uninsured at some point during 2002-2003, according to a report issued June 16 by the health consumer group Families USA. More than half of them were uninsured for at least nine months. Nearly 43 percent of Blacks and 59 percent of Latinos had no health insurance.

Democratic Party presidential candidate John Kerry has blamed the Bush administration for the dismal employment and income figures, seeking to make them an issue in the election. These economic trends, however, are not due to the particular economic policies of a given administration. They are a result of the systemic crisis of the capitalist economy, manifested in decelerating growth and heightened volatility.

One sign of this volatility was a recent report by Ian Douglas of the London-based financial firm UBS, which said that global liquidity—the total dollar value of fixed reserves (in gold) of central banks around the world—fell in April by $8.3 billion, the first drop since December 2001. In the 12 months before this drop, global reserves had grown by an average of $65 billion a month. Douglas warned that this could be an ominous sign of rising deflationary pressures. “If we are right that the rate of reserve accumulation will continue to fade,” he said, “it may be prudent to unload some risk more generally—and drink that Bordeaux before the prices start to fall.”

The roots of this crisis lie in the long-term decline of the rate of industrial profit going back to the early 1970s, when the curve of capitalist development turned downward after the long post-World War II economic expansion.  
Persistent levels of joblessness
Real wages have stagnated for much of the last three decades. The first few years after the 1990-91 recession became known as the “jobless recovery.” Relatively high unemployment allowed bosses to maintain pressure on workers’ income through competition for scarce jobs. Hiring rose in the second half of that decade, which also saw the first sustained real wage growth since the 1970s. But the first two years after the 2001 recession were again marked by little or no net growth in employment, and wages have remained stagnant.While there has not yet been a sharp rise in inflation, prices of gasoline, dairy products, and a few other basic consumer goods have squeezed the income of working people.

The employment picture adds to the pressures facing workers. After each of the last two recessions, bosses have kept employment down by ratcheting up labor productivity—squeezing more labor out of fewer workers.

Unemployment continues to hover around an official rate of 5.6 percent—about 8.2 million workers nationwide, according to BLS figures. Some 10.1 percent of workers who are Black, 6.7 percent of Latino workers, and 16.8 percent of teenagers are out of work. These figures do not include workers who have become discouraged and stopped seeking work, or those who are eking out a living on part-time work.

In addition, the average length of unemployment—10.8 weeks—is higher during this upturn in the business cycle than it was during the “jobless recovery” of the early 1990s.

Democratic Party politicians have used the employment figures to blame the Bush administration for the loss of 3 million jobs. They blur the actual facts, however.

First of all, the recession that took place between March and November 2001 was simply the downturn in the normal business cycle of the capitalist economy, which goes through periodic recessions and recoveries, regardless of who is in the White House or Congress. Secondly, some newspaper commentators and economists—especially Democrats—have described the post-recession period as another “jobless recovery.” This is not true of the last several months, however. Since the fall of 2003, net employment has grown.

On the other hand, for the first two years after November 2001 there was little or no growth in employment. Two methods used by the BLS, however, give different results.

According to the BLS’s payroll survey (also called the establishment survey), a monthly report based on data from about 400,000 private businesses, there was a net loss of 1.1 million jobs between December 2001 and June 2003. The payroll survey has generally been taken by economists of different political stripes to be the best indicator of job gains.

Using a different method, called the household survey and based on a random sample of about 60,000 households, the BLS reported that 600,000 jobs have been created since the recession ended in November 2001. While economists have not been able to explain the discrepancy between the two methods, one difference may be that the household survey registers “off the books” employment as well as contract workers hired through temporary agencies.

In either case, the tightness of the employment situation, the erosion of real income, and the squeeze from high costs of health care contribute to the intensifying economic pressures that workers face today.
Related articles:
Socialists say: ‘Massive public works program! Full cost-of-living protection! Raise minimum wage!

Printer logo 
Printer-friendly version of this article

Home | Text-version home