Vol. 74/No. 32      August 23, 2010

July’s labor figures show that employers are doing little hiring, while increasing productivity through speedup and lowering wages. While the official unemployment rate in July was 9.5 percent, the actual unemployment and underemployment rate is 16.5 percent. This includes job seekers who haven’t looked for work in the past month and those forced to accept part-time jobs.

For some time local and state governments, as well as private employers, have been imposing furloughs and shorter hours to reduce labor costs and squeeze as much as they can from workers. But now the trend is to cut wages.

Local and state governments, which have eliminated 102,000 jobs in the past three months, are leading the push to cut wages. A 2010 survey by the National League of Cities revealed that 51 percent of cities responding said they had cut or frozen employees’ wages. Union contracts were revised to include pay and benefit cuts in 22 percent of the cases.

New York governor David Paterson is seeking to cut most state workers’ wages by 4 percent. New Orleans city employees’ pay was reduced by 10 percent in July, and the mayor told some workers they cannot work a second job to make up for the income lost. State employees in Tennessee have not had a pay raise since 2007 and the governor is now pursuing a 5 percent wage cut.

Even oil cleanup workers in the Gulf of Mexico are affected. Plant Performance Services, a contractor hired to organize some of the cleanup of the BP oil disaster, is cutting hourly wages between $4 and $10, claiming there is less oil coming ashore. Cleanup workers currently make between $18 and $32 per hour based on their training.

According to the Bureau of Labor Statistics, wages have remained largely the same for the past year and a half. Many companies are counting on high unemployment to pressure workers to accept lower wages or forgo raises.

Sub-Zero, a refrigerator and freezer manufacturer, threatened 500 workers in Wisconsin with plant closure unless they accepted a 20 percent cut in wages and benefits. In April Arandell, the second-largest commercial printer in that state, enacted an across-the-board 21 percent pay cut for all 600 union employees. ABF Freight System, a large trucking company, has put a 15 percent wage reduction before the Teamster-organized workforce there.

State governments are also increasing retirement ages. This year 10 state legislatures voted to require new government employees to work longer before they can retire with a full pension. Two other states, California and Mississippi, have similar laws pending.

In Illinois new workers will retire at 67 years, up from 60; in Utah new state employees have to work 35 years instead of 30; in Missouri the retirement age has increased to 67 with 10 years of service, up from 62 with five years of service.

These moves are leading to discussions in Washington about raising the eligible age for Social Security benefits. Currently for those born in 1960 or later the age is 67. Both Democrats and Republicans are discussing a raise to 70 years.  
 
Some workers fight back
While many workers have accepted pay cuts with little complaint because of the tight job market, others are refusing to buckle under, especially when a company is making huge profits.

Members of Retail, Wholesale and Department Store Workers Union Local 220 in Williamson, New York, went on strike against Mott’s May 23 after the company instituted a $1.50 pay cut. The company is running the plant, which produces applesauce and juice products, with temporary workers. Of the 305 workers on strike, only eight have returned to work, according to the union.

The Rochester-area company, a subsidiary of Dr Pepper Snapple Group, reported profits of $550 million last year.

Company spokesmen justify the cut based on the going rate for wages in the area. “We pay folks based on what the market will bear and as we look in the Rochester area, we were a bit out of line with that,” Lain Hancock told YNN, a local Rochester TV news station.

In addition to wage cuts, Mott’s is looking to reduce the company’s 401(k) contribution, increase employee payments for health insurance, and eliminate pensions for new employees.

The strike at Mott’s has won support from the United Food and Commercial Workers union. New York attorney general Andrew Cuomo and the New York City Council have asked the company to negotiate with the union. So far the bosses have refused.

In an interview with the Militant, Bruce Beal, Local 220 recording secretary, said the union has received tremendous support from the community and “the tone and attitude on the picket line is strong.”

“This strike is not just about 300 workers in Williamson, New York,” he said. “All blue collar workers, whether union or nonunion, have to stick together and fight corporate greed.”
 
 
Related articles:
On the Picket Line
Bay Area transit workers fight givebacks
UK health care, jobs in government firing line
Benefits end for growing number of jobless
Workers told to accept ‘new normal’  
 
 
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