Some Labor Day Food for Thought: Let Workers Have More of the Pie
Just in time for Labor Day barbecues, the Teamsters cooked up a nice win for Big Labor by staring down United Parcel Service of America Inc. on the issues of pay, part-time work and pensions.
U.S. workers at large, however, have far less to cheer about.
Oh, sure. Finding a job has seldom been easier, and unemployment is at its lowest level in more than two decades. Inflation is under control (for now), and corporate profits are leaping into heady territory. So what’s not to like?
Wages, that’s what. They’re dead in their tracks, goin’ nowhere, Dullsville.
Cowed by the simultaneous corporate trends of downsizing, outsourcing and part-timer hiring, the typical working stiff is too skittish to go to the boss and demand a raise for all the extra work done to make up for laid-off colleagues. On the factory floor and around the conference table, workers have heard daily sermons about sacrifice, with constant reminders from the executive suite that cost-cutting is necessary to keep pace in the global marketplace.
Yet, in those same executive suites, pay has been rocketing into the gonzosphere. The result? Management has severed its connection with the work force. Awesome windfalls for CEOs--even those who fail and get the ax--have soured workers, whose pay boosts for years have not kept pace even with subdued inflation.
“It is amazing to me how many American workers swallowed the company line about the need to keep costs down to stay competitive,” says Rosabeth Moss Kanter, author of “Rosabeth Moss Kanter on the Frontiers of Management” and a Harvard Business School professor.
“They did expect that, after their period of sacrifice, things would start to get better again--wages would rise again, incomes would again automatically increase year to year. When that didn’t happen in the 1990s, cynicism set in.”
Consider: After adjustment for inflation, average wages remain lower than their all-time peak in 1973. Though productivity has steadily risen since 1986, wages have not.
If your wallet feels lighter these days, it’s not your imagination. Princeton University economics professor Alan B. Krueger calculates that the inflation-adjusted wage rate of workers in the bottom 10th percentile fell by a troublesome 16% from 1979 to 1989. The median worker’s real wage in that period dropped by 2%. Only the nation’s highest-paid employees registered a real gain over those years. Middle-class wage erosion has continued since 1989, with the median worker’s wage declining 5%.
It’s no wonder that the UPS workers’ two-week strike struck such a chord with Americans. Pollsters noted a resurgence of populist sentiment that a part-time work force, which helps keep a lid on wages, should not be the American way.
Executives’ concerns that higher wages will reignite inflation and dull their companies’ competitive edge won’t wash with Jeffrey Pfeffer, an organizational behavior professor at Stanford University.
“People confuse wage rates with labor costs,” says Pfeffer, author of the forthcoming book “The Human Equation: Building Profits by Putting People First.” “If you do things to also make [workers] more productive, labor costs do not go up.”
Failure to adequately share in their companies’ recent prosperity has led to widespread disgruntlement among workers. Compounding their resentment is management’s steady push toward precarious, contingent job arrangements--McJobs, as some young workers call them.
“People are feeling very pressed for time,” says John Schmitt, a labor economist with the Economic Policy Institute, a liberal think tank in Washington. “American families work many more hours now than 15 to 20 years ago. It’s the only way to defend their standard of living in the face of stagnant or declining wages.”
Many economists say there is room for wages to grow, with higher wages in turn creating more demand for cars, homes and furniture. If workers and management band together to figure out ways to boost productivity, the inflation bugaboo needn’t rear its ugly head.
Companies should think about the long-term implications of stinginess. Workers who feel that their organization is not sharing “are more likely to do a 9-to-5 job,” says John Challenger, who runs a Chicago job search firm. “You lose the synergy that comes from people who stay together and share values and a desire for quality.”
To be sure, many more companies are spreading stock options through the ranks, but the promise of distant reward has not been enough to ease many workers’ dissatisfaction. Recent signs of upward movement in wages offer some encouragement. But U.S. workers have a lot of catching up to do.
Will the UPS strike embolden other workers to ask for more? Who knows? But why wait, Madam and Mister Executive? On Monday, as you bite into that well-done Labor Day burger (remember, cook it to 160 degrees all the way through), think about making an investment in America. Spread that mustard around a little bit.
Does your company have an innovative approach to management? Tell us about it. Write to Martha Groves, Corporate Currents, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. Or e-mail martha.groves@latimes.com
