The working class takes it on the chin

William Wolman is the co-author, with Anne Colamosca, of "The Great 401(k) Hoax" and is a regular commentator on CNBC.

Three new books provide disturbing insights into how American workers have fared at the end of the 20th century and the beginning of the 21st. They go far in explaining why, during a long period of American economic hegemony, the real income of the average worker has remained essentially stagnant, while the share of the rich in national wealth has increased to a point at which it can provide satisfaction only for believers in the economic benefits of greed.

The attack on America's workers is occurring along a broad front. "The State of Working America, 2002-2003" is a comprehensive survey of the American workplace as a whole, while the other two books deal with what are, in effect, its extremes. "The Unmaking of the American Working Class" is an account of work and life among members of the International Longshore and Warehouse Union, one of the few labor organizations that has retained power, largely because it stands astride the flood of imports unleashed by globalization. "No Collar" offers an account of life in Silicon Valley and Silicon Alley, where workers were first lifted and then cast down by the boom-bust cycle in information technology.

The most recent in a series of biennial reports compiled by the Economic Policy Institute, "The State of Working America" presents careful data on real (inflation-adjusted) wages that clearly show how, from 1973 to 1995, the real income of the average American family grew annually by a barely visible 0.4%. The good news, and it was not nearly as great as advertised, came mostly during the great boom from 1995 to 2000, the year before the stock market bubble burst.

Those boom years saw a 2.2% rise per year in the wages earned by the median family -- an improvement for minority workers and women caused mainly by low unemployment rates. It took an overheated economy to produce serious economic gains for the average worker. When the boiler exploded in the stock market crash that started in spring 2001, the gains in average family incomes quickly fell back into the 1% range, even though unemployment remained low by historic standards. The institute's data show that the net worth of the average American family increased by only 2.9% per year between 1989 and 2001. In 2001, a drastic about-face happened, with net worth suddenly declining 10.8%; when the numbers are in, they probably will show a further decline in 2002.

What happened? The institute's economists attribute the stagnation of worker incomes in an era of economic hegemony and strong productivity gains to a "power shift" in Washington. The migration of manufacturing jobs abroad wreaked havoc on the union movement, opening the way for industry to "capture" economic policy. The case for free markets and "free trade" was superficially strengthened by the collapse of the Soviet empire. The corporation was free to play a strong hand and win a degree of deregulation unseen since the 1920s. And, with the globalization game going full tilt, the corporate forces that had favored protectionism in the 1920s became the champions of free trade. The corporation, of course, used its influence to negotiate specific trade treaties that protect the rights of capital while ignoring the interest of workers in enforcing fair labor standards.

The result has been an American workplace in which the growth of productivity routinely produces statistical "miracles" even as feelings of insecurity and anger become more widespread. Though the anger is unfocused, it is real and pervasive: A survey conducted by the Behavioral Health Group at Cigna last year found that 6 out of 10 workers felt insecure and even despondent about their jobs. The survey also found that an astounding 45% of the workers had considered leaving their jobs in the last year.

Insecurities in specific industries is the focus of "The Unmaking of the American Working Class." Reg Theriault writes what is almost a tone poem about the three decades he has spent as a West Coast member of the International Longshore and Warehouse Union. Because its members have plenty of work handling the flood of imports unleashed by the rise of industrial Asia, the union still has plenty of power. And though it took some lumps as a result of Bush administration pressure to settle the recent port lockout, the union will be strong enough to protect, and even enhance, the $135,000 annual income of its more senior members.

Theriault loves his fellow workers and their union. Rough though they and their work may be, he finds the members considerate and caring for one another. There is little prejudice against either blacks or the few female members of the union. The longshore workers are highly sensitive to the physical limitations of some of the older members, in an environment that is otherwise a fellowship of equals. To Theriault, the docks stand in strong contrast to the corporate jungle of competitive individualism. He laments the virtual disappearance of the "values" of most traditional labor brotherhoods and warns that society will be hurt by their loss.

Theriault also has a political complaint that perhaps explains low voter turnout and that is worth the attention of the Democratic Party. "In the last election," he writes, "[Al] Gore, almost contemptuous of labor, reiterated his approval ... of measures detrimental to American working people.... What makes ... nonvoters so angry is if they had voted Democratic, had voted for Gore, they would have participated in their own destruction, actively subscribing to their own demise." Shades of filmmaker Michael Moore, who has said, "The richest 1% that owns 50% of all the wealth in this country now have two political parties, the Republicans and the Democrats, and we, the other 99%, have none."

At the opposite end of the spectrum is Andrew Ross' "No Collar," which provides a balanced, richly textured and, in the end, chilling account of work in the high-tech digitized world of the New Economy, which embraced the "openness, cooperation and self management" that had been discouraged in the pyramid organization of the post-World War II economy and that were verboten in the "early high-tech echelons of IBM, RCA, AT&T;, GE, and Westinghouse." By leveling the pyramid in the newest tech firms, the vast majority of the employees found satisfying avenues to self-realization -- until the great tech crash of spring 2001.

Big Brother, it seems, is more Orwellian than ever in the firms that survived the bust. In 2001, the American Management Assn. reported that 77.7% of companies acknowledged routine electronic monitoring of their employees' activities, a figure that had doubled since 1997.

Ross also shows how features that appeared to be healthy advances in corporate democracy could turn into "trap doors that opened onto a bottomless seventy-hour-plus workweek." Employee self-management could result in the abdication of accountability on the part of real managers and an unfair shouldering of risk and responsibilities by ordinary workers. Flattened organizations may mean that opportunities for promotion are dried up along with layers of protection intended to shield employees from market exposure. Such a company culture is an emotional salve in good times but could turn into a trauma zone in times of crisis and layoffs.

The longer-term implications of the three books are grimly clear. Globalization will, in the long run, produce huge benefits to many people in the world economy. But the hard fact is that it provides huge opportunities for the rich, who are the main owners of capital, to deploy their resources in areas of the world where the supply of low-cost productive labor is growing rapidly. The migration of old economy jobs was the big story of the 1980s and 1990s; the migration of many high-tech and other white-collar jobs, especially to India and China, is already becoming the big story of this decade. Americans who earn their living from work, not capital, are fated to continue to bear the costs of globalization.

Outside of the few pockets where unions, like Theriault's, retain some real bargaining power, wage gains will continue to be sluggish in a world of globally mobile capital. And there is little that a New Economy workplace culture can do to counter its effects.

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