With an American labour movement in tatters, and strikes now virtually unheard of, thousands of vulnerable and replaceable workers are taking to the streets, demanding they be paid a living wage.
This development – marked most recently in early September by worker walkouts and street demonstrations totalling thousands of workers across the country – is a testament to effective organising, to be sure. But it is far more than that. It is a reflection of the desperation of working people across the US. Minimum and low-wage jobs don’t pay enough for people to survive, but those are the only jobs an increasing number of Americans can find.
The US federal minimum wage is now stuck at $7.25 (many states and localities have higher minimums). At that level, a full-time job pays $15,000. The official poverty level for a family of four – a notoriously inadequate measure – is approximately $24,000. More than 3 million hourly workers are paid the minimum wage or lower; half of them are 25 or older.
The underlying problem is far more pervasive – and systemic – than the facts on minimum wage workers show. The core problem is this: Real wages for most Americans are no higher now than they were in 1979.
The gains from the vast majority of economic growth in the United States over the last 35 years have accrued to the wealthiest Americans. Indeed, wage rates have risen at an annual rate of 1 percent or higher only among the top 5 percent of the population. Between 1979 and 2013, the Economic Policy Institute reports, productivity in the United States rose 65 percent, while the wages of nonsupervisory workers rose by just 8 percent.
The gains from the vast majority of economic growth in the United States over the last 35 years have accrued to the wealthiest Americans. Indeed, wage rates have risen at an annual rate of 1 percent or higher only among the top 5 percent of the population.
Stagnant wages are often attributed to technological change and the rise of the service economy. Both of these factors are important parts of the story of why it is so hard to make a living in the US today, but, by themselves, they have little explanatory power. After all, isn’t technological change making the economy more efficient – and shouldn’t this lead to a rise in wages? And exactly why should service jobs pay poorly? The financial services sector is the richest in the country.
To understand why it’s becoming so much harder to make a living in the US, we have to look at different trends and to one underlying issue: the allocation of political and economic power.
A multinational corporate-friendly trade policy has had two devastating effects on working people in the United States. First, millions of good-paying manufacturing jobs have left the United States, with the products factories once made in the US replaced by imported goods made by low-paid workers with minimal rights. It is not unusual for the same company to be selling the good – just to have simply shifted production overseas.
Much of the deindustrialisation of the US is traced to the 1980s, when iconic steel mills in the Midwest shut down. But deindustrialisation has been especially severe in the 2000s, with a third of US manufacturing jobs lost in the first decade of the millennium. There are some signs of manufacturing jobs beginning to revitalise in recent years.
The second effect of corporate globalisation has been a massive pull-down effect on wages. Employers point to overseas competition – some of it real, much of it imagined – to forestall unionisation efforts and the demand for wage increases. As Kate Bronfenbrenner, a leading authority in the field writes, “Not only are individual workers afraid to ask for significant wage increases, the spectre of capital mobility haunts the union organising process for unorganised workers and collective bargaining over wages and benefits for workers already in unions.”
Paralleling employers gaining power over their workers, Wall Street and the financial sector have gained enormous power relative to the real economy. Financialisation of the economy has subjected companies in the real economy to new pressures to reduce costs – which often translates into firing workers or lowering wages. In the run-up to the financial crisis, Wall Street firms captured almost a third of corporate profits.
Of course, the Wall Street-induced financial crisis imposed enormous hardship on working people across the country. Millions lost their homes and savings. Unemployment spiked and remains high, especially taking into account those who have given up looking for work. Households collectively lost $9.1 trillion in wealth as a result of the financial crash, and unemployment remained above 8 percent for the longest period since the Great Depression.
The US labour market remains very weak, but except for a short-time in the 1990s when unemployment was very low, wages have remained stagnant even with modest unemployment rates. That’s because labour power is so weak. Unionisation rates have dramatically declined over the last 40 years, thanks to unrelenting aggression from employers and minimal legal protections. Now, well below 10 percent of private employees are members of unions. If there’s a single most important reason for why it’s so hard to earn a decent living in the US, it’s probably plummeting unionisation.
But, more to the point, all these factors all intersect. Corporate globalisation weakens unions; with a strong union movement, the US would have a different trade policy. Service economy jobs don’t inherently pay poorly – jobs in unionised grocery stores are well-paying, those in non-unionised stores typically not.
If there were political will to improve the economic status of working and middle-income families, it would be easy enough to move forward. The first and easiest place to begin would be to raise the minimum wage above $10 an hour. Raising the minimum wage is supported by 70-80 percent of the public. But Republicans in Congress will not let it move. The notorious Koch Brothers, responsible for one in 10 political advertisements this election season, oppose the very existence of the minimum wage, and a top Koch strategist recently suggested the minimum wage paves the pathway to totalitarianism.
The minimum wage would be just the start. However, there are bipartisan obstacles to more fundamental measures – measures supported strongly by the public, but opposed by the corporate donor class. These include reversing corporate globalisation, reducing Wall Street’s power and the financialisation of the economy, making corporations pay more in taxes, and using deficit spending to spur government investment in the economy.
So, until public pressure builds sufficiently to make politicians more responsive to voters than donors, the action is on the streets. Fast-food workers are demanding a living wage. Low-wage workers are demanding their cities and states jump the minimum wage so that workers can escape poverty. Companies like McDonald’s, Wal-Mart and others are feeling the heat.
“I’m participating because I’m doing whatever it takes,” one Burger King worker who joined living wage protests said. “I’m tired of living in poverty.”
Protests by workers in the fast-food and retail sectors take real courage, because they know their jobs are at risk. At the same time, those protests are, for now, about the only hope these workers have to attain a living wage.
Robert Weissman is president of Public Citizen.