LA Times: Wages aren't keeping up with increased labor productivity

[Omaha Steve]

http://www.latimes.com/news/opinion/la-oew-lilly-weigel13-2008nov13,0,3752984.story

Counterpoint: Scott Lilly

David,

The lengths to which some conservatives go in trying to portray this nation's labor movement as special pleaders on behalf of unwarranted benefits for unworthy workers is truly remarkable. The fact is that the root cause of the current economic crisis is the stagnation in wages that has occurred in this country over the past eight years and the unwillingness of employers to share the benefits of worker productivity growth. To prop up consumer demand in the face of stagnant wages, the Bush administration and the Federal Reserve opened the floodgates for cheap credit, only delaying the day of reckoning and making the economic shock far more severe when it did occur.

Here are the facts:

* Between 2000 and 2008, American worker productivity rose 20%.

* Rather than sharing the benefits of that growth evenly (as occurred throughout most of the post-World War II era), business allowed wages to rise in real terms by only 1% and kept the remainder as profits.

* While corporate profits normally grow at about the same pace as the overall economy, between 2000 and '06, they grew four times as fast.

* As employment growth during that period was slower than population growth, the average family actually had less real income in 2006 than they had 2000.

* For much of 2002, 2003 and 2004, the Federal Reserve Discount Rate was below the rate of inflation. To counter the effects of wage stagnation, the Federal Reserve was charging negative real interest rates, and the amount of consumer debt sky rocketed. Consumers used their homes as ATM machines and borrowed more than $1.7 trillion of equity to buy the goods that kept our stores in business and factories running, but did so with debt we couldn't afford to repay.

As Henry Ford noted long ago, paying fair wages is good for business and workers. It expands the market for the products that business must sell. The wisdom of that advice is evident today in the sorry state of the stock market despite years of unprecedented profit growth.

Stagnant wages are in part the result of a broken system of labor laws. That system is supposed to ensure that workers can decide whether or not they wish to be represented by a union via a majority vote of those in the workplace who would be represented. But the system ceases to accomplish that because (as you point out) of the outrageous delays by the National Labor Relations Board in scheduling elections. Businesses frequently fire not only those employees who work on behalf of the organizing effort, but also those who simply support it. By the time the election is held, the remaining workers have been intimidated into voting no.

American wages now trail those of most of our trading partners. The problem with Michigan is not the labor movement, as you argue. Rather, it is car makers who have designed and sold gas guzzlers that don't hold up as well as their foreign competitors and an economy that is coming apart at the seams. The average hourly cost of employing an auto worker in the U.S. is lower than it is in Japan and much lower than it is in Germany.

The Obama administration will work to see that American workers get a fairer share of the economic benefits that flow from their productivity. It will do that not only because it is the right thing to do, but because restoring the nation's economic health depends on it.

Scott Lilly, a senior fellow at the Center for American Progress Action Fund, has served in numerous posts for members of Congress and the Democratic Party.