The Corporate “Race to the Bottom” and the Blindspots of Power Elite Liberalism

[Omaha Steve]

Note that the company CEO got $6 million last year and wants workers to take a $3,000 a year cut.

http://www.dissentmagazine.org/atw.php?id=242

Leo Casey - August 24, 2010 10:00 am

In upstate New York, a bitter strike between Mott’s Apple Juice and its production workers has become the latest battle against the “race to the bottom,” the process of undercutting labor market standards that has plagued American labor for the last three decades. As Steve Greenhouse tells the story of the months-long strike in the New York Times, the Dr. Pepper Snapple conglomerate that owns Mott’s Apple Juice is seeking a $1.50 cut in the hourly wage rate (which would slash annual income by approximately $3000), a pension freeze, increased worker contributions for health care insurance, and a host of other concessions. Dr. Pepper Snapple makes no pretense that their bargaining stance is based on economic necessity, on hard times for the company. Corporate sales in 2009 totaled $5.5 billion, with a rather handsome net profit of $555 million. Rather, Dr. Pepper Snapple is demanding concessions simply because it can. The local blue-collar economy is depressed after years of layoffs by its two biggest employers, Kodak and Xerox. Many nonunion local workers earn less, with inferior benefits, than the Mott’s workforce. Dr. Pepper Snapple wants to drive its Mott’s workers down to the lower local standards not because it needs to do so, but because it wants to do so.

“Corporate America is making tons of money—this company is a good example of that,” local union president Mike LeBerth told the Times. “So why do they want to drive down our wages and hurt our community? This whole economy is driven by consumer spending, so how are we supposed to keep the economy going when they take away money from the people who are doing the spending?”

There is, unfortunately, nothing new about the “race to the bottom.” It has been a feature of the American economy since the late 1970s, when corporate-driven globalization first took hold and corporations began to move their operations to countries such as China. There the power of an authoritarian state kept workers from organizing into real unions, keeping their wages artificially low to attract corporate investment. The end product of decades of this “race to the bottom” has been the evisceration of once powerful industrial unions in basic industries such as steel and auto and the general decline of the American labor movement. This led, in turn, to the decline of the American middle class that arose as a result of trade union expansion in the New Deal era.

In his book The Big Squeeze: Tough Times for American Labor, Steve Greenhouse notes that between 1979 and 2007, the real hourly earnings of private sector workers, who make up 80 percent of the American workforce, rose just 1 percent. Over the same time period, the productivity of those same workers rose a remarkable 60 percent. If the wages of the American worker had kept pace with his increased productivity, the average full-time worker would have been earning an average of $58,000 by 2007. Instead, the average wage was $36,000.

The productivity gains, which never found their way into worker salaries, have been pocketed by the American corporate elite: in 1978, the average CEO salary was thirty-five times greater than the average worker salary; in 2007, the average CEO salary had mushroomed to 344 times greater than the average worker salary. . “There’s class warfare, all right,” billionaire investor Warren Buffet said in an unguarded moment, “but it’s my class, the rich class, that’s making the war, and we’re winning.”

FULL story at link.