BAME workers have suffered the most financial hardship since coronavirus pandemic began – as well as being among most at risk from disease An economic…
Donald Trump pretends to be a tribune of the working class, standing up for American jobs. Last week nearly 50,000 General Motors workers went on strike to get what they see as their fair share of its profits and stop further layoffs. Trump’s response? A shrug.
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In 2009, when GM was on the brink of collapse, the United Auto Workers (UAW) agreed to let the company hire new workers at about half the prevailing hourly wage and with skimpier retirement benefits, hire temp workers at even lower rates, and outsource more jobs abroad. American taxpayers also forked over $10bn to save the company.
When GM went public again in 2010, it boasted to Wall Street that 43% of its cars were made outside the US in places where labor cost less than $15 an hour, while in America it could now pay “lower-tiered” wages and benefits for new employees.
The corporation came roaring back. Over the last three years it’s made $35bn in North America.
But its workers are still getting measly pay packages and GM is still outsourcing like mad. Last year it assigned its new Chevrolet Blazer, a sport utility vehicle that had been made in the US, to a Mexican plant, while announcing it would lay off 18,000 American workers. Earlier this year it shut its giant plant in Lordstown, Ohio, which Trump had vowed to save. “Don’t move. Don’t sell your house,” he told a Youngstown rally in 2017.
GM is still getting corporate welfare: since Trump took office, some $600m in federal contracts and $700m in tax breaks (including Trump’s giant corporate tax cut). Some of this largesse has gone into the pockets of executives. Chairman and chief executive Mary Barra raked in almost $22m in total compensation last year.
Trump’s response to the strike? He’s “sad to see” it and hopes it will be short, adding: “I don’t want General Motors to be building plants outside of this country.”
Reminds me of last month’s anodyne statement from the Business Roundtable – a confab of CEOs on whose executive committee Barra sits – pledging to compensate all employees “fairly” and provide them “important benefits”.
For 40 years these CEOs have fought unions, outsourced jobs abroad, loaded up on labor-replacing technologies without retraining their workers, and abandoned their communities when they could do things more cheaply elsewhere. Does anyone really think they’ve changed their minds?
Amazon CEO Jeff Bezos signed the statement. Last week, Amazon-owned Whole Foods announced it would be cutting medical benefits for its entire part-time workforce – at a total saving of what Bezos makes in two hours.
Corporate profits have reached record levels but most Americans have not benefited. Profits now constitute a larger portion of national income, and wages a lower portion, than at any time since the second world war. These profits are generating higher share prices (fueled by share buybacks) and higher executive pay, resulting in wider inequality. The richest 1% of Americans own about 40% of all shares of stock; the richest 10%, around 80%.
The demise of unions explains much of this. In the mid-1950s, more than a third of all workers in the private sector were unionized. This gave them substantial bargaining power to get higher wages and benefits. Non-unionized workers benefited indirectly because their employers knew they’d be unionized if they didn’t nearly match the union contracts.
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Today, just 6.4% of private-sector workers are unionized, eliminating most of that bargaining power. Researchers Daniel Greenwald at MIT’s Sloan School of Business, Martin Lettau at Berkeley and Sydney Ludvigson at NYU have found that between 1952 and 1988, almost all the rise in share values came as a result of economic growth, but that from 1989 to 2017, economic growth accounted for just 24% of the rise. Most of the increase in share values has come from “reallocated rents to shareholders and away from labor compensation”. Translated: from corporate revenues that otherwise would go to workers.
America’s shift from farm to factory was accompanied by decades of bloody labor conflict. The subsequent shift from factory to office and other service jobs created further social upheaval. The more recent power shift from workers to shareholders – and consequentially, the dramatic widening of inequality – has happened far more quietly, but it has had a more unfortunate and more lasting consequence for the system: stagnant wages, abandoned communities, and an angry working class vulnerable to demagogues peddling authoritarianism, racism, and xenophobia.
Trump didn’t come from nowhere, but he’s a fake champion of the working class. If he were the real thing, he’d be walking the picket line with GM workers.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. He is also a columnist for Guardian US
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