Friday, August 31, 2012

To Labor on Labor Day

By Kathy White

This weekend, many Coloradans will celebrate Labor Day as Coloradans have since 1887.  More than 125 years ago, the Colorado General Assembly designated a “Labor Day” to honor the effort and achievements of the worker. Congress followed suit in 1894 declaring the first Monday in September the national holiday that we still celebrate today.1 And while the Labor Day celebrations that we’ll see this weekend will look a lot like those from decades past – picnics, parades, leisure time with family and friends – the workers we celebrate and the value we place on their labor are quite different.

The United States worker has never worked harder, produced more or played less. U.S. workers log long hours – more than competitors in other developed countries like the United Kingdom, Japan and Germany.2 U.S. workers also take and are offered less paid time off (PTO) than peers in every other developed nation. On average, the U.S. worker is given 12-14 days PTO, but most of our workers use half or less of those days for economic reasons.3 Remarkably, the U.S., unlike every other developed nation on the globe, including those with economies that outperform ours, does not require employers to provide PTO of any kind – not to rejuvenate and celebrate, not to heal from an illness, not to recover from a death in the family and not to adjust to the birth or adoption of a new baby.

Moreover, the typical worker today must invest more in themselves in order to compete in to today’s “knowledge-based economy.” Today, roughly two-thirds of students seeking a bachelor’s degree borrow money from banks to do it, when just 20 years ago only 45 percent borrowed for college.4 Today, the average worker is saddled with thousands of dollars in debt right out of the gate.

Yet, despite this effort and achievement, today’s worker reaps less benefit from their work and sacrifice than ever before. According to research by the Economic Policy Institute (EPI), from the late 1940s to the mid-1970s productivity and hourly pay for workers grew hand-in-hand. But something went awry in the 1970s, something that continues to steamroll today. Productivity continued to grow, but worker compensation stagnated. From 1973 to 2011, productivity grew by more than 80 percent while median hourly compensation grew by just under 11 percent.5 (See Figure 1).

Figure 1
Mishel, Lawrence. “The Wedges Between Productivity and Median Compensation Growth,” Economic Policy Institute, April 26, 2012. Available at

Click to Enlarge

The smart guys over at EPI attribute this “wedge” between productivity and compensation to three things: 1) inequality of compensation; 2) shifts in labor’s share of all income; and 3) divergence of consumer and output prices.6 What does that mean? Well, I’m not an economist, but it basically boils down to this: the first means the gap between how much income in the economy went to the worker and how much went to owners of capital. The second means the growing gap in income between high income workers and everyone else. And the third means the gap between the price of what U.S. workers buy and what they make. While the economists over at EPI carefully explain each of these in great detail, by sub-period no less, in their upcoming signature publication, The State of Working America 2012,7 the main reason why workers today benefit less from their hard work than ever before is growing inequality. Inequality between workers, i.e. average workers and CEOs. Inequality between those who work and those who own, i.e. average workers and corporations.  

Yes, you’re probably wishing you could dust off your version of Marx’s Das Kapital about now or maybe you have a hankering to dig out that old Pink Floyd Animals album. You may even feel like you want to review anthropologist David Harvey’s 10-minute RSS Animate refresher that went viral earlier this year, the Crises of Capitalism.8 (Or maybe you’re just thinking that I did to write this blog.) But none of that is necessary to get the real point, which is: from 1973-2011 less income generated in the economy went to wages and more went to capital. In other words, owners of capital took the gains of productivity as income (dividends, interest, profits) for themselves, rather than sharing those gains with workers through greater wages and better benefits. And this is a policy issue – not some natural economic storm that has befallen the U.S., which means, it’s a reversible trend, a solvable problem.

Since the mid 1970s, the U.S. has witnessed an all-out assault on unions and every worker’s right to collectively fight for better wages, greater safety and decent benefits. When wages and productivity were happily growing together in a long marriage of shared prosperity, the number of workers covered by unions was at its highest point. In 1973, more than a quarter of all U.S. workers benefited from union coverage. By 2011, that number had dropped to just13 percent.9 (See Figure 2)

Figure 2
Mishel, Lawrence. “Unions, Inequality and Faltering Middle-Class Wages,” Economic Policy Institute, August 29, 2012. Available at

Click to Enlarge

Weakened labor unions has not only meant that there are fewer union members who enjoy the higher pay and better benefits negotiated by their union, but also that there are fewer labor standards that protect and benefit all workers. Weakened labor unions has made it near impossible for the average individual wage earner today to reap the benefits of their long hours and increased productivity. It has left the individual worker almost powerless to negotiate for health insurance, paid sick days or family leave, education and training benefits, higher wages or even a national holiday to celebrate the achievement and effort of the American worker.

But it doesn’t need to be this way. We can all support our friends in labor and advocate for policies that advance our common ideals of equality, opportunity for all and shared prosperity. So this Labor Day, amidst the picnics and parades, we should all take a moment to reflect and consider what we can do throughout the year to truly honor the achievement and effort of the American worker.

Kathy White
303-573-5669 ext. 303

1 comment:

Janine said...

Kathy, thanks for laying out this information in such a straight forward way, with data that refutes the current blame-the-worker narrative.