Drop in jobless rate doesn't equal higher pay

If the economy is booming, why am I busted?
Drop in jobless rate doesn't equal higher pay
Jenny Brown
January 1999

Anyone who isn't in a coma knows that in America the gap in wealth between Wall Street and Main Street is growing. Dollars and Sense Magazine noted in December that the personal wealth of Bill Gates exceeded the wealth of 40% of America combined.

So when President Clinton announced January 8 that America was experiencing an "Economic renaissance," many had to wonder whose renaissance they were talking about.

At the end of the year, the Labor Department announced a 4.5% unemployment rate for 1998, the lowest peacetime jobless rate since World War II, they claimed. At the same time, companies were announcing thousands of year-end layoffs. Phillips announced 1,400 jobs would be cut. Citigroup planned to cut 10,400 jobs-3,600 in the U.S., while SPX, an auto parts company, announced a plan to close 25 factories and offices, laying off 1,000, and air-freight carrier Kitty Hawk cut more than half its workforce, 1,500 people. In North Carolina, hundreds of union textile workers came back after vacation to discover their jobs would be axed. Toolmaker Cooper Industries announced 1,000 layoffs. In our area, nearly 150 unionized Energizer workers were laid off over the last year, only a few have been called back.

These cuts were on top of AT&T's 18,000 cuts in the last year and the projected 10-20,000 jobs to be lost due to the Exxon/Mobil merger. In the first 11 months of 1998, 574,000 jobs were cut, the most since the year of the downsize, 1993, when 615,000 people were laid off.

Also in December employers added 378,000 jobs to their payrolls. What is going on? There may be jobs out there replacing those slashed, but they don't pay enough to live on, according to "Working Hard, Earning Less," a report released in December by the National Priorities Project.

The report, which is co-authored with Jobs with Justice, defines decent-paying work (a "livable wage") and then tracks job creation to see what the new jobs are paying. In the categories of jobs that are growing, most (74%) pay less than a livable wage. Forty-six percent pay less than half a livable wage, or the equivalent of the federal government's poverty level. Wage rates in 1998 are less than they were in 1968.

"When politicians boast about our strong economy, they frequently turn to the number of new jobs created as the greatest evidence of the good times" the report states. "Officials also use these employment opportunities to help justify ... time limits for people receiving welfare. This report ... makes clear that these new jobs are not the ticket out of poverty."

The top five jobs projected to have the most growth from 1994-2005 are cashiering, janitorial work, retail sales, waiting tables, and nursing. The first four job categories average pay at less than half of a livable wage. Only nursing pays above the report's definition of a livable wage, which in Florida would be $28,638 for a family of three and $31,682 for a family of four.

For those laid off, the chances of getting a job that pays the same or better are pretty slim. A 1996 Labor Department study found that for workers laid off between 1993 and 1995, 40% found jobs that paid less than what they had before, or were only part time. Twenty-six percent still didn't have a job, and only one in four found a job with equivalent pay or better.

Why are people being paid less? According to the report, at the same time that unionized manufacturing jobs are giving way to non-unionized service sector jobs, U.S. labor law makes it harder and harder to organize a union. This explains a lot of the pay gap. Unionized workers earn 25% more on average than their nonunionized brothers and sisters in the same occupations. For example, unionized janitors and maids average $10.91 an hour while janitors and maids with no union get paid an average of $7.70. Unionized waitstaff make $13.30 on average while those without a union average $7.73 according to the Bureau of National Affairs.

According to public opinion surveys, 50 million people, almost half the U.S. workforce, "Would join a union tomorrow if they had the chance." But one in ten union activists is fired for promoting a union, according to the Labor Party, and ten thousand workers lose their jobs each year just for supporting union organizing campaigns. "Employers spend over $1 billion a year on consultants trained in intimidation and psychological tactics to stop workers from forming unions" states the Labor Party in materials for their "Right to Organize" campaign.

Even when workers brave the costs and vote for a union, 34% are blocked by the employers from negotiating a first contract, and another 17% never get to a second contract.

Cases where the employer essentially fires the whole workforce for striking have increased drastically. Prior to the 1980's, there were only about 6 cases a year of striking workers being "permanently replaced." according to the General Accounting Office. By 1985 that number had risen to 100 cases a year, and the danger of "permanent replacement" has become a permanent feature of labor struggles in the '90's. By contrast, this practice is illegal in Canada.

Among the new jobs created, "There is more to the story than low wages," the National Priorities Project states. "Few jobs provide health insurance or other benefits; often jobs are part-time or temporary; many workers face extreme employer opposition when they attempt to organize; [and] women and people of color are especially impacted."

Federal assistance has also been cut, the report points out. "In the past 18 years the federal government has reduced its commitment to help workers and their families nationwide by cutting job training 58% and mass transit by 46%." Florida has lost 14.7 billion in these programs since 1980.

The report tells of five ways people are organizing against these trends: Living Wage campaigns; increasing the rights of workers to organize; raising the minimum wage; closing the gap between CEO and worker pay; and public investment in workers and their families. In 20 cities around the country, Living Wage ordinances have been passed.

In Alachua County, a coalition is forming to plan a Living Wage Campaign, which would cover workers working for the city and/or county and those working for companies that contract with the city or county. There will be a Strategic Planning Workshop on Saturday, February 20, from 10 am to 2 pm at the Carpenters Hall, 1910 NW 53rd Street. Bruce Nissen of the Miami-Dade Living Wage Coalition will speak.

To get a copy of the full report, "Working Hard, Earning Less: The Story of Job Growth in America", write National Priorities Project, 17 New South St., Northampton, MA 01060. (413) 584-9556. Their website is at www.natprior.org