the fact that a worker’s wealth and well-being is much more dependent upon her employer than the employer is on a given worker tilts things in the employer’s favor.
.. Two trends demonstrate the decline of labor and the ascent of business. Since 1979, after-tax corporate profits as a share of gross domestic product have grown by 22.8 percent, while the share of nonfarm business sector income going to labor has dropped by 10.3 percent.
The decline in worker bargaining power in the United States is the cumulative effect of numerous small and large changes over recent decades reaching into almost every area of law and policy. This combines with a decline in the enforcement of existing laws that could protect workers’ bargaining power — laws protecting unions, laws against wage theft, nondiscrimination laws, and more.
.. Among these changes is the requirement that employees sign what are known as “noncompete” and “no-raid” agreements, both of which restrict workers’ ability to extract pay hikes by threatening to take similar jobs at competing companies.
.. “less than half of workers who have non-competes also report possessing trade secrets.”
When entry-level workers at fast food restaurants are asked to sign two-year non-competes, it becomes less plausible that trade secrets are always the primary motivation for such agreements.
.. The treasury report estimated that 30 million American workers have signed noncompete agreements.
.. 94 percent of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.
The growing emphasis on “shareholder value” has provided additional justification for all of these anti-worker developments.
.. “the shareholder value movement starting in the late 1980s and now institutionalized through industry analysts” was crucially important in the devaluation of employees:
.. Accounting in business is mainly about costs. Finance people hate fixed costs because of the challenges they raise to share price valuation when there is uncertainty, and the biggest fixed costs are labor. Simply moving the same labor costs from employees to outside staffing companies moves it from one part of the accounting ledger to another and makes analysts happier.
This mentality, in turn, encourages “the use of temps and contractors” to fill high-wage jobs because “that way the employer doesn’t have to raise wages for all their employees.”
.. Companies could outsource work to areas with cheaper labor and less of a union presence. This both weakened the union and ramped up competitive pressure on the companies that were unionized. The result was fewer unions.
.. In 2017, 6.5 percent of the private sector work force was unionized, down from 35 percent in 1955.
.. The contemporary weakness of organized labor and the threatened status of employees has roots in the breakdown in the 1970s of the postwar capital-labor accord — what A.H. Raskin, the legendary labor reporter for The Times, called a “live-and-let-live relationship” that held sway for 30 years.
.. First, they would alter antitrust enforcement to require consideration of the likely effect of mergers on concentration in the labor market, in order to prevent “too high a risk of wage suppression.”
.. Second, Krueger and Posner would support legislation making noncompete agreements “uniformly unenforceable and banned if they govern a worker who earns less than the median wage in her state.”
.. ban no-poaching arrangements altogether:
We propose a per se rule against no-poaching agreements regardless of whether they are used outside or within franchises. In other words, no-poaching agreements would be considered illegal regardless of the circumstances of their use.
.. In the 2016 election, Trump profited from the conviction of rural and working-class voters that they were on a downward trajectory. If anything, Trump appears to be gambling that letting those voters’ lives continue to languish will work to his advantage in 2020.
.. His administration has turned the executive branch, the federal courts and the regulatory agencies into the sworn enemy of workers, organized and unorganized. Trump is indisputably indifferent to the plight of anyone in the bottom half of the income distribution:
- look at his appointments,
- look at his record in office,
- look back at his business career and
- look at the man himself.
Where Did Your Pay Raise Go? It May Have Become a Bonus
A growing preference among employers for one-time awards instead of raises that keep building over time has been quietly transforming the employment landscape for two decades. But it was accelerated by the recession’s intensity, which made employers especially cautious about increasing labor costs.
.. In 2017, one-time payments consumed 12.7 percent to those budgets; raises amounted to just 2.9 percent.
.. “Pressure to increase productivity and minimize costs,” the report concluded, had pushed employers to forgo raises and rely more on short-term awards “as the primary means of rewarding for performance.”
.. In the recession that began a decade ago, the businesses most likely to survive tended to be the most conservative spenders
.. That approach was rewarded and has now been reinforced, he said, helping to restrain the growth of full-time work forces and salaries.
.. The practice of spending more on variable pay than on permanent raises took root in the 1990s, when growing competition from abroad increased pressure on companies to keep a lid on prices and production costs.
.. Pay-for-performance and other bonuses increasingly functioned as a release valve. Companies could offer more money to attract talent or when profits were strong, and pull back when business was slow.
.. The trend toward outsourcing work that was once handled in house as a way of saving money fits in with that story line.
.. Salary increases compound over time, offering greater financial security. Moreover, bonuses have not made up for wage stagnation.
.. The inflation-adjusted median income of men working full time was lower in 2016 than it was in 1973. And their lifetime earnings — which include salary, wages, bonuses and exercised stock options — have mostly dropped since then.
.. Salaried workers, rather than hourly wage earners, remain much more likely to be the recipients of such extra payments.
Average America vs the One Percent
Americans have increased productivity by 80 percent since 1979; unfortunately, their income hasn’t risen accordingly, if at all.
.. all Americans pay an average of a third of their incomes for housing. The second highest expense of top earners in America is transportation; the rich spend about 17 percent of their income traveling for business and pleasure. On the other hand, the lower classes spend about 17 percent of their income on feeding their families... Rich people are also more likely to pay for private education for their children. The majority of the 1 percent have attended college, and it’s only natural that they want the same for their kids. Higher-income families are able to pay for education expenses, whereas poor kids must rely on academics and hope to earn a scholarship or other financial aid. This means that while it’s not impossible for a child from a poor family to attend Harvard, it will be substantially more difficult for him to get accepted than if his family had better connections and more money... While money often works its way to the upper classes, it very rarely flows back the other way... If the average person’s wages had kept pace with the economy since the 70s, most people would be making $92,000 per year... Inside of the 1 percent, however, the people who make the most money actually pay the least taxes... the top 400 highest earners in the country pay only 18 percent personal income tax... People in the 15 percent tax bracket pay roughly 30 percent of the total tax gathered in the country, and their income tax accounts for more revenue for the government than any other bracket... 57 members of Congress, or roughly 11 percent, are members of the financial elite. Overall, 250 members of Congress are millionaires, and their median net worth accounts for roughly $891,000, or nine times that of the average American.
Trump’s Top Economist Says Corporate Tax Cuts Will Lift Workers’ Wages
The council’s report concludes that if the corporate rate were cut to 20 percent, the median American household would earn $3,000 to $7,000 more than it otherwise would have. The median household earns just under $60,000 a year.
Mr. Hassett said in a conference call with reporters that those gains could be even larger than the calculations suggested, “because America’s broken corporate tax system creates incentives for firms to hold their profits outside our borders.”Another report issued on Monday from three economists at Boston University used an economic model to predict similarly large income gains from the Republican tax framework, though it warned that the plan would likely widen income inequality. That model assumes that the burden of corporate taxes falls almost entirely on workers... Seth Hanlon, a senior fellow at the Center for American Progress think tank and a former economic adviser to President Barack Obama, said Mr. Hassett had “cherry-picked” studies on the effects of corporate taxation on wages.Jason Furman, a professor at the Harvard Kennedy School and a former Council of Economic Advisers chairman in the Obama administration, called Mr. Hassett’s findings “implausible” and noted they were rooted in studies that had not been published in major academic journals.
“This lies outside the mainstream of economists,” he said.