‘Recovery’ brings more suffering for workers

The day after the December jobs report was issued by the Labor Department, President George W. Bush stood at the podium at the Chicago Economic Club. “The American economy heads into 2006 with a full head of steam. ... We’re productive. We’re innovative. We’re entrepreneurial,” he declared.

The basis for his carefully stage-managed excitement was thin to non-existent: a job gain of 108,000 for the month and a drop in the official unemployment rate from 5.0 percent to 4.9 percent.

In a move that had the Karl Rove touch, Bush sent Vice President Dick Cheney and a good chunk of his cabinet on the road to talk up the economy and try to make these anemic numbers look like a major turning point in the economy for 2006. Cheney went to a Harley-Davidson factory in Kansas City, Mo., Treasury Secretary John Snow to the New York Stock Exchange, Commerce Secretary Carlos Gutierrez to Louisville, Ky., Labor Secretary Elaine Chao to Baltimore and Energy Secretary Sam Bodman to Pittsburgh in a major effort to try to bring Bush’s sinking poll numbers up.

Bush was pushed into motion by the latest Gallup poll, which found 63 percent of the population rates the economy fair-to-poor and 58 percent say that economic conditions are getting worse. So the roaring economy, as far as the majority of the population is concerned, is no more real than the weapons of mass destruction in Iraq.

Of course, neither Bush nor his emissaries mentioned that the job-creation numbers were half what Wall Street economists had been predicting. Nor did they mention that it takes 150,000 new jobs per month just to keep up with population growth. And they did not confide that the entire unemployment number is understated because more and more people have given up looking for jobs and are not counted in the labor force, or are only able to find part-time work.

In the world of the working class, employed and unemployed—the people who create all the wealth and profit that is being disposed of by the brokers, bankers and bosses—the picture is not so rosy.

No recovery for workers

Wages grew at 3.1 percent but inflation was 3.5 percent. This amounts to a general wage cut of 0.4 percent. Average weekly hours worked were down 0.2 percent to 33.7 hours and average weekly earnings were flat at $550.66. (Los Angeles Times, Jan. 6) This does not take into account the hundreds of thousands of day laborers and other undocumented workers, who are underpaid and whose much lower wages go unreported.

Little to nothing was said in the capitalist press about the way racism and sexism are reflected in the statistics. Rarely cited from the Labor Department report for the month is the fact that African American unemployment is over twice that for white workers, 9.3 percent compared to 4.2 percent; Latino unemployment is 6.0 percent; and among women at least 20 years old, it is 8.5 percent. Teenage unemployment is 13.4 percent. There are no statistics on lesbian, gay, bi or trans unemployment.

Of course, even these official statistics are suspect, given the fact, for example, that half the African American men in New York’s Harlem are known to be unemployed.

The masses of workers are hurting and not just because of one month of the capitalist economy. Here are some of the findings of the Economic Policy Institute, a liberal think tank, as compiled by EPI President Law rence Michel and Director Ross Eisenbrey and issued in a Dec. 21 release.

Inflation-adjusted wages are still below where they were at the start of the recovery in November 2001. Productivity, on the other hand, is up by 13.5 percent.

Wage growth has been shortchanged because 35 percent of the growth of total income has gone into corporate profits.

Median household income (inflation-adjusted) has fallen five years in a row; it was $46,129 in 1999 and only $44,389 in 2004. Thus, household income dropped on the average almost $2,000.

Over the last four years the indebtedness of U.S. households has risen 35.7 percent, the highest level of debt in history, and now amounts to 115 percent of after-tax income. On average, people are paying 13.6 percent of their earnings in interest to banks and credit card companies to cover this debt.

The percent of the population that has a job has never recovered since the last recession and is still 1.3 percent lower than in March 2001. More than 3 million manufacturing jobs have been lost since January 2000.

The poverty rate rose from 11.3 percent of the population in 2000 to 12.7 percent in 2004 and the number of people living in poverty has increased by 5.4 million over that period. The poverty rate for children has gone from 16.2 percent in 2000 to 17.8 percent in 2004.

Household health-care costs rose between 43 and 45 percent from 2000 to 2003. Last year the percent of people with employer-provided health care fell for the fourth straight year. Nearly 3.7 million fewer people had health-care insurance in 2004 than in 2000.

According to Kaiser Family Foundation and Health Research Educational Trust, since 2000 alone employers have raised the health-insurance premium their workers must pay by an average of 50 percent—or about $1,000 per family. Only 63 percent of the working-age population has any health coverage at all, meaning that over a third of the working-age population, or about 45 million people, have none. (Los Angeles Times, Oct. 10, 2004)

And while the bosses added 2 million jobs in the year 2005, they also laid off at least 1.56 million workers between Jan uary and November 2005, according to the Bureau of Labor Statistics. And this number is a gross underestimate. It only records layoffs involving 50 or more workers, who are out of work for 31 days or more, and relies completely on the bosses’ testimony to the BLS.

‘Recovery’ for the rich

In the boardrooms, the executive suites and the country clubs there is a recovery, and no wonder. The Dow Jones stock average has finally risen to 11,000, the Gross Domestic Product (GDP) grew at 4.2 percent and, according to Paul Krugman’s column in the Dec. 5 New York Times, profits have risen more than 50 percent since the last quarter of 2001 while wages and salaries went up 7 percent over the same period. This wage and salary number is distorted, however, because it includes the salaries of CEOs, high-paid executives and managers of all types. Average hourly earnings of non-supervisory workers, adjusted for inflation, are lower now than when the “recovery” began.

All talk of “strong performance” of the economy means little to the 35,000 GM workers facing layoffs at 10 plants or the 25,000 workers at Ford also facing pink slips. They and their families, as well as hundreds of thousands of people in the communities where the plants are located, are living in a state of anxiety and tension over the impending shutdowns. Both GM and Ford are on the brink of bankruptcy and may be looking to the bankruptcy courts to help bail them out in the same way the courts bailed out Delta Airlines. They are working with the Delphi auto parts corporation to try to break union contracts.

IBM’s assault on pensions

IBM announced in early January that it will freeze the $48 billion pension fund for its 125,000 workers beginning in 2008 and push them into 401k plans.

Instead of being able to rely on fixed pension benefits, paid out by IBM based upon their years of service to the company—really, years of exploitation—the workers will have to contribute out of their own paychecks into funds that will be used by brokers to gamble on the stock market or be put into money-market accounts. And this at a time when market “fundamentals” are increasingly shaky.

IBM will make small contributions to the 401k plans, but they will be far below the fixed-benefit pension-fund contribution the company was paying. IBM expects to save $450 million to $500 million this year alone and up to $3 billion from 2006 to 2010.

While corporations like Delta, Delphi and Bethlehem Steel have used the bankruptcy courts to get out of pension obligation to the workers, IBM is the first big corporation to just abandon its pension as a matter of policy on such a scale.

Of course, IBM is a non-union company and feels free to unilaterally dictate what amounts to a massive wage cut. Pension benefits are nothing but deferred wages, which the corporation is legally responsible to hold and protect for workers until they retire.

This frontal assault by IBM is likely to serve as a signal for other corporations to try to get out of fixed pension benefit plans.

Banks and Chapter 11 scam

According to Mark Ruetter, writing in the Oct. 23 Washington Post, “About 150 major corporations are now in some stage of bankruptcy reorganization, including four of the nation’s leading airlines. As the prospect of other large enterprises taking a spin down Chapter 11 becomes more widely discussed in business circles (‘maybes’ on the list include such iconic names as General Motors and Ford), the tactics used in bankruptcy courts are shaking the very foundations of the American workplace.”

Ruetter points out that while the new personal bankruptcy laws make it more difficult for individuals to declare bankruptcy and wipe out their mounting credit-card debt, amounting now to about $800 billion, the bankruptcy courts are becoming a major instrument for the corporations to wipe out the rights of their workers.

The Chapter 11 scam is a conspiracy between the banks, the corporations and the courts against the working class. Delphi is a graphic illustration of this conspiracy. Just before Delphi declared bankruptcy, it not only had $1.6 billion in cash on hand but had secured $2 billion in loans and revolving credit from Citigroup and JP Morgan Chase bank.

The obvious question posed by Ruetter was, “If Delphi is so broke, with unsustainable wage costs and skyrocketing pension obligations, why are two of the nation’s major banks offering to lend it money on excellent credit terms?

“The answer: For the same reason that Bank of America, General Electric Capital Group, UBS Securities and ... ‘vulture capitalists’ have invested billions of dollars in supposedly tattered companies entering Chapter 11 since 2001. Investors can profit richly from the meltdown of established companies....”

By making big loans, these banks become protected creditors, whereas the workers are unprotected. The banks can work with the reorganizers and the courts to void labor contracts and get control over the cash flow of these companies while they are in bankruptcy—and then become key players once they emerge from Chapter 11.

Global struggle for profits

These assaults upon the workers are driven by the lust for profit and the need of these giant transnational monopolies to position themselves for the vicious struggle being carried on for survival and dominance in the global markets. They are fighting each other to boost profitability, and they do it by attacking the workers. Bringing down wages, in whatever form—cutting pensions and health benefits or just plain wage cuts and layoffs—is the primary form in which capitalist corporations fight each other. They call it being “competitive.”

It is not just the individual greed of the bosses that drives them to attack the workers. It is the profit system itself that drives the attacks. The scientific-technological revolution has accelerated the construction of a global network of capitalist production, with instant communication, cheap transportation, computerized control of production, ordering and shipping, and an advanced global division of labor in production and services.

Each advance in technology and organization increases the productivity of labor, or in Marxist terms, increases the rate of exploitation of labor and the potential profit of the bosses. But with each advance, more commodities must be sold at a profit. That means they must be produced in less time as workers work faster, harder and longer, either at new and expensive machines, in super-modern factories managed by computers, or in speeded-up poultry and meat packing plants, strip mines, fisheries and just about everywhere.

In the global struggle for profit, all labor processes—whether in hospitals, offices or fields—come under pressure as the bosses pit workers against workers.

U.S. capitalism’s crisis
of overproduction

But in this process, the capitalist class increases its own crisis, the crisis of overproduction that it struggles to overcome. Each capitalist grouping’s goal is to produce more, sell more and reduce or eliminate labor. This brings about an increasing crisis for the workers.

After the last four economic crises, during each recovery it has been harder and harder for the system to absorb and reemploy the workers. According to statistics compiled by the Economic Policy Institute, published on Jan. 6 in a document entitled “The Jobs Picture,” the job growth figures over 49 months of each recovery have steadily diminished:

* March 1975 to April 1979:
16.7 percent,

* November 1982 to December 1986: 13.2 percent,

* March 1991 to April 1995:
7.8 percent,

* November 2001 to December 2005: 2.7 percent.

After each crisis it has become increasingly difficult to put workers back to work. With each crisis the giant corporations merge. They have “efficiency” layoffs. They make new investments in labor-saving machinery and technology to boost profitability. They build more and more powerful means of production.

And they must sell more and more commodities to recoup the cost of the expensive technology and plants and still have enough left over for the fabulous profits that they live for. The corporations run up against capitalist overproduction again and again. And each time it is more difficult for them to make their profits.

To keep production going, they resort to credit, either from the federal government in the form of low interest rates or consumer credit. According to the Wall Street Journal of Jan. 10, consumer credit, not counting mortgages, now amounts to $2.1 trillion.

In the sphere of production and exploitation, they outsource to low-wage areas, pit workers in other countries against workers in the U.S., and attack unions, wages, pensions and benefits.

Right now the corporations have accumulated vast profits that they cannot reinvest. U.S. corporations are rich with cash. According to the Wall Street Journal of Nov. 3, “World pension, insurance and mutual funds have $46 trillion at their disposal, up almost a third from 2000. In the same period global central-bank reserves have doubled to $4 trillion, and other gauges of available capital have risen as well.”

The Journal points out that global investors are diving into a wide range of risky assets. All are speculative and almost none have anything to do with production of wealth. They buy financial instruments, fine art, real estate and real-estate backed debt, etc.

Of this wealth, some has only paper value, the rest is nothing more than profits taken out of the labor process, taken from the workers in the form of surplus value. It is being held because it cannot be profitably invested in production. The ever-growing constraints of the world market upon the increasingly productive economy of the U.S. and the entire world capitalist class, tend to restrict investment. This in turn leads to unemployment and increased exploitation in order to get more profits from the workers.

Crisis at home, wars abroad

This global struggle for markets, resources and investment drives the bosses to war. That is what drove the Bush group to try to conquer the oil in Iraq. That is what is driving them to try to conquer Iran and North Korea, to threaten China, to try to overthrow Hugo Chávez in Venezuela and to blockade Cuba.

Their foreign adventures are simply an extension of their vicious, racist, exploitative practices at home. The racism against Iraqis is just an example of the way racism and chauvinism in general have been used in the service of imperialist war, from the 1898 war with Spain when the U.S. took over the Philippines, Cuba and Puerto Rico to the Vietnam War.

This situation cannot proceed in a straight line.

In fact, the Delphi workers are beginning to fight back against the attempt to drastically cut their wages and benefits under cover of the bankruptcy law.

The Transport Workers Union in New York City took an historic stand against the very center of U.S. finance capital on Wall Street and walked off the job to stop an assault on their pensions and to fight for dignity. They stood up in the face of the no-strike Taylor Law, the bondholders of the Metropolitan Transit Authority, and a vicious anti-labor mayor and governor.

Janitors in Texas have recently organized in an unprecedented victory.

The capitalist class and its system have ensured more and greater class struggles to come. It is a revival of the working-class struggle that will push society forward.

U.S. bosses have had relative labor peace for several decades. But in their insatiable thirst for profit and their drive to overcome their crisis of overproduction they will inevitably awaken a response from the multinational working class in the direction of rebellion and the opening of a counteroffensive.

The contradiction between the vast socially operated world apparatus of coordinated production on the one hand and the private ownership of the world economy by a tiny group of corporate billionaires on the other can only be overcome through struggle. The means to produce all this great wealth has been built by the working class, not by the exploiters. The workers must take it over and use it not for private profit but for satisfying human need—for health care, housing, education, jobs and a decent life. That is the very essence of socialism.