Courtesy of MarketMontage. View original post here.
I’ve written often in the past stories showcasing the statistics about “what” kind of jobs are coming back, rather than simply focusing on “how many”. What has been striking during the Great Recession and its aftermath (also known as a recovery), is the loss of jobs in the higher strata of wages, and the replacement of those jobs with those at the lower strata. The long term societal implications of this if it does not reverse itself in the future are many. With the full flowering of globalization I’ve written since 2007 this will not reverse – indeed the wages of those in developing countries will increase, while the wages of those (in direct competition) in developed countries will decrease. I’ve called this “global wage arbitrage”. While these wages between developed and developing will not exactly converge (many other items such as regulation, environment, taxes et al will impact) they will become much closer as a global labor force becomes closer to reality. I’ve written long ago this is going to mean much tougher times for those in high cost of living countries and I believe this has surfaced over the past decade in the States.
This NYT story takes a look at one of those sectors of the economy in global competition – manufacturing. Yes, some jobs are being created but most are a far cry from the type of wages (relative to cost of living in the country at the time) once offered. Locally, with the Big 3 there is now a two tier wage system with recent union contracts. Work that once was done for $28+/hour is now being done by $14/hr workers. Considering Walmart pays cashiers somewhere around $11-12/hr for a much less physically taxing type of workload we can see how the expectations of many in this country need to change to the new reality. It also poses a lot of challenges to the government as there will be much more strain on social services, and far less of a taxpayer base to create revenue. So as we celebrate job ‘creation’ each first Friday of the month, we need to think much deeper than just the raw number – it’s not just quantity but quality.
Please note – as stock speculators whose only ‘concern’ is profits, we ‘embrace’ these changes as they mean more profits, and ultimately higher stock prices. As U.S. citizens? It’s not such a clean and easy argument. “Someone” is going to have to pay for the offset to lost wages and that either means higher deficits or higher taxes. Further with record amount of profits now going to ‘capital owners’ versus ‘labor’ you begin to see the societal friction beginning to develop in movements such as OWS. I expect this to only expand in the years and decades to come at current trends.
- Manufacturers are hiring again in America, softening a long slide in factory employment. But for a new generation of blue-collar workers, even those protected by unions, the price of employment is likely to be lower wages stretching to retirement.
- That is particularly true of global manufacturers like General Electric. With labor costs moving down at its appliance factories here, the company is bringing home the production of water heaters as well as some refrigerators, and expanding its work force to do so. The wages for the new hires, however, are $10 to $15 an hour less than the pay scale for hourly employees already on staff — with the additional concession that the newcomers will not catch up for the foreseeable future.
- Such union-endorsed contracts are also showing up in the auto industry, at steel and tire companies, and at manufacturers of farm implements and other heavy equipment, according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the A.F.L.-C.I.O.’s director of collective bargaining.
- The shrunken pay scale for newcomers — $12 to $19 an hour versus $21 to $32 an hour for longtime workers — threatens to undo the middle-class status of even the best-paid blue-collar jobs still left in manufacturing.
- The generational setback implicit in a “globally competitive wage” is evident at G.E.’s Appliance Park, the complex of factories where G.E. makes refrigerators, washing machines, dishwashers and other household appliances. Six years into the adoption of lower wages for new hires, half of the hourly workers are paid at the reduced scale.
- In an earlier era, that would have been a source of friction, perhaps protest. Now it isn’t, and in an interview William Masden, 62, earning $31.78 an hour after 42 years at Appliance Park, attempted an explanation. The younger workers still get annual raises, he noted, and by the time they top out, he and his peers — the oldest baby boomers — “won’t be here any longer to remind them of what they are missing.”
- Linda Thomas, 37, one of the first to be hired in 2005 under the new arrangement, amends that explanation. Her hourly wage, $18.19, has almost topped out, although it is nearly $14 an hour less than Mr. Masden’s. But she keeps silent. Too many unemployed people, she explained, would clamor for her job and her wage if she were to protest. “You don’t want to rock the boat,” Ms. Thomas said. “You take a chance on losing everything you have if you do.”
- Neither the nation’s unions nor the government has tracked the number of jobs downgraded to the equivalent of a lower-tier wage scale, or the number of people who, like Ms. Thomas, have gone through the experience of a downgrade: in her case, from $19 an hour at the Ford auto body stamping plant — until she was laid off in 2005 — to a starting wage at G.E. a few months later of $12 an hour.
- The decline in unit labor costs is striking. In manufacturing, the wages and benefits invested in each unit of production have fallen in eight of the past 10 years, a net decline of 13.6 percentage points, the Bureau of Labor Statistics reports. Productivity played a role — modern factories require fewer workers. Still, the decline is the greatest in such a short time since the statistic was first tracked in 1951.
- Mr. Masden, divorced with two grown daughters, and Ms. Thomas, single and childless, reluctantly accept this view. He wonders if the next generation will ever make it into the middle class, as he did. “I never had to think about pay,” he said. “I just kept putting money in my pocket.”
- Ms. Thomas doubts that her pay will rise above the $19 an hour she had earned at the Ford plant before her layoff. Two older sisters still employed there are similarly worried. “They were making $22 an hour and they are now making $15 an hour,” Ms. Thomas said, referring to a concessionary United Automobile Workers agreement. “They were totally upset. But the alternative offered by the company was cut the wage scale or close the plant.”
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