The Militant (logo)  
   Vol. 69/No. 17           May 2, 2005  
 
 
U.S. real wages fell in 2004, continuing 30-year decline
(front page)
 
BY MICHAEL ITALIE  
The real wages of working people in the United States, which have been on an overall downward curve for 30 years, fell again in 2004.

The intensifying drive by the employers, factory by factory and industry by industry, to push down wages, increase the differentiation among wage earners, and dilute seniority is the underlying cause of this decline. This offensive by the bosses takes its toll in the steady grinding away at conditions in housing, health care, and other aspects of workers’ basic standard of living.

Many of the newspapers that reported on this, from the New York Times to the Los Angeles Times, placed the blame for the pay cut on inflation rather than the bosses. In fact, the 2.7 percent rise in the cost of living last year was modest in comparison to the double-digit inflation of the late 1970s. During the period of capitalist expansion from 1947 to 1973, average real wages rose substantially, despite periods of greater inflation. But in 2004 stagnating wages did not keep pace with the rise in prices, producing a decline in the purchasing power of workers in this country of about half a percent.

In seeking to boost their profit margins, more and more employers have been unable to count on anything other than freezing and driving down wages, lengthening the workweek, and intensifying labor. This stretchout and speedup is the secret behind the productivity “miracle” pointed to by Federal Reserve Bank president Alan Greenspan and others. “We’re in for a long period where inflation-adjusted wages will be under acute pressure. That’s a most unusual development in a period of high productivity growth,” Stephen Roach, chief economist at Morgan Stanley, told the New York Times April 12. “The competitive pressures for companies to hold the line on labor costs are intense.”

At the center of this assault have been the labor unions, which have continued a decades-long decline. In 2004, 12.5 percent of all employed workers belonged to unions, compared to 13.5 percent in 2001 and more than 20 percent in 1983.

The pressure from the bosses and their government against the unions has extended to the public sector, where in the name of “homeland defense” the government has been pressing to weaken the unions. In 2003, over 37 percent of public sector workers belonged to a union; a year later that figure had fallen to 36.4 percent.

This toll has had a disproportionate impact on workers from oppressed nationalities and women. In 2003, the median hourly wage rate of Black men was 73 percent of their white counterparts. For Latino workers that figure was 64 percent.  
 
A snapshot of New York
In New York City real wages declined by 1.5 percent in 2003, according to a report by the NYC Rent Guidelines Board (RGB) released April 12. Real wages fell by 5 percent for New Yorkers the year before. This has translated into workers paying an ever-greater portion of their income to cover the costs of basic needs such as housing.

About half of New Yorkers live in “affordable housing,” the RGB reports. The Department of Housing and Urban Development defines affordable housing as rent that can be paid with no more than 30 percent of household income. In addition, a quarter of those who rent an apartment in New York turn over more than half of their income to the landlord. “In order to afford a two-bedroom apartment,” according to the RGB, “a full-time worker must earn $19.58 per hour, or $40,720 a year. Alternately, those who earn minimum wage would have to work the equivalent of 131 hours a week (or two people residing together would have to work 65.5 hours a week) to be able to afford a two-bedroom unit.”

For many there is no “affordable” housing: they move in with relatives, share apartments with other families, or find roommates.

An article in the April 17 New York Times highlighted one of the trends that has resulted from these pressures: the growing number of households in the city—some 9,000-plus—made up of people 60 years of age or older who are living with unrelated boarders or roommates. “Such partnerships are typically accidental,” said the Times article. “Sometimes, all it takes is a sudden slip on the stairs, and a hospitalization, draining finances and options. Sometimes, all it takes is an eviction notice from a landlord who wants to ride a hot real estate market.”

Eugene Swierczynski, 57, worked as a carpenter until he fell off a ladder and became disabled. He lived in a homeless shelter before renting a room for $400 a month from Irena Schafhauser, 77, in Greenpoint, Brooklyn. She needed the income because she had fallen down the stairs of the four-story walk-up apartment building a couple of years earlier and was unable to keep her job at a doctor’s office.

Their stories are typical of those covered in the article, in which the roommates often end up pooling Social Security checks, disability payments, and food stamps in order to stay off the street. “They usually talk about how Irena is battling the landlord, who wants to evict them, renovate the rent-regulated apartment and charge someone else more money,” reported the Times. “About how the government is cutting her benefits to $547 a month from $666, and is pushing Eugene to go to health clinic he does not want to go to.”

Rising gasoline prices make up a large share of inflationary pressures. Wholesale energy prices increased by 3.3 percent in the month of March, the Labor Department reported April 19. This resulted in higher prices at the pumps for working people, reaching an average of $2.33 per gallon in the state of New York, the New York Post reported, a 20 percent increase over the year before.

The drop in purchasing power for workers and farmers that occurred last year was the first in a decade, but followed a 30-year trend that has meant a steady decline in the standard of living of working people.

In the three decades following the Second World War, when Washington gained unrivaled dominance over other imperialist powers, the employing class could afford to concede regular wage increases to sections of the working class in exchange for labor peace.

By the early 1970s, however, the postwar boom had ended and the curve of capitalist development dipped downward. At the root of this turn was the decline in the average rate of industrial profits.

The deep recession of 1974-75 brought a sharp increase in unemployment and an intensified employer attack on workers’ wages and conditions. Beginning with the takebacks Chrysler imposed on autoworkers in 1979, the bosses rammed through massive cuts that drove down actual take-home pay—before inflation was even taken into account.

For a five-year period in the late 90s, workers were able to reverse the wage trend as the booming “bubble economy” of the 90s increased employment and workers’ confidence to fight for higher wages. This ended with the recession in 2001, and wages resumed their 30-year downward slide.

This offensive by the employers has not only produced a fall in real wages, but a decline in medical and pension coverage, the value and duration of unemployment benefits, and the availability and real worth of workmen’s compensation for those injured on the job.
 
 
Related articles:
U.S. auto giants face crisis of overproduction
Unemployment rises in Michigan as plants shut down, hiring stagnates
 
 
 
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