Despite headline unemployment rate of 6.7 percent, the percentage of the population without a job has hovered around the same low level of 58.5 percent for the last four years.
Manufacturing production has only recently reached 2007 levels, while the U.S. population has increased by 5 percent. Even more striking is the fact that today the same amount of production is being done by many fewer workers. Capitalists call this “productivity” and consider it a positive trend. Workers know it as speedup, increasing disregard for job safety and a “there’s the door” approach to any complaints. There are 12.5 percent fewer manufacturing jobs today than when the recession began in December 2007, according to the Bureau of Labor Statistics.
“The United States has gained just 568,000 manufacturing positions since January 2010 — a small fraction of the nearly six million lost between 2000 and 2009,” said a Jan. 26 New York Times article titled, “The Myth of Industrial Rebound.”
Hand in hand with their productivity drive, bosses have been going after wages and benefits won in past struggles, an assault on the working class that has yet to be met by the kind of resistance that could push it back.
Since the recession ended in June 2009 average real wages for auto workers have declined 10 percent; for all manufacturing workers they’ve dropped 2.4 percent.
One rough indication of the increasing rate of exploitation can be seen in the proportion of gross domestic product that represents wages. Between 1950 and 2000 compensation to workers ran between 61 and 65 percent of GDP in the U.S., according to the Financial Times. “Then, something happened. From 2000, it plummeted and currently rests at an all-time low of 57 percent.”
Bosses are not expanding productive capacity or hiring because they don’t think they can turn their greatest profit that way today. This is part of a long-term trend rooted in the lawful workings of capitalism, not bad government policies or behavior by capitalists that can be redirected with proper regulation.
“The capitalists are not refraining from major new capacity-expanding investment because they are choosing to divert too much capital into securities markets, real estate speculation, loan sharking, and speeding up production in outmoded factories,” said a resolution adopted by the 1988 Socialist Workers Party convention, titled “What the 1987 Stock Market Crash Foretold,” which is available in New International no. 10. “The cause and effect are the other way around. The exploiters are sinking their capital into ‘labor-saving’ retooling and speculative paper claims on values because they can get a better rate of return there than from investments in building new factories, installing major new technologies, and hiring on large amounts of additional labor power.”
This is more true today than it was a quarter century ago. Government monetary and fiscal schemes that have maintained interest rates near 0 percent to make borrowing for capitalists as cheap as possible have made no difference. One symptom of the crisis is the massive hoarding of cash by large corporations and increasing concentration of capital among fewer and larger banks.
At the end of 2012, the 975 largest nonfinancial companies worldwide were holding onto $3.2 trillion of cash, up 36 percent from four years earlier, reported the Financial Times. In the U.S., corporate cash hoarding is $1.5 trillion. Combined profits at the six largest U.S. banks — Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo — jumped 21 percent in 2013 to $74.1 billion, the highest level since 2006.
These banks also redistribute profits squeezed from the labor of working people through buying up commercial paper, from derivatives to credit default swaps and other financial “instruments.” In the second-quarter of 2013, such investments generated over 60 percent of Citigroup’s profits and 40 percent for JPMorgan Chase, according to The New Yorker.
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