Capitalism and workers’ power

You don’t have to read Marx to understand the lack of power workers have under capitalism. But you do have to read beyond mainstream economists and economic pundits. You might turn, for example, to the business school.

Yes, I know, that’s a strange assertion. But let me explain.

The usual argument these days is that workers have acquired a lot more power because of the scarcity of labor. When labor is scarce (basically, when the quantity supplied of labor is less than the quantity demanded), workers can fetch higher wages and be pickier about the jobs they’re willing to accept. That, of course, drives employers crazy and, as usual, mainstream economists and commentators just echo those concerns.

So, is it true? Well, look at the data they cite:

The blue line represents the number of job openings, while the red line is the number of unemployed workers. And, look, way over on the right-hand side of the chart the blue line is slightly higher than than the red line! (Numerically, there were 10.1 million job openings recorded at the end of June and 9.5 million unemployed workers.In other words, for every available 100 jobs, there are only 94 unemployed people available.) And that scares the bejesus out of employers and those who always take the side of employers: they might have to pay workers more to take the terrible, low-paying jobs they are offering.

The result is an increase in workers’ power, as Ben Popken explains:

A pandemic-tightened labor market has given willing and able workers more of an upper hand with their employers for the first time in generations. . .

Worker power is the ability of an employee to command higher wages and benefits and set terms about their working conditions.

Not so fast! Yes, some workers might benefit from the current tight labor market but certainly not all of them, especially at the bottom of the economic pyramid.

Moreover, as Julie Battilana and Tiziana Casciaro remind us, while “it’s understandable” that some claim that workers have more power now than they did during the worst months of the pandemic, it’s still the case that “power remains highly unbalanced in most American workplaces.”

In non-unionized, hierarchical organizations, it is still concentrated in the hands of top executives and shareholders who control all company decisions and priorities, from pay levels to hiring (and firing), and company strategy and policies. Workers continue to have no representation on most corporate boards of directors and have no or very little say over any of these decisions even though they affect their work lives and livelihoods. This lack of control has detrimental effects on worker health and well-being: It has been associated with job dissatisfaction, greater mental strain and damaged physical health. The philosopher Elizabeth Anderson has written that American “workplaces are small tyrannies,” resembling dictatorships more than democracies.

In other words, workers have two positions within capitalism: they sell their ability to work in markets for labor power and then, after those exchanges are concluded, they leave the market and enter another realm, where they perform labor. And inside the enterprises where they work, they have no power at all. There, in the realm of production, their employers—the corporate boards of directors or capitalists—have all the power. That’s why capitalists enterprises are dictatorships, not democracies.

And if workers did have power inside the enterprises—if, for example, the enterprises were organized instead as worker-owned cooperatives?

giving workers more power means giving them the right to collectively validate or reject important decisions that affect their work lives, including the choice of the CEO, how profits are shared, what strategies to pursue and what to prioritize in the face of a health crisis like the pandemic.

And if employers and mainstream economists don’t attempt “to reduce the extreme power imbalance that so clearly puts workers at a disadvantage”? Then, Battilana and Casciaro warn, workers might take matters into their hands:

when the distribution of rewards in an economic system is so unequal as to appear blatantly unfair, those with less power are more likely to upend the current system entirely.

That, of course, would mean the end of capitalism. . .

Chart of the day

To read the mainstream press, you’d think that the U.S. economy—especially the economy from the standpoint of workers—is on the mend.

The New York Times is a good example:

The American economy gained 1.8 million jobs last month, even as the coronavirus surged in many parts of the country and newly reintroduced restrictions caused some businesses to close for a second time.

And, it’s true, both the official (U-3) unemployment rate (the orange line in the chart) and the more inclusive (U-6) rate (the green line) have fallen since April. But, at 10.2 and 16.5 percent, respectively, they’re still at or just below what they were during the worst period of the Second Great Depression.

Moreover the percentage of American workers who have been unemployed for 15 weeks or more is on the rise—and can be expected to continue to grow in the months ahead.

The massive Reserve Army of unemployed, long-term unemployed, discouraged, and underemployed workers is serving to discipline and punish workers, both those who have managed to keep their jobs and those who have lost them.

We know this because workers’ pay is going down. At the same time, workers are forced to have the freedom to commute to and labor at their jobs under perilous pandemic conditions, they’re being paid less. According to the Bureau of Labor Statistics, both the average hourly and weekly earnings for production and nonsupervisory workers fell between June and July of this year.*

Meanwhile, now that emergency federal benefits have expired, the unemployed—both continuing cases and newly laid-off workers—will not be receiving the $600-a-week supplement that helped them pay their bills through the spring and early summer.

Instead of raising workers’ wages, to mitigate the effects of the pandemic and to attract them back to work, employers and their political representatives prefer to slash unemployment benefits in order to compel workers to compete for the few jobs that are currently available.

Whichever way you look at it, American workers are the ones who are being forced to shoulder the lion’s share of the costs created by the COVID economic crisis.

*These numbers relate to production employees in mining and logging and manufacturing, construction employees, and nonsupervisory employees in the service-providing industries. These groups account for approximately four-fifths of the total employment on private nonfarm payrolls.

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Your job or your life

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When social solidarity is essential, it’s common to hear pious sermons against class warfare. Unfortunately, there is a class war. And its victims, so many of them front-line workers, didn’t start it.

— E. J. Dionne Jr.

New research confirms what we’ve all been seeing for the past couple of months: the lowest paid, most precarious workers are the ones who are being forced to face the choice between their jobs and their lives.

And, looking forward, as those in charge push to reopen the economy, the most vulnerable workers are the ones who will most find themselves caught up in the ultimate dilemma of capitalist employment during the COVID-19 pandemic: stay at home without the ability to earn a paycheck or go back to work and increase the chance of getting the dreaded disease.

A new working paper by Simon Mongey, Laura Pilossoph, and Alex Weinberg explains why. Workers in low-work-from-home jobs (the chart above on the left) or high-physical-proximity jobs (the chart on the right) are more economically vulnerable: they are less educated, earn lower incomes, have fewer liquid assets relative to income, and are more likely renters.

Moreover, they found, those same workers (who, for example, lived in areas with less pre-virus employment in work-from-home jobs) saw smaller increases in the rates at which individuals were able to stay at home. At the same time, workers who were employed in occupations with low work-from-home scores experienced larger employment losses.

In recent months, then, workers at the bottom of the economic pyramid were more likely to be either laid off and forced onto the ever-lengthening unemployment lines or required to continue to labor under perilous conditions because their jobs didn’t allow them to work from home.

Now, as their employers attempt to reopen their businesses, many vulnerable workers will lose their unemployment compensation. Therefore, they will be forced to have the freedom to work not from home, but on-site, in close proximity to other workers and customers. That also means they’ll be closer to and caught within the cruel circuits of coronavirus contagion—thus imperiling themselves, their families, and their communities.

The authors of the report succinctly and accurately characterize the cruel dilemma created by American capitalism in the age of the pandemic in the following manner:

Already more economically vulnerable workers are disproportionately exposed to unemployment now, and infection in the future.

 

“It’s a lose-lose” for workers

It’s now an almost daily occurrence: Donald Trump starring in the White House pandemic briefings, flanked by business executives—from Walgreens, CVS, Target and a host of laboratory, research, and medical-device corporations—to form a mutual admiration society.* The various scientists, public-health experts, and emergency personnel, the ones people want to hear from, are accorded third rank.

And American workers are nowhere to be seen—or heard—even when, as on 24 March, Trump decided to speak for them as wanting nothing more than “to get back to work.”

The fact is, while millions and millions of workers have been furloughed or laid off in recent weeks, waiting desperately to receive financial assistance, many more continue to be forced to have the freedom to labor for their employers on a daily basis. They leave their families and venture out—too many with no alternative but to expose themselves to the risks of the pandemic during their commute on public transportation—and then submit to even more risks on their jobs, with little in the way of protection, as some of their fellow workers contract COVID-19.

As Francis Prose explained, many working-class people don’t have the luxury of social distancing on their way to work:

Among the most disturbing are the photos and videos of jam-packed New York subway stations and cars, crowded with passengers – mostly people of color – on their way to work. Some passengers are wearing masks, some aren’t. Whether they like their jobs, believe in what they do, worry about health protections at work, fear losing their health insurance, if they have any, they probably have something in common: they wouldn’t be on this packed subway if they didn’t have to be.

And then, once they get to work, there are the dangers of laboring alongside others or interacting with possibly infected clients and customers. Think of all the hospital workers and other first responders, supermarket clerks, janitors, and nursing-home aids, as well as all the other members of the working-class who cannot work from home, but have no choice but to go their jobs in the factories, stores, and delivery services run by the CEOs who are fêted at Trump’s briefings.

It’s no wonder, then, that Amazon driver Maurice Baze called the situation “a lose-lose.”

If I don’t go to work, I can’t pay my rent. If I do go, I could get sick and never work again because I lost my life.

American workers, lest we forget, live in a country with no federal laws requiring paid leave for family matters or their own health.** And many of their employers have simply refused or been slow to provide personal protection equipment and to enact new safety procedures on the job.***

So, workers have had to take things into their own hands—not just individually (for example, by staying home), but collectively—by using one of the few tools at their disposal: the strike.

By my count, there have been more than a dozen work stoppages across the country in the past two weeks. They include the following:

•Amazon workers on Staten Island (and the worker who organized the strike was subsequently fired)

•Instacart employees

•Whole Foods “sick-out”

•Bath Iron Works shipbuilders

•Fiat Chrysler plant in Michigan

•Birmingham, Alabama bus drivers

•Bus drivers in Detroit

•Sanitation workers in Pittsburgh

•Kroger warehouse workers in Memphis

•Workers at a Perdue processing plant in Kathleen, Georgia

•Cooks and cashiers at a McDonald’s restaurant in San José

•Fast-food workers at McDonald’s restaurants in St. Louis, Tampa, and Memphis

•Workers at a McDonald’s restaurant in Los Angeles

Other workers (for example, at the GE Appliances plant in Louisville, Kentucky) have engaged in protests against the reopening of factories.

Even in the best of times, millions of American workers are injured, succumb to illness, or die on the job.**** This year, unless employers are forced to implement the appropriate safeguards and give workers a say in when and how they work, we can expect those numbers to rise.

Until then, American workers will face a no-win situation and be forced to take matters into their own collective hands.

 

*Starting with the 13 March news conference, when Trump first (finally) declared a national emergency. Fortunately, more and more networks are cutting their coverage of or simply refusing to air the daily White House briefings.

**The recently passed Families First Coronavirus Response Act does require certain employers (only those with fewer than 500 employees) to provide workers with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19, and only until the end of 2020.

***For example, it took Walmart, the nation’s largest employer, until this past Tuesday to start implementing new health and safety procedures for workers due to coronavirus concerns.

****According to the Bureau of Labor Statistics (pdf), 2.8 million nonfatal workplace injuries and illnesses were reported by private industry employers in 2018; 5,250 fatal work injuries were recorded by the BLS.

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Their beautiful recovery

Does anyone really need any additional evidence of the lopsided nature of the current recovery?

Employers certainly don’t. They’re managing to hire additional workers, thus lowering the unemployment rate. But they don’t have to pay the workers they hire much more than they were getting before, with wages barely staying ahead of the rate of inflation. As a result, corporate profits continue to grow.

Clearly, what we’re seeing remains a one-sided recovery: employers are getting ahead—and their workers are still being left behind.

According to the latest report from the Bureau of Labor Statistics, total nonfarm payroll employment increased by 164,000 in April, thus reducing the headline unemployment rate to 3.9 percent and the expanded or U6 unemployment rate (which includes, in addition, marginally attached workers and those who are working part-time for economic reasons) to 7.4 percent.* Meanwhile, average hourly earnings of private-sector production and nonsupervisory employees increased by only 5 cents in April—an annual rate of just 2.7 percent (just a bit more than the current inflation rate of 2.5 percent).

Sure, employers complain that they can’t hire the workers they need—persistent gripes that are dutifully reported in the business press. They may even be paying one-time bonuses. But they’re certainly not increasing wages in order to attract the kinds of workers they say they want.

That’s because they don’t have to. Most of the new jobs are being created in sectors—like professional and technical services (an additional 25.8 thousand jobs in April), temporary help services (10.3 thousand), health care (24.4 thousand), machinery (8.4 thousand), and accommodation and food services (18.9 thousand)—where there are plenty of still-underemployed workers to go around. In addition, most of those workers are not represented by unions, and therefore aren’t in a position to negotiate for higher wages.** The decline in government jobs means there’s little competition for the nation’s workers. And employers continue to have the option of automation and offshoring, which also keeps workers’ wages in check.

So, employers in the United States are able to advertise jobs that pay $10, $12, or $20 an hour, which desperate workers are forced to have the freedom to take—because, within the existing set of economic institutions, the alternatives are even worse.

American employers, with their higher profits and new tax cuts, could be paying higher wages. But they’re choosing not to.***

For them, it’s certainly been a beautiful recovery.

 

*After revisions, job gains in the United States have averaged 208,000 over the last 3 months.

**However, one group of workers without union representation—teachers—have decided to initiate strikes and other work stoppages to respond to cuts in their wages and education budgets. As North Caroline kindergarten teacher Kristin Beller explained, “We are done being the frog that is being boiled.”

***Except, of course, the portion of the surplus they have been distributing to their CEOs.

World employers report

The history of capitalism is actually a combination of two histories: it’s a history of employers attempting to hire workers and develop new technologies to make profits and expand the reach of capitalism; it’s also a history of workers banding together to improve wages and working conditions and imagine ways of moving beyond capitalism.

The World Bank’s World Development Report, currently in draft form, comes down firmly on the side of employers and their historical role.

The theme of the 2019 report is the “changing nature of work.” As envisioned by the reports authors,

Work is constantly being reshaped by economic progress. Society evolves as technology advances, new ways of production are adopted, markets integrate. While this process is continuous, certain technological changes have the potential for greater impact, and provoke more attention than others. The changes reshaping work today are fundamental and long-term, driven by technological progress, globalization, shifting demographics, urbanization and climate change.

Beneath the typically lofty but vague rhetoric, the two trends that haunt the report are the increasing gap between the top 1 percent and everyone else and the jobs that will be eliminated with the use of automation and other labor-saving technologies—leading to “rising concerns with unemployment, inequality and unfairness that are accompanying these changes.”

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So what does the World Bank recommend for beleaguered workers, who are falling further and further behind the tiny group at the top and whose job prospects are threatened by new technologies?

Here, the World Bank reveals which side of history it’s on. It goes after the kinds of protections workers have long fought for, in both developed and developing countries, but which the world’s employers consider onerous and that make the price of labor power too high. In particular, the World Bank focuses on “high minimum wages, undue restrictions on hiring and firing, strict contract forms” that make workers both costly to hire and difficult to dismiss. In other words, the World Bank recommends exactly what employers have always wanted: flexible labor markets.

Rapid changes to the nature of work put a premium on flexibility for firms to adjust their workforce, but also for those workers who benefit from more dynamic labor markets.

That’s what the World Bank offers to the world’s employers (“flexibility”), coupled with an empty promise to the world’s workers (“more dynamic labor markets”).

But, as even the World Bank recognizes, such changes would leave the world’s workers even more destitute than they are right now. That’s why they shift the focus to a discussion of a a “new social contract. . .to promote fairness and equality of opportunity for people and firms.”

Possible elements of hypothetical social contract could include: (i) creating jobs; (ii) investing early in human capital; (iii) taxing platforms and superstar firms; and (iv) introducing basic income guarantees.

Once again, it’s exactly what private employers want—more workers with additional skills, a redistribution of monopoly rents, and a minimum income for their workers—as long as employers themselves don’t incur any additional costs. Employers retain their control over the surplus, and therefore over both jobs and workers. And the changes proposed by the World Bank promise them even more surplus as they use new technologies and change the nature of the work that is done for them.

What remains intact in choosing the employers’ side of history is that work, however much it is envisioned to change, is still done by employees for their employers. Governments and the rest of society are then charged with the responsibility of cleaning up the mess left by employers, including the dearth of required jobs and the mass of workers who are too impoverished and insecure to satisfy their own needs.

The idea that the worlds of technology and work are quickly moving far beyond the control of employers—well, that’s the side of history the World Bank remains incapable of comprehending.