Posts Tagged ‘wages’

wages

If we needed any more confirmation of who’s been laid off during the current crisis, all we need to do is examine the change in average hourly wages.

In the past month (so, April 2020), the year-over-year increase in hourly wages jumped to 7.9 percent. That’s more than three times the average increase since 2008 (2.5 percent) and more than two and half times the increase since Donald Trump took office (3 percent).

That doesn’t mean American workers are now earning more. Oh, sure, perhaps a few, who have been granted temporary increases to commute and work in precarious conditions—the ones who were receiving so-called “heroic pay,” which in many cases (such as Kroger supermarkets) is now being cancelled. No, the April increase mostly tells us, first, that tens of millions of works have been laid off and, second, that the vast majority of the workers who were fired in April were at the lower end of the wage scale.

Those low-wage workers—in retail, hospitality, healthcare, and other sectors—are no longer employed. So, their wages don’t count as part of the average. Therefore, the average hourly wage (of all private-sector workers), in comparison to last year at the same time, rose dramatically.

What it means, then, is: those who can least afford it, have been let go and are now struggling to survive on unemployment insurance and charity from food banks. They are the new members of the reserve army of unemployed workers, which in the months and years ahead will serve to hold down wage increases for and generally weaken the position of all workers.

That, alas, is how capitalist labor markets are working (for employers) and not working (for employees) during this pandemic crisis.

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I’ve often read that people who wash their hands in innocence do so in blood-stained basins. And their hands bear the traces.

— Bertolt Brecht, Mother Courage

The first time care for elderly and chronically ill Americans was radically transformed was during the first Great Depression, as almshouses were overwhelmed and public support grew to replace old-style charitable “indoor relief” with new-style government-funded “outdoor relief,” based on cash payments to people to support themselves in the community. According to Sidney D. Watson (pdf), “The Social Security Act of 1935 embodied this new approach to American social welfare, creating cash benefit programs to provide the elderly and needy with the money to support themselves at home rather than in institutions.”*

Later, the Social Security Amendments of 1950, 1956, 1960, and 1965 (which created Medicaid), a combination of federal and state payments fueled the growth of nursing homes by expanding eligibility and authorizing states to make vendor payments directly to for-profit care institutions. The existing nursing home industry fought to get Medicaid funding and, through its lobbying efforts, to keep and expand based on Medicaid funding.** It then used those funds to warehouse the elderly and infirm, in the care of workers who earn low wages, most of whom are women of color, a large portion of whom are immigrant workers.  

Now, those same nursing homes, like the almshouses of the 1930s, have been overwhelmed by a “tidal wave of human need”—but for a very different reason: they have become one of the key sites of the novel coronavirus pandemic.

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According to a recent investigation by the New York Times, about one-third of all U.S. coronavirus deaths are nursing-home residents or workers. At least 25,600 residents and workers have died from the coronavirus at nursing homes and other long-term care facilities for older adults in the United States, which has infected more than 143,000 people at some 7,500 facilities. Moreover, in about a dozen states, the number of residents and workers who have died accounts for more than half of all deaths from the virus.***

For example, in Massachusetts, more than half the state’s deaths, 2,922, come from long-term care facilities that have become major sources of infection. As of this past Saturday, 336 long-term care centers in the state had reported at least one COVID-19 case and some 15,965 residents and health care workers have been sickened.

Unfortunately, the existing data can’t for the most part distinguish between patients and workers. What we do know is that most nursing-home patients (60 percent) are supported by Medicaid, and therefore are (or are made) poor or near-poor. Across the country, they are being infected by and dying from COVID-19 at rates that are much higher than for the general population.

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As for the more than 3 million nursing-home workers in the United States, they earn a median wage of $12.15 an hour, for a median annual wage of only $25,280.**** The chart above demonstrates that, while the typical nursing-home worker earns more than retail cashiers, their wages and annual pay put them substantially below the national average as well as many other occupations, from bus drivers to chief executives.

We also know that, thanks to a recent study (pdf) by PHI (formerly the Paraprofessional Healthcare Institute), a great deal about the demographic makeup of the nursing-home workforce (which, for their purposes, include, in addition to home health and personal care aides, nursing assistants). It is predominantly (86 percent) female, a majority (59 percent) people of color (including 30 percent who are Black and 18 percent Latinx), and about one in four (26 percent) born outside the United States. Because of their low wages, about 1 in 7 nursing-home workers live in poverty, almost half (44 percent) are low-income (defined as below twice the poverty line), and 2 in 5  (42 percent) require some form of public assistance.

Taken together, these data reveal a workforce that is collectively marginalized in the labor market.

Unfortunately, it should come as no surprise, given the obscene levels of inequality in the United States and the nature of long-term care for the elderly and infirm, that both residents and workers in nursing homes occupy a marginalized position in American society. As a result, both groups are living and working—and, increasingly, dying—in one of the veritable hellholes of the current pandemic.

For a century now, the United States has not had to rely on charity and poorhouses to care for the elderly and infirm. But if we didn’t know before, then surely the effects of the novel coronavirus pandemic have demonstrated how much their replacement—the nursing-home industry—like many other capitalist institutions, has failed to protect both those who have been placed in its care and those who have worked so diligently, under impossible conditions, to provide that care. Today, the nursing-home industry requires a transformation that is as at least radical as the one that was started during the first Great Depression.

In the meantime, the industry needs to be pushed by individual states and the federal government, by any means necessary, to rescue its residents and workers from their pandemic-induced nightmare.

 

*Watson argues that

The Social Security Act was an epochal event in American social welfare. It reflected a belief that public assistance recipients should, and could, be trusted to spend their benefits as they saw fit and that use of “in-kind” benefits was unnecessary, demeaning, and stigmatizing. The disabled would continue to be cared for through “indoor relief” in a variety of institutions including mental asylums, tuberculosis sanitariums, public hospitals, and schools for the deaf.

**As Watson explains,

By making nursing home care free for all senior citizens without assets, nearly half of the elderly in 1975, Medicaid provided a powerful incentive to families to institutionalize parents, who might previously have moved in with grown children or sought the part-time care of a home health aide. By offering states a federally funded alternative to state psychiatric hospitals, nursing homes also became the place to institutionalize those with developmental disabilities and long-term mental illness.

***The BBC recently reported that one-third of all coronavirus deaths in England and Wales are now happening in “care homes”—an ominous feature of the Anglo-American response to the pandemic.

****Bureau of Labor Statistics earnings data are for 3,161,500 Home Health and Personal Care Aides (2018 SOC occupations 31-1121 Home Health Aides and 31-1122 Personal Care Aides and the 2010 SOC occupations 31-1011 Home Health Aides and 39-9021 Personal Care Aides) for May 2019.

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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.

 

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The idea that GDP numbers don’t tell us a great deal about what is really going on in the world is becoming increasingly widespread.

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David Leonhardt, in reflecting the emerging view, has argued that GDP doesn’t “track the well-being of most Americans.”

Now, we’d expect that someone like socialist Democratic candidate Bernie Sanders would question the extent to which the low unemployment numbers, associated with economic growth, hardly tells the whole story about the condition of the American working-class.

Unemployment is low but wages are terribly low in this country. And many people are struggling to get the health care they need to take care of their basic needs.

But even centrist candidates Joe Biden and Pete Buttigieg are making the case that the headline numbers, such as Gross Domestic Product and stock indices, hide the fact “that a very different reality exists for many Americans who have not seen much improvement in their own bottom lines.”

And one of the last people you’d expect to question the shared gains from economic growth, Robert Samuelson, thinks that “something momentous is clearly occurring.”

economic inequality continues to rise at a steady pace; the further you go up the income scale, the larger the income gains, both relatively and absolutely. . .

The great danger here is social and political. It is the creation, or the expansion, of a multi-tiered society where the largest income gains are enjoyed by relatively small groups of people near the top of the economic distribution.

So, let’s step back a bit and see what these numbers reveal—and what they mostly hide.

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First, as is clear from the chart immediately above, the growth in the value of U.S. stock markets (as measured by the S&P 500 Index, the red line) doesn’t tell us much about actual economic growth (as indicated by the value of Gross Domestic Product, the blue line). For example, between 2010 and 2019, the stock market increased by 163 percent, while GDP grew by only 46 percent.

Second, neither number alone indicates what is happening to the vast majority of Americans. For example, as I argued back in 2017, ownership of stocks in the United States is grotesquely unequal: while about half of U.S. households hold stocks in publicly traded companies (directly or indirectly), the bottom 90 percent of U.S. households own only 18.6 percent of all corporate stock. The rest (81.4 percent) is in the hands of the top 10 percent.

Well, then, what about GDP?

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It’s obvious from this chart that the increases in all the indicators of average income in the United States—real median personal income (the red line), real mean personal income (green), and real median household income (purple)—are much lower than the increase in real (inflation-adjusted) GDP. Those discrepancies reveal the fact that the average person or household is benefiting much less than they otherwise would from economic growth. And, of course, the gap increases over time, as in every year people fall further and further behind.

So, all that the GDP numbers indicate is that the monetary value of final goods and services produced and sold in the United States—the “immense accumulation of commodities” that represents the wealth of a capitalist society—is growing. But it doesn’t tell us anything about who gets what, that is, how the incomes generated during the course of producing those commodities are distributed. In other words, GDP numbers are a poor indicator of people’s well-being.

So, what would tell us something about how Americans are faring in the midst of the so-called recovery from the Second Great Depression?

Leonhardt’s view is that “distributional accounts”—that is, estimates of income shares for every decile of the income distribution, as well as for the top 1 percent—will change the national discussion whenever GDP numbers are released.

I don’t know if they’ll change the terms of debate but they will certainly challenge the presumption that GDP (and other headline numbers, such as stock market indices) accurately the economic and social health of the nation.

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Thus, for example, as Emmanuel Saez (pdf) has shown, by 2017, real incomes of the bottom 99 percent had still not recovered from the losses experienced during the initial years of the Second Great Depression (from 2007 to 2009), while families in the top 1 percent families captured almost half (49 percent) of total real income growth per family from 2009 to 2017. And, as a result of growing inequality, the 50.6 percent top 10 percent income share in 2017 (with capital gains) is virtually as high as the absolute peak of 50.6 percent reached in 2012.

CBO

Moreover, according to the Congressional Budget Office (pdf), income before transfers and taxes is projected to be more unequally distributed in 2021 than it was in 2016. And while means-tested transfers and federal taxes serve to reduce income inequality, the reduction in inequality stemming from transfers and taxes is actually projected to be smaller in 2021 than it was in 2016.

All of these distributional effects of the current mode of production in the United States are hidden from view by the usual headline economic numbers.

But there’s one more step that can and should be taken. The distributional accounts that have been used to change the discussion focus on the size distribution of income, that is, the distribution of income to groups of individuals (and individual households) that make up the population. What is missing, then, is the factor or class distribution of income.

profits-wages

In the chart above, I have illustrated the changing ratio of corporate profits to workers’ wages in the United States from 1968 to 2018.* Two things are remarkable about the trajectory of this ratio. First, beginning in 2001, the ratio more than doubled, from a low of 0.31 to a high of 0.70 (in 2006). And, second, even though the ratio has fallen in recent years, it still remains as of 2018 much higher (at 0.52) than during the pre-2001 period.**

However inequality is measured—in terms of the size or class distribution of income—it is obvious that most Americans are not sharing in the growth of national income (or, for that matter, the stock-market gains) in recent years.

The focus on GDP (and stock indices, unemployment rates, and the like) serves merely to hide from view what the American workers clearly understand: they’re being left behind.

 

*This is the ratio of, in the numerator, corporate profits before tax (without IVA and CCAdj) and, in the denominator, the total wages paid to production and nonsupervisory workers (assuming a work year of 50 weeks). It is clearly similar to but different from the Marxian rate of exploitation, surplus-value divided by the value of labor power—since, among things, it does not include distributions of the surplus to members of the top 10 percent in the numerator.

**A third observation is also relevant: the ratio of profits to wages has fallen prior to every recession since 1968. The recent decline in the ratio (since 2013) therefore portends another recession in the near future. However, I’m no more keen on making predictions than on coming up with New Year’s resolutions. It was John Kenneth Galbraith who wisely wrote, “There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”

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