Archive for the ‘Labor’ Category

Overworked and underworked in the USA

September 3, 2014

A Gallup poll shows that half of all American full-time workers put in more than 40 hours a week, which once was considered the standard work week.

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The average work week for full-time workers is 47 hours, according to Gallup.

The average work week is much longer for salaried workers than for workers whose pay is based on hours worked.

According to Gallup, one out of every two salaried workers puts in more than 50 hours a week and one in four more than 60 hours.

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So much for the superior middle class status of working on a salary!

On the other hand, roughly four out of 10 American workers are employed only part-time, and their average work week is declining.

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Gallup reported that 12 percent of Americans hold two jobs, and 1 percent hold three or more, but they don’t change the overall poll results.

Working overtime is not necessarily bad, if you love your work or if overtime pay is more important to you than leisure.  Similarly, many people—full-time students, or parents of small children—have a need for part-time work.

But my guess is that the vast majority of people who are working 47 or more hours a week, and those who are working 25 hours or less, would prefer the standard 40-hour week.

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The history and meaning of Labor Day

September 1, 2014

Labor Day, like Martin Luther King Day, arose out of a struggle for human rights—the right of workers to bargain collectively for better wages, hours and working conditions.

Thanks to the struggle of labor unions, we Americans (some of us) have an eight-hour day and 40-hour week, weekends off, paid vacations, workers compensation for injury on the job and contracts defining the obligations of employers and employees.   And if fewer and fewer of us enjoy these rights, it is because of the eroding power of organized labor.

Here are links to articles on the history of  Labor Day and North American labor struggles.

Labor Day History: 11 Facts You Need to Know by Nate Hindman and Craig Kanally for Huffington Post.

When Labor Day Meant Something by Chad Broughton for The Atlantic Monthly.

The Forgotten Meaning of Labor Day by Jack Marshall on his Ethics Alarms web log.

The First Labour Day in Canada on the Canada’s History web site.

Debunking the Myth: The True History of Labor Day by Eugene E. Ruyle for Popular Resistance.  Why the U.S. labor holiday is not on May Day.

Organizing “The Organized” Is Now the Key to Union Survival by Steve Early for Counterpunch.  (Hat tip to Bill Harvey)

 

The sanctity of contracts

September 1, 2014

class.warfare

Big Brother and the ‘Internet of things’

August 7, 2014

The ‘Internet of things’ is the next big thing in technology.  Supposedly you will have combinations of sensors, RFID tags and Internet links that will be as much a part of you as your clothes, and will allow you  to control everything in your life, from your thermostat to your garage door.

But this is not just a new technology for people to control things.  It is a new technology for people to control other people as if they were things.

“The next wave is wearable technology, like Google Glass, smart watches, and smart vests,”  [Jason] Prater of Plex systems explained.

internetofthingsThe advantage of these devices is that they “will allow you to continue using your hands without having to input or look for data.”

The data will be sent to the factory’s computer where every movement and drop of sweat will be recorded and analyzed.

In Gartner [Inc.]’s words: monitoring, sensing and remote control … …

“Today, decisions are made instantaneously,” Prater said. “We can’t wait to hear about things after the fact.”

And then the industry insider too had an intriguing forecast: “Turning people into essentially walking sensors is going to be the future.”

via Wolf Street.

“Monitoring, sensing and remote control.”  Hmm.

Engineers will be able to constantly monitor the air temperature, humidity, and working conditions of a factory process, and track employee motions for ergonomics research and safety concerns.

New Internet-based technologies will allow all the data to be managed automatically, so that factory tooling and equipment can be adjusted without human intervention, Jason Prater … said … at the 2014 Management Briefing Seminars.

via Automotive News.

“Track employee motions.”  Hmm.

What the new technology will mean for factory workers is this: Managers will track what every line worker is doing every minute of the day, and make sure that (1) they never let up and (2) they always do things in the “one best way” as outlined in Frederick W. Taylor’s system of Scientific Management.

The key idea of Scientific Management is for industrial engineers to design an optimum way to perform any repetitive task, to teach factory workers to do it that way and to make sure they conform.

This is dehumanizing, but I think it is a bad idea even from the standpoint of economic efficiency—that is, unless you think economic efficiency is the same thing as managerial convenience.

The “one best way” system does not allow workers to use their intelligence and experience to adapt to variability of circumstancs.

And, of course, if you decide to treat employees as if they were machines, there is no reason not to decide to replace them with actual machines.

Telephone operators, data processors and customer service representatives know what it is like to work every minute of the day under surveillance, and to be punished for any slippage from the schedule or deviation from the script.  The new technology would bring surveillance and control to a new level.

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Goal of Becoming ‘Internet of Things': Monitoring, Sensing, Remote Control – Factory Workers First, You Next by Wolf Richter on Wolf Street. Hat tip to Naked Capitalism.

When profits and productivity aren’t enough

July 9, 2014

Losing Sparta by Esther Kaplan on VQR tells the following story.

A Philips lighting fixtures plant in Sparta, Tenn., was named by Industry Week in 2009 as one of the 10 best factories in the USA.

Workers and managers had worked together to increase output on some lines by 60 percent, lower changeover time between small orders by 90 percent, and reduce defective parts by 95 percent.  As a result the plant generated a good profit.

Yet in 2010 an executive showed up from corporate headquarters in the Netherlands and announced that the plant was closing, and its operations moved to Monterey, Mexico.

To people in Sparta, this didn’t make sense.  Local business leaders did a study that showed that any savings on wages (which generally are no more than 10 to 15 percent of manufacturing costs) would be offset by increased transportation costs of Philips’ markets in the Northeast and Midwest.  They were unable to make contact with anyone in Philips who was willing to listen or who had authority to make the decision.

Esther Kaplan thinks that the decision probably was based not on study of the Sparta plant specifically, but on an overall policy of centralizing manufacturing in low-wage countries.

I know from reporting on business years ago that there are fashions in management.  In one era, the fashion was diversification, so that your business is not dependent on any one market; in another, it was divestment and concentration on core competency.  And I know there are managers who think that willingness to cause human suffering is a sign of realism and tough-mindedness.

I also know from my own experience that when managers tell employees it is necessary to do X in order to keep their operation going, they almost always will do everything humanly possible to achieve X—provided that they think the statement is being made in good faith.

Workers in Sparta did everything management asked of them, but to no avail.  Kaplan wrote that this is the story of American workers as a whole.   Americans by many measures are the most productive workers in the world, and U.S. productivity continues to increase, but this does not keep manufacturing jobs in the USA.

The logic of being required to pay union dues

July 1, 2014

At first glance, it seems wrong to require people who don’t believe in labor unions to pay union dues just to be able to work for an employer with a union contract.   Here’s how I see the logic.

unionsShould workers have the right to bargain collectively and make contracts with employers?  Under U.S. law, workers have that right.  It would be absurd to say that investors have the right to join together to form corporations, but workers do not have the right to join together to form unions.

If there is a union contract, should the union have the power to say who is hired and who isn’t?  Under U.S. law, unions do not have that right.   If they did, they would, in effect, be the employer.

Should everyone who is hired by a union employer be covered by the union contract?  Under U.S. law, they are.  If not, the contract would be meaningless.

Should someone who gets the benefit of a union contract pay the same dues as fellow employees for union representation.  I would say, “yes,” but yesterday the U.S. Supreme Court said “no,” at least as regards home care workers and public employee unions.

LINKS

Supreme Court rules against home care workers unions by Laura Clawson for Daily Kos.

Supreme Court: It Could Have Been Worse by David Cole for the New York Review of Books.

Alito and the expected pretzel on Psychopolitik.

Six Groups That Are Reinventing Organized Labor by Josh Israel for Think Progress.   In the light of recent Supreme Court decisions restricting labor and empowering business, some worker groups are organizing without the protections and restrictions of U.S. labor law.

Reflections on Piketty’s inequality argument

June 14, 2014

 

The novels of Jane Austen, Honore de Balzac or Henry James, in which civilized life was confined to a small percentage of the population and the only way most people could acquire significant wealth was to inherit it or marry it.

According to Thomas Piketty’s Capital in the Twenty-First Century, there is nothing to stop that kind of world from coming back.

1_percent_decomposed_2.png.CROP.promovar-mediumlargePiketty’s basic argument goes as follows:
•    If the rate of return on investment is a higher percentage than the rate of economic growth, which he expresses as r > g,  the owners of investment property will get an ever-larger share of national income.
•    R > g is the normal state of affairs.
•    Ownership of wealth is distributed even more unequally than income.   The higher the share of income that comes from wealth, the more unequal it will be.
•    The larger the amount of wealth you own, the faster it is likely to compound.   So not only do the rich become richer at a faster rate than ordinary people, the super-rich become richer at a faster rate than the ordinary rich.
•    At some point the process levels off, but the leveling-off point may not come until inequality reaches a point that we associate with 18th century Europe or the Third World

The economic prosperity and relative equality during 1945-1975 were made possible by the destruction of capital during the Great Depression and the two World Wars, according to Piketty.   Of course war and depression left everybody worse off, not just rich people, but when economic growth resumed, a lesser share went to the economic elite.

Piketty’s conclusions are backed up by archival research that traces income and wealth distribution in France, Britain and the USA for two centuries and many other countries for shorter periods of time.  That research shows that r > g is the typical state of affairs in most countries and most periods of history for which information is available.

One striking finding is that there is just as much inequality among the elite as there is among the public at large.  In the USA, the top 10 percent have about half the wealth, the top 1 percent have about half the wealth of the top 10 percent, and the top 0.1 percent have about half the wealth of the top 1 percent.

Another finding, based on comparisons of American university endowment funds, is that the larger the amount of wealth you have to invest, the higher your rate of return is likely to be.   This is probably because the richer you are, the better financial managers you can hire, the better able you are to diversify your investments and the better cushion you have when you make high-risk, high-return investments.

chart_2.png.CROP.promovar-mediumlargePiketty proposes to deal with inequality by means of a graduated tax on wealth to go along with graduated taxes on inheritance and income.  But there are other ways.

You could figure out ways to increase the rate of economic growth, for example.  Or you could figure out ways to achieve a wider distribution of wealth, such as through employee stock-ownership plans or worker-owned enterprises.   Or you could strengthen labor unions, increase minimum wage or take other measures to increase the incomes of the middle class, working people and the poor.

It’s important to keep in mind that Piketty only deals with one specific issue, the concentration of income and wealth in a small elite—an important issue, but not the only one.   Piketty does not tell us how to raise people out of dire poverty, nor how to achieve better productivity, or economic growth, or better education, or a cleaner environment, or any other goal.

And taking money away from the economic elite will not in and of itself make anyone any better off.   A lot of financial wealth was destroyed during the Great Depression and and a lot of tangible wealth was destroyed during World War Two, but this did help anybody at the bottom of the economic scale.  Piketty thinks that destruction of wealth cleared the way for the prosperity of the 1950s and 1960s, but I don’t think anybody who lived through the 1930s and 1940s would have said it was worth it.

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Piketty’s inequality argument in six charts

June 14, 2014

Thomas Piketty’s book, Capital in the Twenty-First Century, has stirred up a lot of controversy.  As well it should.  If he is right, there is nothing to stop a tiny elite from growing richer and richer at the expense of the rest of us.

The important thing to remember of Piketty’s argument is that it is not based on economic theory.   It is based on years of research on sources of wealth and income through history in different countries.   And, as quantitative information, it lends itself to charts.

I think Piketty’s research is important to understand for the future of our country and the world.   I’m reproducing six charts based on Piketty’s data from an article by John Cassidy in The New Yorker, which sum up Piketty’s findings well.

The first chart shows the share of American income taken by the best-paid 10 percent.

chart-01The chart shows that half of the income earned by all Americans went to the top 10 percent just prior to the stock market crash of 1929, that their income share fell to between 30 and 35 percent between 1945 and 1975 and now it is going back up again to 1920s levels.

Piketty explained this with his equation, r > g.   When the rate of return on investment is a higher percentage than the rate of economic growth, the holders of capital will get an ever-increasing share of income.   For the purposes of his book, Piketty has a special definition of capital, which is different from economists’ standard definition.  He defines capital as anything you can own that will give you an income, including agricultural land, government bonds, houses (which you can rent), common stocks or anything else.   In the Old South, prior to the Civil War, slaves were a form of capital.

Income distribution in the 20th century USA became more equal for a time partly because the Great Depression destroyed the value of so many financial assets, but mostly because of the high rate of economic growth following the Second World War.

Of late the pay of financiers and corporate executives has gone up much faster than the pay of middle-class and poor people, but, as the following chart shows, inequality in ownership of financial assets is a bigger factor in the income share of the top 1 percent than inequality in wages and salaries.

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The next chart shows that same trend exists among the top 1 percent in all the major English-speaking countries.

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The next Cassidy chart shows the income shares of the top 1 percent in some of the developing countries.

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Amazon is bad for writers and book lovers

June 12, 2014

 Amazon’s tactics against the book publisher Hachette are not just bad for publishers.  They are bad for writers.   And, in the long run, they are bad for lovers of books.

What’s going on is part of a familiar pattern.   A powerful company uses its power to squeeze the profit margins of weaker companies.   This means the weaker companies can’t afford decent pay for the people who produce the work.   But the producers can’t get at the powerful company because it is buffered by the intermediaries.

That is how it works with fast-food franchisers such as McConald’s, their franchisees and low-wage fast-food workers.   That is how it works with electronics companies such as Apple and Sony, their sub-contractors in Asia, and the low-paid sweatshop workers.  That is how it works with Walmart, its suppliers and their low-paid employees (aside from what Walmart pays its own employees)

Hachette Amazon LogoAnd this is how, apparently, it is going to work with Amazon, book publishers and authors.

Jeff Bezos of Amazon refuses to provide good service to buyers of Hachette books unless the publisher submits to his terms for distributing their books.  In an earlier dispute with the publisher Macmillian, he simply deleted the “buy” button from all Macmillan books listed on Amazon.

One of my favorite authors, Charles Stross, who is published by Hachette, explained what is at stake.

Amazon’s strategy … is to squat on the distribution channel, artificially subsidize the price of e-books “dumping” or predatory pricing to get consumers hooked, rely on DRM on the walled garden of the Kindle store to lock consumers onto their platform, and then to use their monopsony buying power to grab the publishers’ share of the profits.  If you’re a consumer, in the short term this is good news: it means you get cheap books.

But if you’re a reader, you probably like to read new books.  By driving down the unit revenue, Amazon makes it really hard for publishers—who are a proxy for authors—to turn a profit.  Eventually they go out of business, leaving just Amazon as a monopoly distribution channel retailing the output of an atomized cloud of highly vulnerable self-employed piece-workers like myself.

At which point the screws can be tightened indefinitely.  And after a while, there will be no more Charlie Stross novels because I will be unable to earn a living and will have to go find a paying job.

via Charlie’s Diary.

There is an old tradeoff:  Speed.  Price.  Quality.  Pick any two.  The business model being pushed by Jeff Bezos would pressure publishers into signing up authors who are prolific and cheap.  That literature has a value in and of itself doesn’t enter into his thinking.  As Stross said:

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People vs. money: the playing field is tilted

June 9, 2014

A labor union is a group of working people working together for a common purpose.   A corporation is a pool of money which has been combined for a common purpose.

In American history, going back to when Thomas Jefferson was Secretary of State and Alexander Hamilton was Secretary of the Treasury in George Washington’s cabinet. there have been two sources of power—people and money.

People power is irresistible when it has been mobilized, but people are prone to be apathetic and short-sighted.   Money power is constant.   It never is bored and never is blind to its own interests.  It is able to tilt the playing field.

Public opinion polls show that a majority of Americans want policies that are the opposite of what millionaires want, yet Washington officials and pundits accept the corporate agenda and treat those who represent public opinion as a lunatic fringe.

minimum_wage_onpageGovernment strictly regulates the internal workings of labor unions to make sure that they are operated honestly and democratically.   No such regulation applies to corporations.

Attorney-General Eric Holder has admitted that the Obama administration has not investigated financial fraud in the biggest banks and Wall Street investment firms because they are too important to the economy.   Imagine someone in the Kennedy administration saying this of Jimmy Hoffa and the Teamsters!

Right now a battle is going on for the rights of low-wage workers who frequently are, among other things, victims of wage theft.  Owners of fast-food restaurants commonly withhold pay for hours worked.  This is illegal.  Progressives are trying to put a stop to it.   Corporate executives are trying to change the laws to make it more difficult to sue.

The big problem for organized workers is that their immediate employer is not always the source of the problem.  Fast-food franchisees operate on extremely narrow profit margins, because of the conditions set by the franchising companies, and (arguably – I don’t really know) may not be able to afford to pay more than they do.  But the battle of the unions is with the franchisees, not with the real decision-maker.

Contract manufacturers in Asia operate under the same conditions.  Their profit margins, as set by their customers in North America and Europe, are so small that (arguably – I don’t really know) they may not be able to pay more than they do.   This is another way that the playing field is tilted against workers and their unions.

Another corporate abuse is the use of private equity to loot corporations at the expense of workers.  The basic idea of private equity is that investors buy out a company’s stockholders and operate it themselves.  In principle, there is nothing wrong with this, if they think they can manage the company better than the previous owners.   Sometimes they succeed in doing this, which is fine.

In practice, private equity investors frequently are looters.  The investors have the company pay themselves or their other companies big fees for management services, consulting services and other fees.  Typically they buy the company with borrowed money, so their own cost is small.  They sell off assets for a quick profit, lay off employees and pocket quick profits while leaving the company a mere shell.   Jimmy Hoffa would never have been allowed to get away with stuff like this.

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