Labour Day message to neglected workers

Workers need to stand up for themselves. Photo by Yan Krukov

In Vietnam, where I live, International Labour Day is being marked today Monday May 2, providing a public holiday.  Attention is given to what people need to ensure that work is not degrading, but a positive experience for themselves, for their family, and for the ethos of the whole society.

In Vietnam, Ho Chi Minh declared in 1945 that May 1 should be a public holiday, but the Japanese and French powers had other ideas. However, even with Ho Chi Minh's party in control after 1954 the struggle for improved working conditions would have to continue. 

The labour "shortage" that has created headaches for employers since the end of the Covid-19 lockdown tells us that working people are not happy with their situation.

A vision of what is possible by way of new practices, a willingness to regain what has been lost to employer power in the way of  union bargaining and overtime pay, for example, and a society-wide acceptance that the family must have more protections through legislation to allow parents, especially women, to have flexible arrangements in order to meet the needs of their children—these are essential for the well-being of all.

To regain what has been lost to working people means restoring provisions such as contract negotiations only through a union, provisions lost under the onslaught of the Milton Friedmanite ideology from the 1960s onward where businesses are held to have no responsibility for the welfare of society, but only for generating the highest possible returns for investors. 

Here is a graphic picture of what has been one of the consequences for Americans:

If it feels like you’re working longer hours for less money than your parents or grandparents did, it’s because you probably are. Adjusted for inflation, average hourly wages have actually fallen since the early 1970s, while average hours worked have steadily climbed. American workers are increasingly underpaid, overworked, and overwhelmed.

What went wrong? In part, overtime pay.

If you’re under the age of 45, you may have no idea that overtime pay is even a thing. But believe it or not, middle-class workers used to get a lot of it, while you likely don’t get any at all. That means that every hour you work over 40 hours a week you work for free, contributing to a giant pool of free labor that modern employers have come to expect and exploit. Profits are up, real wages are down, and income inequality has soared to its highest level since the Gilded Age [period of rapid growth in U.S. 1870-1900].

The writer goes on to say that employers—but let's widen the reference to managers (see how Apple's top lawyer got $27 million last year on a base salary of $1 million)—are able to live it up while the typical employee finds it tough to pay for childcare:

It wasn’t always this way. Overtime pay was one of the biggest deals of the New Deal reforms—along with the prohibition of child labor and the establishment of a federal minimum wage, it was one of the three core provisions of the Fair Labor Standards Act (FLSA). The FLSA literally changed the way we think about work: by establishing a salary threshold below which workers were guaranteed time-and-a-half pay for every hour worked over 40 hours a week, it was the FLSA that created both the weekend and the eight-hour day. “Except perhaps for the Social Security Act,” President Franklin Roosevelt declared on the FLSA’s passage in 1938, “it is the most far-reaching, far-sighted program for the benefit of workers ever adopted here or in any other country.”

Benefit program maliciously neglected 

A little history: 

From 1938 into the 1970s a robust federal overtime standard served as a kind of minimum wage for the middle class, providing both a valuable source of extra income and an invaluable shield against the imposition of exploitative working hours. At its inception the FLSA set the minimum wage at one-half the median wage and the overtime threshold at three times the minimum—an amount equal to 1.5 times the median wage, a level high enough to cover about two-thirds of salaried workers. Over the next few decades, thanks in part to these strong labor standards, real wages at all income levels broadly grew in lockstep with growth in worker productivity.

Year after year as the median wage grew, both the minimum wage and the overtime threshold were regularly adjusted upward to maintain the FLSA’s intended 0.5 (minimum) to 1.0 (median) to 1.5 (overtime) ratio. For more than three decades overtime pay was the norm; most American workers expected to be paid 150 percent of their regular wage for every hour worked over 40 hours a week, and most employers expected to pay it. And since time-and-a-half gets expensive fast, employers were strongly incentivized to hire more workers in order to avoid routinely incurring the added cost. 

The result has been for the powerful to treat fellow Americans with contempt:

But sometime around 1975 the prosperity of working Americans was dramatically severed from that of the economy as a whole. Entranced by an emerging free market neoliberal consensus, both Congress and federal regulators quietly abandoned the historic 0.5 to 1.0 to 1.5 ratio, allowing the overtime threshold and the minimum wage to be relentlessly eaten away by inflation. Our current minimum wage of $7.25 an hour now stands at little more than a quarter of the median wage and has not been adjusted since 2009. 

At one point, the overtime threshold remained unchanged for 29 years. And absent the strong labor standards the FLSA once provided, wages inevitably stagnated too. Today’s median wage of $52,520 stands at just 54 percent of what it otherwise would be had its growth continued to track growth in worker productivity. In fact, over the past 45 years, nearly all of the benefits of economic growth have accrued to top one-percenters like me. 

Furthermore:

Today’s $35,568 overtime threshold now stands at only 67 percent of the already diminished median wage and covers only 15 percent of salaried workers, compared to over 60 percent in 1975. If you earn more than $35,568 a year (and 85 percent of American workers do), chances are you’ve been misclassified into an “exempt” position that does not receive any overtime pay at all. As the memory of overtime pay fades away, employers are taking full advantage.

According to a 2019 Gallup poll, 52 percent of full-time workers report working more than 40 hours a week; 39 percent work at least 50 hours a week, and 18 percent work at least 60. Yet few of these workers are paid a penny of overtime for all the extra hours they put it in on the job. Overtime pay is no longer the norm. As a result, Americans are working longer hours at lower wages while employers and shareholders reap record profits.

This illustrates how societies can collectively forget what is of benefit to their members if their attention is directed elsewhere, especially by the pressure of burdens placed on them, such as the threat of firing or being declared redundant, given the associated banishement of union solidarity in the workplace.

But, as the author says, it doesn't have to be that way. The overtime threshold can be raised by an administrative order, not needing legislation:

No doubt opponents will argue that raising the overtime threshold by any measure would be a surefire “job killer”, because that’s what they have always cynically argued about every policy intended to benefit working people, from child labor laws to workplace safety regulations to the minimum wage. And in the case of overtime, this job-killer logic is particularly wrong. In fact, it has been the steady erosion of the overtime threshold over the past 50 years that has been the real job-killer, enabling corporations to effectively convert three 40-hour-a-week jobs into two 60-hour-a-week jobs, and to pocket the 40 hours in lost wages.

I know, because as a venture capitalist and serial tech entrepreneur I built a lot of personal wealth doing exactly that. Of course, do it at a single tech startup and you end up with a bunch of miserable burned-out twenty-somethings working crazy hours in exchange for decent pay and a shot at striking it rich off stock options. But do that 60 million times across the entire economy, and you effectively kill 20 million middle-class jobs. This has been the most underappreciated driver of stagnant wages and rising inequality over the past 50 years: the jobs lost to a steadily eroding overtime threshold. 

In addition, the ensuing inequality is staggering:

According to a study by the RAND Corporation, rising inequality since 1975 is responsible for a $50 trillion upward redistribution of wealth and income from the bottom 90 percent households to those in the top 1 percent—roughly $2.5 trillion in 2018 alone. That $2.5 trillion is enough to more the double median income—enough to pay every single working American in the bottom nine deciles an additional $13,728 a year (an amount remarkably close to the additional $13,787 a year the median wage earner would take home if they were paid time-and-a-half for the average seven hours of overtime worked every week). 

With the mid-term U.S. elections in mind:

Free labor may sound good to corporate CEOs, but it’s terrible for working families and the economy as a whole. If Democrats know what’s good for them, they will raise the overtime threshold to at least $85,000 a year and proudly run on it, leaving it to Republicans to explain to voters why the American middle-class should be expected to work overtime for free.

For me, this recommendation for urgent action is a case study of what affects working families around the world. Economic exploitation is rampant even in what are regarded as sophisticated economies. But without the power that comes from solidarity with fellow workers, applied through a union, working people are at the mercy of those who wish to elevate their own wealth, and status, and aura of success, defying God.

As Christian morality has faded from many WEIRD societies so immoral economic practices have returned. 

Look! The wages you failed to pay the workers who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty. (James 5:4)

Unions as a winning way of life 

Time has another article that is very relevant to this topic, that relating to the suppression of unions in the US, and to possibility of their return as more working people realize the degree of repression inflicted on them. 

Unions became popular in the U.S. starting in the 1930s, with membership rising from just over 10% of the eligible working population in 1936 to about a third by the mid-1950s, according to 2021 research published in the Quarterly Journal of Economics. That remained the case until the mid-1980s, when they fell out of favor, thanks to a culture in which companies refocused on maximizing shareholder value and minimizing worker benefits, as well as a court-backed emphasis on the value of private property and private profit. 

By 2002 union membership had fallen to about 15% of the workforce, but the article notes the recent resurgence of a unionising movement.

During unions’ heyday in the U.S. the income gap between the richest and poorest Americans shrunk considerably. “The only time that the bottom tenth of the population and the top tenth of the population have come closer together has been during those years, when unions were operating in the largest corporations in this country,” [Stanford University's Ileen] Devault says. As unionization declined in the 1970s and 80s, that income gap grew once more. Today, it is at an all-time high since tracking began over 50 years ago, based on Census Bureau data. Research shows that as much as $50 trillion has migrated into the coffers of the top 1% of income earners in the U.S., an upward redistribution of wealth that has squeezed out the middle class.

Unions are responsible for bargaining contracts between workers and employers that guarantee anything from better working conditions to higher wages—on average union households have received 10-20% better pay than non-union households, according to one study. When benefits are considered, that improvement can rise to nearly 30%. And while that is certainly a boon for the workers themselves, corporations must adjust both their balance sheets and employment practices to acquiesce to the contracts. That’s at the heart of the battle between the two forces.

The distinctly American value of revering private property over public goods has made this relationship particularly challenging, says Devault. “We’re all supposed to try to gain as much private property as we can, and then protect it from anybody who isn’t us, whatever that means,” she says. “And I think that emphasis—and the fact that the courts have bought into that emphasis on private property—has meant that unions have always been seen as somehow against the whole idea of private property.” Instead of viewing unionization as a net positive that supports better returns for everyone contributing to a company, companies view their bottom line and profits as property that needs to be protected from workers.

Plus, unions give workers power that doesn’t always jive with the preferences of corporate leaders. “Unions aren’t just about higher wages. They are very much about workers having a say about what happens in the workplace,” Devault says. “And that’s what employers don’t like.” When things like vacation policies, health care benefits, and firing practices are set by the union and not the employer, it means the employer becomes more responsible for its workers—and less capable of, say, instituting layoffs.

[W]hen unions are functioning well, Devault says, they aren’t just about pay—but about making sure that workers have more overall power in the workplace. “The pandemic has really changed the way people look at their work,” she says. “We’re starting to see now [that one of those changes is that] I want some say in what goes on in my workplace.” And when workers have more say, they can be more invested in their company’s future, too.

Read the article in full, for a useful look at the false accounting and rhetorical posturing that goes on when corporate bosses find they are having the prospect of facing up to workers and their representatives.   Here is the link again.

The arrangements we make about work are up to us. We have the opportunity to exert personal agency to restore overtime pay, to build in greater flexibility, to experience afresh the cooperative solidarity of old, and in doing so, free ourselves from the general debilitating individualism we learn from our consumerist society.   

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