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Labor Daze: A Murky Future for the 'Average'

Posted: 09/09/2013 2:54 pm

This past Labor Day was a national holiday. There wasn't much to celebrate, however, for labor unions and the American worker.

In the week before Labor Day there were marches, protests and polemics. The most well choreographed was the 50th anniversary march commemorating the "Jobs and Freedom" mass march on Washington that was made famous by Martin Luther King's I Have a Dream speech. On the day after the anniversary march, in much lower-key events, fast food workers in more than 50 cities across the country went on strike in one-day walkouts for higher minimum wages. News stories and op-ed pieces abounded in both print and electronic publications.

In spite of the sometimes soaring and sometimes sour rhetoric surrounding Labor Day, the sad reality in 2013 is that, on average, the "average" American worker continues to struggle mightily. That's a point supported by Lawrence Mishel and Heidi Sheirholz of the Economic Policy Institute in a
new report in which they state, based upon their analysis of data from the available surveys of employers, "...across all available establishment based measures, even average wages and compensation have grown anemically, if at all, for more than a decade."

Mishel and Sheirholz appropriately warn us to be careful in considering the average because it "is actually not an accurate measure of the typical worker's earnings" due to the fact that here in the U.S. "those at the top have extremely high earnings, thereby pulling up the average." Statistically, and in general, we agree with their caution.

But, we also believe that in this day and age and in the future "average" will matter for at least three reasons. The first is the ratio between the median annual wage increase and the average annual wage increase. The second is that being "average" will not be good enough to be successful and middle class in the future. The third is the swelling ranks of "freelancers," "temporary/part-time employees," "working poor" and "low-income wage earners" who are defining the face of the "average" work force of the future.

Anna Bernasek of The New York Times observes that "when average wages grow faster than the median....it means that lower earners are falling further behind those at the top." Drawing upon Social Security Administration data, Ms. Bernasek reports that from 2001 through 2008 that ratio grew at 0.28 percentage point per year versus 1.14 percentage points from 2009 through 2011. Her conclusion is that income inequality has accelerated significantly in recent years.

On the other hand, as organizations have restructured, wages have stagnated and the unemployment rate stays at a painfully high 7.4 percent, opportunity equality has declined significantly and may continue to do so into the future. Economist Tyler Cowen has written a new book with the telling title, Average is Over: Powering America Beyond the Age of the Great Stagnation.

In an op-ed essay adapted from that book for the Sunday New York Times of Sept. 1, 2013, Cowen states: "Increasingly, machines are providing not only the brawns but the brains too, and that raises the question of where humans will fit into this picture - who will prosper and who won't in this new kind of machine economy." Cowen goes on to describe the types and traits of winners and losers. He asserts that "There will be a lot more wealth in this brave new world, but it won't be very evenly distributed because a lot of human labor won't seem like a special or scarce resource."

If Cowen is correct, this doesn't sound much like a "brave new world" but a "cruel old world" -- one in which workers have been trapped for some time. And, as the recovery drags sluggishly along with small businesses not hiring; large corporations hoarding cash and distributing bonuses to executives and dividends to shareholders but not rewarding line level employees; and, with government continuing to reduce its ranks and spending, this looks like the new normal for now and the foreseeable future.

What are the parameters of that normal? According to Challenger, Gray & Christmas' annual Labor Day Outlook released on Sept. 2, 2013:

"It is estimated that 1 in 3 Americans are considered contingent workers, meaning they work for organizations on a non-permanent basis as freelancers, independent professionals, contractors, consultants, temporary workers, etc. By 2020, some forecasts have the portion of contingent workers rising to 50 percent."

Based upon Bureau of Labor Statistics projections for the period, 2010-2020, 26 of the 30 fastest growing occupations do not require a college degree. According to the Center for College Affordability, 48 percent of working college graduates are underemployed.

On January 23 of this year, the U.S. Bureau of Labor Statistics released its Union Members Summary for 2012. It showed that private sector unionization was a mere 6.6 percent. Public sector unionization was more than 5 times that at 35.9 percent but had fallen from 37 percent in 2011.

That brings us back to Labor Day as a national holiday. All of our other national holidays (e.g., the 4th of July, Memorial Day, Thanksgiving Day) -- with the exception of New Year's Day -- have a historical connection.

Labor Day has stood unique. It was a day founded by workers in New York State in 1882 as a day for workers. According to the Library of Congress, it "emerged from the ranks of organized labor at a time when they wanted to demonstrate the strength of their burgeoning movement and inspire improvement in their working conditions.

Today in the week after Labor Day 2013 we must candidly report that the movement is nearly moribund. And, the holiday is more about the past -- and the end of summer and beginning of school for most -- than about the future.

This is tragic. Because the labor movement and workers helped to make this great nation what it is. They worked to make capitalism work.

Because of them, the United States for much of the latter 20th century resembled Lake Wobegon, the town that Garrison Keillor describes at the end of his radio show, A Prairie Home Companion -- a place, "where all the women are strong, all the men are good looking, and all the children are above average."

We are confident that we can America get back to that "above average" place again. One of the ways we can get there is through the leadership of workers who are willing to hit the high C's of capitalism, communities and cooperatives. We'll have more to say on this in our next blog.

Until then, to borrow a phrase from Mr. Keillor, "That's the news post Labor Day..."

 
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