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Richard Davis: Feeling squeezed? It's not just the recession

Published: Wednesday, Sept. 3 2014 4:55 p.m. MDT

American workers are in serious trouble today, and Congress and the president need to do more to protect working families.

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On Monday, I asked a friend what he was going to do this Labor Day. He answered that he might ride up the canyon or maybe just nap. He said it was a bit ironic that he was not going to labor on “Labor Day.” It does seem ironic, but that is the point.

First, it is a point many people today miss because we take for granted what people over 100 years ago did not. Then, national holidays were less frequent. There were Independence Day and Thanksgiving, but there was no Memorial Day, Martin Luther King Jr. Day or Columbus Day. And a six-day work week was standard, as was a 10-hour work day.

Labor Day became a national holiday in 1894 to honor the contributions of ordinary workers who have made America economically great. It is a time to rest but also a time to reflect on the status of American workers today. And that status is depressing.

Ordinary workers in the United States have suffered in recent years. According to a new report by the Economic Policy Institute, real hourly wages fell last year for nearly all workers. In fact, wages have fallen for the past several years. But the lack of growth in income for Americans isn’t just recession-related. Rather, it is part of a long-term trend of workers getting underpaid for the work they do.

It is true that the recession had a severe impact on people’s wages. Between 2007 and 2012, the average annual family income of the middle fifth of American families (the middle class) fell by 1.7 percent. However, the real problem of wage stagnation has happened over a longer period. Between 1947 and 1979, the average annual family income for that income group rose by 2.4 percent. However, between 1979 and 2007, family income rose by only sixth-tenths of one percent.

The poor — those in the bottom fifth of annual family income — are even worse off. While their income rose by 2.5 percent between 1947 and 1979, it did not increase at all over the next 28 years. And it declined by 2.7 percent between 2007 and 2012.

Put succinctly, American workers today are receiving fewer of the benefits of their labors than their grandparents and great-grandparents did. Why is this happening? It may be easier to say what is not causing it.

It is not because American workers are lazier and less productive. Over the past 34 years, U.S. productivity has increased by 65 percent. Yet wages for 80 percent of workers have risen by just 8 percent.

Nor is it that corporations are doing poorly and therefore need to pay workers less. With the exception of 2009 and 2010, corporate profits have risen steadily since the mid-1980s. Indeed, in 2013, after-tax corporate profits were the highest since 1965.

Simply put, corporate profits are not reaching the workers. Last year, the compensation laborers receive as a share of the national economy was at its lowest point since 1948. Even worse, some highly profitable companies are laying off workers. Since 2012, United Technologies, which manufactures high-tech equipment for the military, laid off 7,000 workers while its annual revenue increased by $15 billion in seven years.

Such statistics can seem distant, but they represent the reality of millions of American households struggling to make ends meet. American families hear many political and economic leaders blame the recession for their economic woes. But the recession is a cover for a deeper and harsher trend — the undermining of the economic status of American workers.

And the result is harder times for those workers and their families. It means facing ever-increasing debt to help children pay for college. It means forgoing medical visits because copayments and deductibles keep increasing. And for many families it means juggling the costs of basic needs to pay the mortgage, take care of the utilities, and buy food and clothing.

American workers are in serious trouble today. Congress and the president need to do more to protect working families. Unfortunately, I hold out little hope they will do so anytime soon.

Richard Davis is a professor of political science at Brigham Young University. His opinions do not necessarily reflect those of BYU.

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