There is, it seems, an economic miracle underway in the US. Over the last few months, the mainstream media have devoted themselves to spreading economic good cheer, with headlines such as 'Jobless rate falls; stocks soar' and front page stories which inform readers of the 'Fading deficit'! Clinton has taken to bragging that 'America's economy is the strongest it's been in a generation', giving himself full credit, of course. After all, he argues, the US economy has 'now added 12.3 million new jobs since I took office, and unemployment has now been below 6 percent for almost three years.' When the unemployment rate dipped to 4.9 percent in Maylower than at any time since 1973writers for Business Week could barely contain themselves, exclaiming, 'Is this economy on a roll, or what?'
But while US bosses are in high spirits these days, workers do not share their excitement. This is because thus far workers have not shared in the economic good times. In fact, that is precisely what is making the bosses so happy. As a recent New York Times headline summed it up, 'Markets surge as labour costs stay in check'. Or, as Business Week explained in a bit more detail, 'In the first quarter, real gross domestic product grew at the fastest pace in nine years. But at the same time, labour costs rose only moderately, inflation remained low, and companies posted another quarter of strong profits, all helping to warm the hearts of nervous investors.'
Many top executives have taken to patting themselves on the back and gloating that they are now reaping the rewards of restructuring. As economist Alan Blinder put it, 'We paid a significant price for thisbig write-offs on the part of shareholders and lost jobs and slow wage growth on the part of many workers. But now we are beginning to reap the dividends of those investments.' Last year, top corporate executives rewarded themselves with a massive 53 percent raisenearly five times more than the 11 percent rise in corporate profits.
The average factory worker, however, got a wage increase of only 3 percent last year, while white collar workers got just 3.2 percent. In other words, after accounting for inflation, they got next to nothing. In the first quarter of this year, the median real wage was 5.5 percent below what it was in 1989. And last year another million workers lost their health care coverage, bringing the total number of people without healthcare to 44 million. Even when it comes to unemployment, the picture is more complex. In New York City unemployment is 10 percent, while in Detroit it is 7.8 percent. And among black youths unemployment is still at epidemic proportions. Black women aged 16 to 19 face a national unemployment rate of 33.8 percent, while the figure for black men in this age group is 32.6 percent.
But these statistics still do not give the full picture. Corporations have continued to downsize, which has caused continuing job insecurity for millions of workers. This is no accident. As John A Challenger, an executive vice-president at Challenger Gray, admitted, 'Companies are using downsizing to control wage pressures.' Mass layoffsrose by 4 percent in the last quarter of 1996. Statistics for early 1997 show the same trend. Not surprisingly, a May survey by the Wall Street Journal reported that 46 percent of US workers say they are 'frequently concerned' about losing their jobs, compared with 31 percent in 1992.
Downsizing has also resulted in massive speedups and longer work hours for many workers. Overtime is at the highest ever since the government began measuring it in 1956. General Motors, for example, now employs 3.47 workers for each car or truck the company builds in the US, which is one fewer worker per vehicle than five years ago. Firms like General Electric invented a concept called 'stretch management'setting goals just beyond a worker's previous output.
With the economy now in its sixth year of steady expansion, it is abundantly clear that US employers have no intention of sharing their good fortune with workers without a fight. But a big part of the problem is that fighting is something that the labour movement's flabby and conservative leadership has been reluctant to do. Indeed, most top union officials haven't led a struggle of any kind for so long they have probably forgotten what to doif, that is, they ever knew. Last autumn, for example, United Auto Workers (UAW) president Steve Yokich was bent on assuring the Big Three auto makers during contract negotiations, 'We are not strike happy.' Even John Sweeney, the president of the main union federation, the AFL-CIOwho was elected two years ago on a promise to reinvigorate the labour movementseemed unconcerned when recently confronted with the fact that AFL-CIO unions have lost half a million members since he took over. 'I really think things are going great,' he replied.
Nevertheless, this state of equilibrium cannot continue for much longer. For one thing, unemployment is so low in some regions of the US that many employers will need to raise wages just to attract new workers. In Columbus, Ohio, for example, unemployment now stands at just 2.7 percent.
More importantly, however, discontent has been accumulating among US workers for the last 25 yearsever since the employers began slashing wages and breaking unions in the 1970s. Some employers seem convinced that they can continue to play hardball while flaunting their record profitswithout provoking workers to fight back. Thus, John Welch, chief executive officer of General Electric, which posted $7 billion in profits last year, threatened to bust the union in the runup to the 29 June contract deadline with GE workers. He said, 'We are the best prepared company in the world to take a strike. We'll show the world how we can operate in a strike and not flinch if that's what happens.'
American chief executive officers now earn an obscene 209 times what the average factory worker earns. Yet they are still not satisfied. Welch and Co suffer from the arrogance which often afflicts bosses in periods such as this. But it usually comes back to haunt them. For even the most conservative union leaders are susceptible to pressure from the rank and file below. And that pressure is building toward a showdown.