Sunday, November 15, 2015



Obama’s low-wage “recovery”

31 January 2014
President Obama’s State of the Union address this week coincided with the release of several year-end profit reports. Profits for the firms listed on the S&P 500 stock market index jumped 11 percent in 2013, in large part because of declining wages and the increased exploitation of American workers.
In his national address Tuesday night, Obama acknowledged that “corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened.” The “cold, hard fact,” he added, “is that even in the midst of recovery, too many Americans are working more than ever just to get by—let alone get ahead.”
As is his wont, the president posed as an innocent bystander, suggesting that some sections of the population had unfortunately missed out on “four years of economic growth.” In fact, the explosion of social inequality the president paid lip service to is the product of quite deliberate policies spearheaded by his administration.
Obama’s principal task on coming to office was to initiate the largest transfer of wealth—from the working class to the corporate and financial elite—in US history. This began with the bailout of the financial system. It continued through the 2009 restructuring of GM and Chrysler, premised on the halving of wages for new hires and a shift in the burden of health care expenses from employers to workers.
Billions have been slashed from social programs, including the cut-off of long-term unemployment benefits and cuts in food stamps, and the administration has backed the bankruptcy of Detroit, which is seen as a national model for forcing through pension cuts and other measures.
The surge in corporate profits is one consequence of these policies. According to Bloomberg, US corporations’ after-tax profits have grown by more than 170 percent under Obama, more than any president since World War II. They have reached their highest level relative to the size of the economy since the government began keeping records in 1947. Profits are more than twice as high as their peak during the Reagan administration, which, beginning with the smashing of the PATCO air traffic controllers strike in 1981, initiated a class war against workers.
Since Reagan, the American ruling class has waged an unrelenting campaign, utilizing the services of the trade unions, which abandoned any defense of the working class. Deindustrialization and financialization has been accompanied by the destruction of millions of jobs and the decimation of entire industries. To the extent that any jobs are created, it is on the basis of poverty level wages.
Labor’s share of the Gross Domestic Product has now fallen to 57 percent, the lowest portion of the country’s output since 1950. Since the recession officially ended in January 2009, wages for auto workers have fallen by 10 percent in real terms, and for manufacturing as a whole they have fallen by 2.4 percent.
Although the global economic crisis resulted in losses or slower profits in Europe, China and the so-called emerging markets, multinational manufacturing firms reaped huge profits in the US. Aircraft manufacturer Boeing saw its profits rise 18 percent to $4.6 billion last year, while Ford saw profits rise 26 percent to $7.2 billion. Caterpillar beat analyst expectations with a 44 percent jump in fourth quarter profits, due primarily to “aggressive cost-cutting,” i.e., mass layoffs and wage cuts, which its CEO promised would accelerate in 2014.
US corporations are holding on to a record $1.5 trillion in cash reserves, according to Moody’s credit rating agency. Rather than investing in new plants or hiring, let alone raising wages and benefits, corporations are chiefly spending this stockpile of cash on dividend payouts to their investors and stock buybacks to drive up share values, like Caterpillar’s $10 billion program.
Talk of a manufacturing “renaissance” is largely a fraud. Only 568,000 manufacturing positions have been added since January 2010, a small fraction of the nearly six million lost between 2000 and 2009, according to a New York Times column published last week by Obama’s former “car czar,” Steven Rattner.
Employers that have moved production to the US have been lured through wage reductions and massive tax cuts, like the $280,000 a job credit given to Volkswagen for its Chattanooga, Tennessee plant. Pointing to the German auto company, Rattner noted that it “moved production from a high-wage country (Germany) to a low-wage country (the United States).”
As Obama boasted in his address, “for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.” The president added that, “over half of big manufacturers say they’re thinking of in-sourcing jobs from abroad.”
As a model of success, the president pointed to Detroit Manufacturing Systems, a business that hires welfare recipients and the long-term unemployed to produce components for Ford. A Washington Post article noted that the workers, who are members of the United Auto Workers union, are hired “at far lower wages than many had been earning in their previous jobs.”
The Obama administration and the ruling class have counted on the UAW, the International Association of Machinists (IAM) and other trade unions, whose executives and their financial advisors see “in-sourcing” as a growth strategy. Manufacturers making some of the largest profits have relied on the treachery of the unions to impose wage-cutting contracts and suppress struggles when they did erupt.
This included the UAW’s collaboration in the restructuring of the auto industry, which reduced wages of new hires to the equivalent, in real terms, of what was earned by workers in 1914, when Henry Ford first established the $5 day. The UAW was rewarded with corporate shares and millions more in dues money from newly hired workers, who, on top of suffering the indignation of poverty wages, are soon to be hit with a 25 percent dues increase.
Most recently at Boeing, the IAM rammed through a contract extension originally defeated by rank-and-file workers that allowed the jet manufacturer to end company paid pensions, won in 1947, and ban strikes for the next decade.
The experience of the Obama administration, which has overseen the greatest explosion of social inequality in US history, while accelerating the attack on democratic rights and war-mongering policies of his Republican predecessor, has provoked widespread disgust and anger. The president’s election-year rhetoric about “equality” and his proposals for token “reforms” is largely falling on deaf ears.
The historic reversal in living standards for the working class in the United States and around the world is producing enormous levels of social anger, which the capitalist parties, the trade unions and their apologists will not be able to contain. It is only a matter of time for these tensions to erupt into massive struggles. When they do, however, they must be guided by a new leadership and political program, based on the international unity of the working class, its political independence from the corporate-backed parties and the fight to replace the capitalist profit system with socialism, that is genuine social equality.
Jerry White

“Wages are too high,” declares billionaire Trump

At Republican presidential debate

“Wages are too high,” declares billionaire Trump

By Patrick Martin
12 November 2015
Tuesday night’s Republican presidential debate began with something rare in American political life: an open expression of class policy, in which the billionaire who leads the Republican field declared his opposition to any pay increase for the tens of millions of workers making poverty wages, on the grounds that low pay was necessary to make American capitalism more competitive.
In the first question posed to the field of eight Republican candidates, Donald Trump was asked whether he was sympathetic to demands for an immediate hike in the minimum wage to $15 an hour. He replied, “I can’t be … and the reason I can’t be is that we are a country that is being beaten on every front economically.”
He went on to add that in his view, taxes were “too high, wages too high, we’re not going to be able to compete against the world. I hate to say it, but we have to leave it [the minimum wage, now $7.25 an hour] the way it is. People have to go out, they have to work really hard …”
The candidates currently second and third in polls of likely Republican voters gave similar responses. Retired neurosurgeon Ben Carson claimed, “Every time we raise the minimum wage, the number of jobless people increases. It’s particularly a problem in the black community. Only 19.8 percent of black teenagers have a job … and that’s because of those high wages. If you lower those wages, that comes down.”
Senator Marco Rubio of Florida was asked a different question, but insisted on responding on the minimum wage issue. “If I thought that raising the minimum wage was the best way to help people increase their pay, I would be all for it,” he said, “but it isn’t. In the 20th century, it’s a disaster. If you raise the minimum wage, you’re going to make people more expensive than a machine. And that means all this automation that’s replacing jobs and people right now is only going to be accelerated.”
These statements, which took up less than 10 minutes, revealed more about the nature of class relations in America than all the debates and campaign speeches, and all the campaign commentaries that have filled up countless hours on broadcast and cable television and endless column inches in the national press.
Wages are “too high,” says the capitalist Trump, and make it more difficult for American companies to compete in the world market. The solution to unemployment is to “lower those wages,” says Dr. Carson, a multi-millionaire Christian fundamentalist now tied with Trump in many polls. If you raise the minimum wage, “it’s a disaster,” says Senator Rubio, who is increasingly viewed as the consensus choice of Wall Street and the Republican Party establishment for the nomination.
None of the other Republican candidates raised any objection to these sentiments, which make nonsense of all their posturing in the remainder of the debate about defending the “middle class,” fighting for “good jobs,” or bemoaning the growth of poverty, food stamp use, small business bankruptcies and other indicators of the deepening social and economic crisis of American capitalism.
The question to Trump was provoked by the nationwide demonstrations Tuesday by fast food workers demanding a $15 an hour wage, which culminated in a rally of several thousand workers outside the Milwaukee theater where the Republican debate was held. The “Fight for 15” campaign has been organized by a section of the trade unions, led by the Service Employees International Union, with the backing of pseudo-left groups like the International Socialist Organization and Socialist Alternative.
These organizations are trying to channel the legitimate anger of the young workers participating in these protests into the dead end of support for the Democratic Party in the 2016 elections. Bernie Sanders addressed one of the Fight for 15 rallies, while Hillary Clinton—who only backs a raise in the minimum wage to $12 an hour—tweeted her support.
The Democratic Party in power, however, in the person of President Barack Obama, has pursued the same basic economic program outlined by Trump, Carson and Rubio. The Obama administration forced through a 50 percent wage cut for new hires in the auto industry, to as little as $14 an hour, as part of its bailout of GM and Chrysler (now FCA) in 2009. This was necessary, the White House declared, in order to make the auto industry competitive with its foreign rivals.
Outright wage-cutting was combined with Obama’s phony health care “reform,” aimed at cutting the cost of benefits for American employers, and the refusal of the administration, with a Democratic Congress in 2009-2010, to raise the minimum wage or index it to inflation. As a result of this inaction, the federal minimum wage has been frozen at $7.25 an hour for more than six years. Considering inflation, low-paid workers have taken a severe wage cut under Obama.
Cutting US wage levels in order to boost the profits of American companies and make them more competitive in the world market is the axis of Obama’s policy of encouraging “in-sourcing” by US corporations. As Obama boasted in his 2014 State of the Union address, “for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.” A major element of this “success” is the slashing of US production costs to near Chinese levels.
There is a cynical irony in the promotion of the “Fight for 15” slogan by the unions and the Democrats. It is not low-wage workers who will be lifted up to $15 an hour, but those at higher wages, like first-tier workers at GM, Ford and FCA, who are being reduced to that level. $15 an hour is not to be the floor under the living standards of the working class, but the ceiling.
What the Republicans demand in brutally reactionary terms—cut wages, cut benefits, boost profits—the Democrats actually implement, even while disguising the effect of their policies under a cloud of populist rhetoric, with the political assistance of the unions and the pseudo-left. The contradiction between words and actions is so stark that in the 2016 election campaign, the Democrats have had to resort to a self-proclaimed “socialist,” Senator Sanders, to give their pro-Wall Street program a left cover.
The political lesson for the working class is clear. The defense of living standards and decent-paying jobs requires a break with both the parties of big business, the Democrats as much as the Republicans. The working class must build an independent mass political movement of its own, based on a socialist program. Workers must fight for a drastic redistribution of wealth and income: the confiscation of the vast wealth of the super-rich, and the reorganization of economic life to serve the needs of the vast majority of working people, not private profit.

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Obama’s low-wage “recovery”[31 January 2014]

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