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Working Together to Raise Worker America
My response to the question of how we should respond to the growing income gap is that
we should do something about it, because right now we aren't being very responsive.
When John Sweeney, Linda Chavez-Thompson and I began our campaign for the top offices in the AFL-CIO in 1995, we had a mantra we repeated from coast to coast. "Our problem," we said, "is that America need a raise and not just in wages and benefits, but in respect for working Americans and the jobs we do." In speech after speech, we tried to dramatize the wage and wealth gap that has developed in the United States over the past 20 years and how workers and their families were being left behind in the economic recovery. "The solution," we offered, "is a bigger, stronger labor movement and we're going to be stronger and take it to those greedy employers who've been picking our pockets and then telling us we stupidly lost our wallets."
Many reporters and politicians and all but a few economists derided our pleadings as class-struggle rhetoric, but "America Needs a Raise" struck home with workers living from paycheck to paycheck, which of course amounts to about 80 percent of the American people, and we were elected.
Today, things have changed. The dichotomy of a widening wage and wealth gap in the midst of a booming economy is no longer denied even Jerry Jasinowski recognized it last year when he appropriated the phrase "America Needs a Raise" for a report issued by the NAM.
And for working families, what was a curious circumstance has become a cruel contradiction while wages remain stagnant for most and still declining for the bottom 30 percent,
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corporate profits, the stock market and executive compensation are at levels unimaginable in 1995.
Nowhere is this cruel contradiction more apparent than in the difference between wages and bonuses for executives who make the decisions and the workers who make the products in our society. In 1997, the average pay for factory workers in the United States increased 2.6 percent and raised the hackles on the prominent neck of Chairman Greenspan. All but ignored was the rise in CEO pay it went up 35 percent, at a rate 13 times higher than that of factory workers.
It was the continuation of an absurd trend in 1980, CEO pay was 41 times the pay of a full-time factory worker; by 1997 it was 285 times, with the average CEO making $3,750 an hour.
It took less than a day for a CEO to earn as much as a factory worker earned in a whole year!
And in case this gets confused as "class struggle rhetoric" coming from a usual suspect, let me add that BusinessWeek called it "an unprecedented inflationary spiral in executive pay."
The facts are that between 1980 and 1997, factory pay went up 81 percent, the CPI went up 95 percent while corporate profits increased by 328 percent and CEO pay went up, according to BusinessWeek, by 1148 percent. Now one could argue that comparing increases in worker pay and CEO pay is like comparing persimmons to pomegranates, but that begs the question. The facts are that in the past 20 years, 80 percent of the income increase in our country has gone to the top 20 percent, most of it to the top one percent.
The cruel irony of the 1990s is that as the walls confining freedom and democracy are coming down all over the world and our economy is booming at home, we as a nation have discarded any pretense at sharing the wealth of our nation with the workers who made it possible. And I
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think that raises serious questions about who we are and where we are going and the price we will pay as we travel from here to there.
United Parcel Service paid just such a price. Instead of listening to the rumblings in their workforce and making decisions based on fairness and equity, UPS management had been watching and reading news reports about the effects of job insecurity on workers in general and the weakness of the Teamsters union in particular.
People ask me what happened in that strike and I tell them simply this: the UPS workers caught a big, reckless hog in the seed corn and but for the valiant efforts of the Secretary of Labor and the Federal Mediation and Conciliation Service, that hog would have paid the ultimate price. UPS and Boeing and Bridgestone-Firestone and Wheeling Pitt all paid a price because they underestimated the pent up frustration and anger of American workers and the new strength and determination of our unions.
One of the solutions to the wage and wealth gap is indeed a bigger, stronger labor movement, and we are building one victory by victory. But I think we need more than a bigger, stronger labor movement we need a smarter, more visionary business community, as well as a more active, solution-driven government.
Even if you aren't a union supporter, your common sense should tell you what the reckless pursuit of lower and lower wages can do to our country. People who don't have money can't spend money, and that can be disastrous for an economy historically driven by optimism and consumer purchasing. People who have less money than they should have can't save money, or invest it in the stock market that is being looked to as the salvation of our future. People who make less money than they are entitled to pay less taxes and 20 years of depressed wages
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have taken a toll on local, state and federal tax coffers and have undermined our Social Security system.
How can business be a part of the solution? First and foremost, by rejecting the lure of short-term profits in favor of long-range investment in human capital. Let me illustrate by sharing another, more current experience a seven-month work stoppage by a thousand workers at a steel mill in Pueblo, Colorado. Some of you may have heard of the Ludlow Massacre back in 1913 well Ludlow is about 10 miles down the road from Pueblo and the miners whose wives and children were killed there dug coal for the same steel mill, Colorado Fuel and Iron.
The mill went bankrupt in 1993, after it was stripped bare of cash by two different owners and a company called Oregon Steel bought the plant for a song. The workers gave up $85 million dollars in concessions to help save the plant and by mid-1997, CF&I was back in the black in fact it had become one of the most productive and profitable steel mills in the country and was accounting for 70 percent of Oregon Steel's profits. After years of sacrifice, the workers figured it was payback time and when contract negotiations rolled around, they asked that their pay be restored, along with industry-standard defined benefit pensions. Oregon Steel decided to get off on the cheap, instead of sharing a little of its prosperity.
Getting off on the cheap is now proving very expensive. The workers went out on strike and stayed there for three months and cost the company $47 million dollars. Now the union has made an unconditional offer to return to work and the company has rejected the offer and is accumulating a back pay liability of $1 million a week because the National Labor Relations Board ruled the company forced the workers out by violating federal labor laws.
The town of Pueblo is being economically damaged, families have been ripped apart, the company's stock has dropped from $28 a share to $18 a share and the entire labor movement has declared a boycott of Wells Fargo Bank for lending the company the money to get
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through the strike. In just a few short weeks, our unions and our allies have withdrawn $140 million dollars from a bank that is already reeling from competitive pressure and targeted for takeover. Tomorrow, by the way, the steelworkers from Pueblo will be in Portland, Oregon
at the company's annual meeting, explaining how business can be a part of the solution by rejecting corporate myopia in favor of long-range vision.
And how can government be part of the solution? Let's start with the more urgent, uncomplicated items on which we could probably reach a consensus in this room like urging the Federal Reserve to resist the urge to raise interest rates! My own feeling is that if we can resist the temptation of choking off inflation that doesn't exist by shooting off both our economic feet, we can entertain several ideas that could move us back into a high-wage economy and help close the income and wealth gap.
Like growing our economy by three percent instead of 2.3 percent for the next 10 years and generating according to Barry Bluestone and Dick Gephardt an additional $3.1 trillion dollars, millions of jobs, and more than enough revenue to keep Social Security solvent.
Like using most of that money for investment in the education of our children and the re-training of workers whose families have been ravaged by our new winner-take-all global economy.
Like using our muscle in the world marketplace to stop the race to the bottom by insisting on basic standards of human rights and worker rights in all our trade agreements.
And like using the legitimate power of government here and abroad to insure that all workers enjoy the unfettered right to join a labor union in order to provide a higher income and a better life for themselves and their families.
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The message I'd like to get across today is that we can and must begin to work together to create a new higher wage economy and to insist on reason and sanity from our corporate bodies as well as from our government. So we can get on with the business of keeping ours a country dedicated to raising the standard of living for everyone, instead of just building up wealth for a few, a country where you don't have to hold down three jobs to raise a family, a country where what you do, rather than who you are, gets you where you want to go.
We can and must do it because we share common dreams for ourselves and our children. And because whether we are coal miners, or lawyers, or steelworkers, or corporate executives, or Rich Trumka or Jerry Jasinowski, we are all in this together and we will eventually pay the price of wage and wealth inequality together.
© Friedrich Ebert Stiftung | technical support | net edition fes-library | Juli 2000