The American Economy: Making Money By Keeping People Unemployed

[marmar]

from 24/7WallStreet:



The American Economy: Making Money By Keeping People Unemployed
Posted: June 28, 2010 at 6:09 am


The secret to the amazing increases in productivity in the American economy is finally out. Companies in the US are not hiring full-time workers. They are gambling that they can keep their margins high by keeping a vast part of the workforce, perhaps millions of people, unemployed.

Unemployed people, it turns out to no one’s surprise, will work for very little. And, they will work without benefits, without job security, and without complaint.

According to Bloomberg, “The 6.8 million Americans out of work for 27 weeks or longer — a record 46 percent of all the unemployed — are providing U.S. companies with an eager, skilled and cheap labor pool.”

The development is a revelation, and a good one, for companies, municipalities, and states, all of which are tight on cash and unable to get credit at reasonable rates if at all. The nearly 10% unemployment rate in the US is supposed to come down late this year and early next. This assumes that companies with improved prospects will hire full-time workers as they have for decades. These workers have had pensions, benefits, and vacations. That makes a person who makes $40,000 cost $50,00o or $60,000. Employers want to bring the effective cost of that same worker down to $35,000 or perhaps $30,000.

Even if a recovery in GDP means that the US produces more goods and services for the 84% of Americans with jobs or federal and state support and for exports to other nations, many of the companies that supply these things may not hire a single full-time worker. If that is true and becomes a substantial trend, then the point at which unemployment and underemployment will begin to become better may be many quarters, if not many decades, away.

-- Douglas A. McIntyre


http://247wallst.com/2010/06/28/the-american-economy-making-money-by-keeping-people-unemployed/#more-71942

[Parche]

1. FUKING CORPORATE AMERICA

they suk.....:grr::hi:

[Orrex]

2. I'm sorry to say that I've seen this attitude even here on DU

Not very often, but often enough.

Someone will legitimately complain about some workplace injustice or annoyance--you know, simply looking to commiserate. But then someone will jump in to say "you should be glad that you have a job" or "hundreds of thousands of people will take your job if you don't want it."

This mindset is exactly what's being decried in the OP's cited article; a gradual (or not so gradual) shift toward an attitude of acceptance-under-the-gun because jobs are too precious, or whatever.

Union members have fought and (in some cases literally literally) died to improve the lives of workers across the country, and these achievements are being aggressively eroded by a deliberate, relentless effort. Every time someone says "grin and bear it because it could be worse," it's a surrendering of a privilege that someone else struggled to secure for us.


K/R!

[Ishoutandscream2]

11. +1. You mirror my thoughts

"Be glad you have a job." Is that what we have settled for in the so-called greatest nation in the world?

[HillbillyBob]

14. Because it WILL get worse.

I could go on a real rant and cite quite a few actions against me over the years, excuses to not pay you for work done. Check. Make you work for lower pay this week because they dont have enough $. Check. Then be expected to work for that lower amount for fucking ever. Check. Fired for some made up shit so they dont have to pay the promised benefits. Check.

[Donnachaidh]

15. +1000000 n/t

[Soylent Brice]

17. superb.

:applause:

[redqueen]

22. Yes, literally died. "Which side are you on?" is a valid question. (nt)

[cartach]

37. You can start with -

the Republican and Democrat political elite selling out the American labor force by allowing corporate America to relocate to foreign countries so they could take advantage of slave labor wages,selling back their production to American consumers at exorbitant prices and paying the excess profits into their coffers. And at the same time borrowing from China and fostering the mortgaging of America to the point where foreclosure is an imminent threat. WWIII will not be fought on the ground,in the air or on the sea,it will be an economic takeover. The first phase is now taking place where unemployment will keep increasing as more and jobs take off for foreign lands and the standard of living in the US declines ever closer to to the world average. You can be sure the corporate fat cats will still be around and the middle class won't be, only the rich and the poor.

[indepat]

3. Welcome to the new American century, RW PNAC-style, wherein America is fastly sliding to /near the

bottom in all meaning statistical measurements of quality-of-life, thanks to a corrupt and venal Congress whose virtual every act is for the benefit and welfare of large corporation and/or those who already own a vast majority of the wealth. Most Americans just don't realize how fast this is happening, how fast a major proportion of Americans are going down the tubes. :P

[loudsue]

25. Bingo! It's amazing how many people have forgotten the big picture.

Since 2006 it seems like people have forgotten what we came through here. PNAC was just one piece, along with The Powell Doctrine in the 1970's. The corporate/fascist takeover of the USA is almost complete.

[indepat]

39. The corporate/fascist takeover could not be possible if the Congress did not prostitute

themselves to monied corporate interests who influence the Congress to vote to aggrandize corporate interests rather than vote in the interests of we the people. In fact, their record since the gipper's days is so holistically one-sided in favor of corporate interests to the detriment of we the people that, were it a Broadway play, it would be comical, no farcical. But it is not funny to the be-trodden in this nation wherein some 50,000,000 are on food stamps and the long-term real unemployment is at depression levels. :P

Edited to add corporate

[Lorien]

28. More people are aware of it than you think

just because the MSM isn't talking about it doesn't mean that our neighbors on the street aren't.

[rucky]

4. They have absolutely no incentive to start hiring again.

And there's not much we can do without the means to start our own businesses. But who would start a business in this environment without heavy financing? And where do you go for that?

[Art_from_Ark]

5. Not only that, but

what are the odds of even a heavily-financed start-up business succeeding in this environment?

[KurtNYC]

31. perhaps something like 'energy efficiency consultant'

could be started with very little money. And the customer could pay a percentage of what they save -- so nothing extra out of pocket on their side.

[branders seine]

6. just a few generations ago, most of our ancestors

were compliant peasants and serfs.

[WinkyDink]

41. The Peasants' Revolt. Once Wat Tyler was executed, it was quite a few years before the people rose

up again, and not in England.

[Greyhound]

7. And the fewer companies there are, the worse for workers.

Large companies are not job creators, they are job destroyers this is business 101 (literally). Small businesses create jobs and stimulate the economy more as they grow, once a company reaches its zenith the only way to increase profits is reduce costs and this inevitably leads to eliminating jobs and paying ever less for the positions it can't eliminated.

[donheld]

8. When do we take to the streets in mass?

[Hydra]

9. When people stop thinking this isn't all by plan

Right now, people are clinging to the hope that things will go back to "normal"

Fat chance.

[amborin]

34. +1000

[midnight]

10. Vice President was in Wisconsin and said the jobs are not

coming back.

[HillbillyBob]

12. So it took from RunnyRaygun til now for others to notice?

I mean those of us at the bottom of the shit pile noticed right about 1983.

[Overseas]

13. K&R! //nt

[theaocp]

16. Welcome to Chin-, er, I mean, America

One corporatocracy, under a cult-like mindset where we fight over social scraps and divide ourselves along clownish standards like "race," "gender," and "sexual orientation," for ALL. Somebody cursed us to live in interesting times, that's for sure.

[The2ndWheel]

18. Live by efficiency, die by efficiency

We want everything in society to be efficient, except labor. When it comes to jobs, we want more people working, for more money. Even though that goes against every other aspect of society, where we want more for less. Companies want more production with fewer workers, or smaller salaries, etc. Shocking.

[h9socialist]

19. This is no surprise to anyone who ever read "Das Kapital, Vol. I"

And it's happened so often in the history of capitalism that it's hard to believe that anyone who ever studied economic history would be surprised.

If you're really scandalized by capitalism's "reserve army of labor" then it's time to sing the "Internationale."!!!!!!!!!

[lonestarnot]

20. Slave labor only if one submits to being a slave and unions are the only answer for pushing back.

[KillCapitalism]

21. Where does it end?

That makes a person who makes $40,000 cost $50,000 or $60,000. Employers want to bring the effective cost of that same worker down to $35,000 or perhaps $30,000.

Hey, how about we all work for 60 cents an hour like some people in Vietnam do! :sarcasm:

[marmar]

24. Don't give them any ideas.

nt

[LongTomH]

23. Henry Ford knew better!

In his essay: Reverse Henry Fordism, Prof. Ernest Partridge castigated large employers who increas their short-term profits by under-paying their workers:

There are no sellers without buyers.

That’s the first law of practical economics. Everyone knows this to be true, whether or not one has ever taken a course in Economics. Everyone except, apparently, a few Ph.D economists who seem to forget this rule when they are hired by the Heritage Foundation, the American Enterprise Institute, etc., from which they migrate, back and forth, between offices in Republican administrations and these right-wing think tanks.

For these worthies, the “first law” is replaced by the dogmas of deregulation, “trickle-down” and market fundamentalism: impoverish the masses, throw money at the rich who will then invest it, and then “the invisible hand” of the unregulated free market will bring forth a cornucopia of goods and services.

Henry Ford saw the fallacy of such a policy when he raised the wages of his workers. His competitors in the auto industry were aghast. “Why did you do that?,” they asked. Ford is said to have replied, “If I don’t pay them more, who will buy my cars?”

It took awhile, but Henry Ford was eventually proved to be right. In 1935, in the depths of the great depression, Congress passed the Wagner Act which greatly enhanced the power of labor unions to bargain collectively on behalf of their members. And after World War II, the G.I. Bill allowed millions of returning war veterans to go to college and then to enter the work force as trained professionals. The ranks of the middle class swelled, and as a result of this gain in disposable income, so did the nation’s economy. In an ongoing and sustainable economic symbiosis, the investments of the capitalists “trickled down” to increase the worker’s productivity, income and purchasing power, which in turn “percolated up” to provide generous returns on these investments. Like the fabled golden goose, this economic arrangement promised a perpetual production of “golden eggs” of shared prosperity.

Prof. Partridge points out that this worked fine - until the advent of Reaganomics, i.e. 'supply side' economics, 'voodoo' economics, etc.

Make no mistake, Henry Ford was not a nice man. He was a racist and anti-semite who admired Hitler; but, modern 'economists' and employers could learn a lesson from him.

[Greyhound]

38. See Dodge v. Ford.

:kick:

[Lorien]

26. Short sighted. The cheap workers become non-consumers

with no disposable income to spend on their employers goods or services. The books may look good next quarter, but a year from now the company may fold from lack of sales.

[NBachers]

27. An' if yew don't like it, ther's plenty o' people outside who'd love to take yer place

He hands you a nickel
He hands you a dime
He asks you with a grin
If you're having a good time
Then he fines you every time you slam the door
I ain't gonna work for Maggie's brother no more

[on point]

29. Another false metric - productivity is not up, but costs are down

Productivity should be measured by the amount of goods produced by the number of hours worked, the capital invested, and the raw materials consumed per unit of output.

Instead we simply measure by cost of labor which is an improper measure.

Case in point:

4 workers working 40 hours to produce a given amount of output for a total of 160 hours. (raw material and capital costs constant in this example)

1 gets laid off and now 3 workers work 60 hours to make up difference (but still only get paid for 40) total of 180 hours.

Productivity is actually DOWN, but because costs are less, we falsely report productivity is up.

YEA management. They deserve a pay raise and bonus for raising productivity. That is, wages are transferred form the worker to management.

Support for the unemployed person has been externalized to society and gain has been internalized to upper management.

That in a nutshell is what is happening.

[orbitalman]

30. I'd sure like to lopp off some corporate asses....

If any are leaving the country, they may as well go OUT OF BUSINESS as far as I'm concerned.

[JDPriestly]

32. The costs of caring for the elderly is just being deferred.

The development is a revelation, and a good one, for companies, municipalities, and states, all of which are tight on cash and unable to get credit at reasonable rates if at all. The nearly 10% unemployment rate in the US is supposed to come down late this year and early next. This assumes that companies with improved prospects will hire full-time workers as they have for decades. These workers have had pensions, benefits, and vacations. That makes a person who makes $40,000 cost $50,00o or $60,000. Employers want to bring the effective cost of that same worker down to $35,000 or perhaps $30,000.

FDR started the WPA to employ the many, many people in America who could not get jobs during the Depression. But that did nothing to solve a much more difficult problem: the many impoverished people who were too elderly or too infirm or too disabled to work.

Families were too squeezed to take care of their own. There were too many elderly, infirm and disabled for private charities to deal with. The local governments that had traditionally pitched in to help the poor were themselves impoverished.

The federal government was the provider of last resort. And so, FDR started the Social Security program. And seniors who live at below-poverty-level are no longer so common in our country.

As our country became more prosperous, employers began to offer pensions in order to attract good workers. Pensions saved the employers money because, back when the stock market was climbing, employers could invest certain amounts into the pension funds and rely on being able to hand out more when the employees reached retirement age. They could attract workers who were willing to take less pay today as long as they had a promise of a pension down the road.

Our parents and grandparents enjoyed solid pensions as they aged. Many of us who worked for private employers over the years do not.

The Obama administration is planning to cut Social Security. And now we see that pension plans are also being cut. The future looks bleaker and bleaker.

How do we turn this around?

[inna]

33. Sure. High unemployment is great for corporations.

When the supply of labor (that's us) exceeds demand, the price of labor (wages) falls because too many of us are competing for too few jobs. Desperate job-seekers can't be too picky, and will gladly take a wage cut (and forego benefits).

Even better for corporations, outsource the jobs and reduce the wages to 25 cents/hour. And keep the profits offshore to avoid paying income tax. Profits maximized, goal achieved. :sarcasm:

[Blue Owl]

35. And now with the SC in their back pocket

The Corpos will be fucking us over all the more.

WE GOTTA RESIST!

[bluethruandthru]

36. If this keeps up much longer

You'll see Americans in the streets demanding a national health care plan. Even the teabaggers who railed against "socialism" will sing a different tune when they're unemployed and can't pay the cobra payments. Maybe then they'll realize that the benefit of living in a society is that when people need help...help is given.

[lunasun]

50. do not count on that

[WinkyDink]

40. There is a proven correlation between Dow Jones increases and unemployment rates.

[jp11]

42. IF the 'secret' is finally out someone let the Democratic party know cause they

seem to be on the wrong side, as they aren't doing anything about it for some reason, haven't been for a long time.

[Shireling]

43. And now they have smugly

taken away unemployment benefits so that people can work shit jobs, if they can find one, and be thankful. Then they will say that the unemployment rate is improving.

:puke:

[SILVER__FOX52]

44. It just never ends.

I wonder does anybody in the whitehouse ever read DU?

[mother earth]

45. Slavery...the modern way.

[katty]

46. this practice has been going on for quite awhile-paid like

part time slaves for full time service.

[Swamp Rat]

47. Our economy is mainly based on the mass murder of other nations with petroleum and mineral resources

[Q3JR4]

48. That's a great idea, if you don't care about selling your products...

If I, as an employee of a random automaker, have a choice between using my meager pay to feed myself or buy a car, I'm going to hold off on the transportation. I also won't be buying a house, computers, televisions, or any other electronic devices, and make due with what I have.

This will be the death of corporations that manufacture goods that people want but not that people need.

Q3JR4.
_{Good riddance, f***ers.}

[upi402]

49. Republican wet dream in REM state. n/t