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August 16, 2014

By What Means Have Income and Wealth Steadily Been Transferred to the Rich?

By Richard Clark

This transfer has mainly occurred by way of employers making sure that the profits and benefits of ever greater worker productivity (which advancing machinery and technology steadily provide) is rarely if ever shared with workers in the form of a reduced workweek and/or a higher hourly wage. Instead, this ongoing stream of newly created wealth is continually directed upward into their elite pockets.


This transfer has mainly occurred by way of employers making sure that the profits and benefits of ever greater worker productivity (which advancing machinery and technology steadily provide) is rarely if ever shared with workers in the form of a reduced workweek and/or a higher hourly wage. Instead, this ongoing stream of newly created wealth is continually directed upward into their elite pockets.

Bertrand Russell provided the key to our topic question's answer way back in 1931 when he argued as follows:

* Suppose that, at a given moment, a certain number of people are engaged in the manufacture of pins -- they make as many pins as the world needs, working eight hours a day.

* Someone then makes an invention by which the same number of men can make twice as many pins as before.

* But the world does not need twice as many pins -- pins are already so cheap that hardly any more will be bought at a lower price.

* In a sensible world, everybody concerned in the manufacture of the pins would take to working four hours instead of eight each day, and everything else would go on as before.

* But in the actual world this would be thought demoralizing. (It would also represent a dereliction of 'duty' on the part of company owners, who can and do profit greatly by firing half their work force, in a situation like this, and essentially keeping those cancelled payments to workers for themselves and their companies' stockholders.)

* So, unless half of these employees are fired quickly, they will still work eight hours each day, there will be too many pins, some employers will go bankrupt, and half the men previously involved in making pins will eventually be thrown out of work.

* Then, in the end, there will be just as much leisure as on the other plan, but half the men are totally idle while half are still overworked. In this way it is ensured that the unavoidable leisure shall cause misery all round instead of being a universal source of happiness.

* Can anything more insane be imagined?


More recently, Thom Hartmann addedthissupplementary explanation, here slightly edited and abridged:

Ever since Ronald Reagan fired 11,000 striking air traffic controllers back on August 5th, 1981, and appointed labor-hostile Raymond Donovan as the first anti-labor Secretary of Labor in our nation's history, there's been a War on Workers in America. While worker productivity has skyrocketed since Reagan stepped foot inside the White House, wages have remained stagnant.

And the remnants of Reagan's ongoing War on Workers have been so successful -- even during Democratic administrations -- that it's not just keeping wages flat, it's even starting to erode them. Since 2000, as worker productivity continued to grow, average worker take-home pay has been in a steady freefall, while pay for executives and CEO's has soared off the charts. For the financial elite, the War on Workers has been a huge success.

But while this War has been steadily eating away at the income of working-class Americans, its ultimate goal seems to be to turn America's activist working middle-class into a dispirited, disheartened, and disempowered working-poor-class.

By this means, worker productivity can keep rising while the median hourly wage keeps shrinking, thus allowing the owners of companies to take an ever greater share of the profits from those companies.

* * *

Adding on to what Thom just said, here are the slightly edited and abridged commentsof Paul Craig Roberts:

Shortly after Ronald Reagan became president, and slashed tariff taxes for US-based corporations so that they could very profitably move their factories (along with millions of jobs) to cheap-labor countries, the US entered a new economic era in which American workers increasingly faced "direct global competition at almost every job level -- from the machinist to the software engineer to the Wall Street analyst. Any worker whose job does not require daily face-to-face interaction is now in jeopardy of being replaced by a lower-paid, equally skilled worker thousands of miles away. Specifically, American jobs are being lost not to fair competition from foreign companies, but to multinational US-based corporations that are dramatically cutting costs by shifting operations to low-wage countries, and then inexpensively (by way of rock-bottom import taxes) shipping the products to the US to be sold at premium prices.

So, by this means too, the median hourly wage of American workers keeps shrinking even though the productivity of those workers keeps rising. As a result, real median family income has been declining for years -- still more evidence that the ladders of upward mobility that made America the "opportunity society" have been dismantled.

Last April, the National Employment Law Project reported that real median household income fell 10% between 2007 and 2012. Then too, consider the recently released report from the Federal Reserve that two-thirds of American households are unable to raise $400 cash without selling possessions or borrowing from family and friends.

Although you would never know it from the reports coming from the US financial press, the poor job prospects that most Americans now face rival those of India 30 years ago! Many American university graduates are now employed -- if they are employed at all -- not as software engineers, managers and the like, but rather as waitresses, bartenders and the like. And they do not make enough to have an independent existence, so therefore live at home with their parents. Half of those with student loans end up not being able pay back all the money they borrowed. At any given time, 18% are either in collection or behind in their payments. Another 34% have student loans in deferment or forbearance. Clearly, then, more education is not the solution to America's unemployment problem.

Jobs off-shoring lowers labor costs and increases corporate profits, thereby enriching corporate executives and large shareholders. Problem is, the resulting loss of millions of well-paying jobs has made millions of Americans downwardly mobile and unable to spend nearly as much as they once did: jobs off-shoring has greatly reduced consumer demand, on which the US economy depends, with the result that the economy cannot now create enough jobs to even begin to keep up with the growth of the number of people looking for jobs: New jobs can't be created if consumer demand continues to stagnate or even shrink. Ever more young people graduate high school and college and begin their search for a job, while ever more older folks discover that they cannot afford to retire at the age their counterparts once did, and are forced to remain in the job market, thereby adding to the ever increasing number of people searching for decently paid jobs that are in ever shorter supply. Consider the statistics that show what is happening:

Between October 2008 and July 2014 the working-age population grew by 13.4 million persons, but the number of employed Americans grew by only 1.1 million. In other words, the unemployment rate among the increased numbers of the working-age population, over the past six years, has been almost 92%! Since the year 2000, the lack of jobs has caused the labor force participation rate to fall massively, and since quantitative easing began in 2008, the decline in the labor force participation rate has actually speeded up.

Right-wing ideologues say that the labor force participation rate is down because abundant welfare makes it possible for people not to work. But this is nonsensical. During this period, food stamps have twice been reduced, and unemployment benefits were cut back, as were a variety of social services. Being on welfare in America today has therefore become an extreme hardship, not chosen by anyone. Meanwhile, there are no good jobs going begging; all of them have growing numbers of applicants, allowing employers to be just as arbitrarily picky as they wish.

* * *

Finally, Nathan Schneider ties all this together with an amazing, wide-ranging, and very scholarly article, an edited and abridged version of which follows here:

At one point in our history, the US labor movement could fill the streets with hundreds of thousands of workers demanding a shorter (eight-hour) workday. This was thought of as just one more step in the gradual reduction of working hours that was expected to continue indefinitely.

Before the Civil War, workers like the factory women of Lowell, Massachusetts, had fought for a reduction to ten hours from 12 or more. Later, when the Great Depression hit, unions called for shorter hours to spread out the reduced workload and prevent layoffs; big companies like Kellogg's followed suit voluntarily. But in the wake of World War II, the eight-hour grind stuck, and today most workers, in fear of losing their job to some very qualified person willing to work hard for less, end up putting in even more hours than that.

And so it is that the US now leads the pack in annual working hours

US workers put in as many as 300 more hours a year than their counterparts in Western Europe, largely thanks to the lack of paid leave. (Germans work far less than we do, even as they force the Greeks work far more.) Average worker productivity in the US has doubled a couple of times since 1950, yet worker income has stagnated -- allowing the rich to increase their incomes by great multiples. The value from that extra productivity, after all, has to go somewhere, especially so as the median wage continues to fall.

At one time in US history, it was common sense that advances in technology would bring more leisure time. "If every man and woman would work for four hours each day on something useful," Benjamin Franklin wrote, "that labor would be sufficient to procure all the necessaries and comforts of life."

The Industrial Workers of the World

During the heat of the fight for the eight-hour day in the 1930s, the Industrial Workers of the World were already making cartoon handbills for what they considered the next great horizon: a four-hour day, a four-day week, and a wage people can live on. "Why not?" the IWW propaganda asked. Indeed, why not?

It's a good question. A four-hour workday with a livable wage could solve a lot of our most nagging problems. If everyone who wanted to, worked fewer hours, there would of course be more jobs for the unemployed to fill. The economy wouldn't be able to produce quite as much (if ever more people chose ever more leisure time instead of ever more work and consumption) -- which means that our economic system wouldn't be able to pollute as much, either. Rich countries where people work fewer hours than we do, tend to have lower carbon footprints. Less work would also leave plenty of time for family and child care, ending the agony over "work-life balance." Gone would be the plague of neglected children that is born of overwork, which, by the way, increases the risk of heart disease, diabetes, and Alzheimer's.

Historian Benjamin Hunnicutt

This professor at the University of Iowa has devoted his career to undoing the "nationwide amnesia" about what used to constitute the American dream of increasing leisure and the freedom to ramble that Walt Whitman called "higher progress." Hunnicutt's latest book, Free Time, traces how this dream went from being thought of as a technological inevitability, to becoming the chief demand in a century of labor struggles, to disappearing in today's dystopia, where work threatens to invade every hour of our lives (as the rich multiply their incomes accordingly, at our expense). "Dreams of more leisure time seem to have been completely forgotten by most people, who are nowadays lost in a mad scramble for work and money, as wages steadily fall and good jobs become ever more scarce."

John Maynard Keynes

There's a hint of what has happened in an essay that the renowned British economist John Maynard Keynes wrote in 1930, titled "Economic Possibilities for Our Grandchildren." By 2030 Keynes expected a system of almost total "technological unemployment" in which we'd need to work as few as 15 hours a week, and that much mostly just to avoid losing our minds from all the leisure. In the meantime, however, "avarice and usury and precaution must be our gods for a little longer still," he said. "For only they can lead us out of the tunnel of economic necessity into daylight."

Then he proposed a deal with the devil: Trust in greed for a while more, and it would save us from itself. To illustrate, Keynes made the rather anti-Semitic observation that, just as the Jew Jesus brought access to eternal life into the world, so the Jews' genius for "compound interest" and profit would produce so much plenty as to deliver us all from wage slavery forever. Keynes didn't expect, however, that like most deals with the devil, the devil would end up with the upper hand: As it turned out, greed spread, and managed to suck up most of the benefits of our almighty progress, for itself.

Captains of industry use FDR to defeat the 30-hr week

Hunnicutt has spent much of his career detailing exactly how this tragedy took place. Over the course of the Depression, pressure from the captains of industry turned President Roosevelt against shorter hours. So he made sure that the Black-Connery Bill for a 30-hour week, which had passed in the Senate, would die in the House. With the help of Keynes' own notion of deficit spending, FDR's New Deal set the goal of employing everyone "full-time," and the Fair Labor Standards Act of 1938 enshrined the eight-hour day as the norm. However, that was to be the last reduction in a century of reductions. The onset of the Cold War meant that those in the labor movement who kept calling for shorter hours were derided as subversives and communists. In fact, ever fewer workers were able to join a union at all. Every hour of work became increasingly productive, and the ownership class gobbled up an ever greater share of the benefits from that growing productivity.

A new American dream then gradually replaced the old one

Instead of leisure, or thrift, consumption became even more than a dream; it has become our patriotic duty, for only through continuous economic growth, we are told, can we even begin to employ all the people who need jobs and income. Corporations can therefore justify anything--from environmental destruction to prison construction--all for the sake of inventing more work for us to do, however absurd and ultimately unnecessary it might be. In other words, we've been conned.

A college education has been repackaged as an expensive and inefficient job-training program -- but for what jobs?!. There are ever fewer decently paid jobs to be had. We have stopped imagining, as Keynes thought it so reasonable to do, that our grandchildren might have it easier than ourselves; instead we are resigned to the fact that they will have an even tougher time of it than we are having, as work hours actually worked, continue to increase. Link

All we can do now, it seems, is hope that our kids will have jobs of any kind. So once more, we have been conned.

The new dream of work-a-plenty has taken hold with remarkable tenacity. Hardly anyone talks about expecting or even deserving shorter workdays anymore. In the dogged, lonely pursuit of a well-paid job that we might actually like, we don't bother organizing with our co-workers for a shorter workweek. We're made to think so badly of ourselves that we begin to accept the rightwing propaganda that even if we had more free time, the vast majority of us would just squander it. So once again, we've been conned.

Meanwhile, the more we are told to value work, the less it's actually worth. When women began entering the workforce in large numbers, real hourly income (adjusted for inflation) was dropping so low that two incomes started to be necessary to support a family. Overtime has become mandatory for many people, and having a part-time job usually means having to work one or two others, just to keep the wolves from the door.

"Some workers got shorter work hours, but what they didn't get was stable pay," says Karen Nussbaum, who directs the AFL-CIO affiliate Working America. In what's left of the labor movement, nobody is even bothering to ask for shorter workdays; it's hard enough to win a living wage, paid sick days, a bit of vacation time, and parental leave. Compared with when she began organizing women workers in the 1970s, Nussbaum says, "the crisis is different--more acute and more widespread."

You've probably heard of this absurd little book, The 4-Hour Workweek. (Trading stocks on your home computer.) It's a lonely yet best-selling fascination with the idea that by working smarter (as a "day trader"), but not harder, one just might be able to join author Timothy Ferris and the "New Rich" with some solid stock investments and a modicum of maintenance work -- 4 hours a week as the title of the book says. And it can happen--but only to a lucky few, among the million-plus suckers who've bought the book.

The idea of the four-hour workday that workers imagined a hundred years ago was different. It was for everyone, the natural and to-be-expected consequence of advancing technology. But in the decades since World War II, capitalism has not provided us with a shorter workday. The coming kingdom of leisure used to be considered a mainly technological issue, but it has turned out to be a political one. And the opponents to its realization are very, very powerful.

The Industrial Workers of the World considered shorter workdays with no cut in pay to be, in the words of one pamphlet, "THE Revolutionary Demand." The so-called Wobblies recognized that fewer hours would make sure workers reap the benefits of progress rather than let those benefits forevermore trickle upward.

In the past few months, there have been small indications of progress

After much pressure from organized labor, President Obama announced stricter federal rules on overtime pay; meanwhile, the government estimated that millions of workers might switch to part-time rather than full-time jobs because they can buy their own health insurance through the new system. This prompted Congressman Paul Ryan to express his fear that, with affordable coverage, "the incentive to work declines." Just the thought of the non-rich working less than every available hour of the day, and still having health insurance, was an affront to his idea of the American way. He actually said, "It's adding insult to injury." (Injury to whom, one might ask. To the corporate rich who might by these means have their con job questioned? Perish the thought!)

Time for the universal basic income or guaranteed annual income

The most practical approach to winning shorter workdays may be to detach necessities, like insurance, from employment. Peter Frase, an editor of Jacobin Magazine and one of the shorter workday's most capable advocates, calls for a universal basic income. People by that means able to cover their essential needs could then for the first time choose for themselves how much they want to work as a supplement to that. But unless there are powerful, disruptive movements demanding such measures, politicians and other elites will keep on repeating the lie that there simply isn't enough to go around. However, workers in countries with strong labor organizations know better. Gothenburg, Sweden is experimenting with a six-hour workday for municipal workers, while in France, where a 35-hour week is already common, unions are trying out a rule against checking work email after hours.

The time-saving gizmos that Benjamin Franklin predicted are here

But rather than liberating anyone, they've become a clever disguise for corporate greed to sneak ever more work into our days and evenings. Few subcultures revel in staying at the office after hours so much as Silicon Valley engineers. But who really benefits from their late nights of coding?

It's probably the same people who prevent Silicon Valley's underlings from forming a union, who also:

* don't have any objections to a single mother working two jobs,

* expect you to check email at all hours of the day and night, and . .

* say we need more growth rather than let the unemployed share our workload and thereby lighten it for those of us already employed.

Those who believe these lying profiteers from on high, and who, deceived in this way, neglect to organize with their co-workers, are stupidly stealing a shorter workday from themselves.

(Article changed on August 16, 2014 at 19:58)

Submitters Bio:

Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've always been more interested in political economics and what's going on behind the scenes in politics, than in mechanical engineering, and because of that I've rarely worked more than 8 months a year, devoting much of the rest of the year to reading and writing about that which interests me most.