DMI Blog

Amy Traub

When Working People Can’t Push Back

Unless you're a high flying investment bank, this is a hard time to be in business. Credit is tight. Customers are cutting back. The one place you might be able to wring out a little extra profit is on labor costs. And sure enough, around the country, companies are cutting wages, reducing benefits, and relying on fewer employees to pick up the workload of their laid off co-workers.

The result? Even harder times for working people. With 9.8 percent unemployment, you'll take the pay cut and like it. You'll fork over more for the new high deductible health plan that saves the boss a bundle. You won't speak up when the employer contributions to your 401(k) come to an abrupt halt. What's more, you'll be willing to work harder. As the head of a web design firm told the Wall Street Journal this week, he's noticing more cars already in the parking lot when he arrives at work each morning. "After the cuts were made," he noted "the people that are still here...are motivated that much more. They know they can't just put their résumé out there, because this is happening across the industry."

Productivity is soaring as fewer workers get more work done. But it doesn't look like working people are seeing any of the benefits. And that's bad news for the economy as a whole. Consumers aren't likely to resume spending when wages are down, especially without the ability they once had to borrow against high home values. It's a recipe for a vicious economic cycle.

The way out should include additional public stimulus, but it must also involve shifting more power to employees - enough to push back and stop making America's working families the single easiest target for every negative economic development. The Employee Free Choice Act was a good idea before the recession, when middle-class Americans weren't sharing the benefits of economic good times, but it's absolutely essential now that working people are bearing the disproportionate brunt of the economic hard times.

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Posted at 8:26 AM, Oct 22, 2009 in Labor
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