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Wages Of Prosperity

Wed., Aug. 6, 1997

On the cover of this week’s newsletter from a Wall Street investment firm is a chart plotting the growth in wages and benefits for American workers.

Since 1989, it shows, worker gains are sharply down - cause for Merrill Lynch & Co. to give the report the cheerful title: “Let the Good Times Roll.”

If Wall Street is applauding, much of Main Street is not. The economic boom that has exalted corporate profits and investor portfolios has clearly not been shared by American workers. Indeed, many analysts say, much of the so-called good economic news has come at the expense of American workers.

Some analysts say the stark disconnect between the economic news that investors love and the bread-and-butter concerns of American workers is partly mirrored in the current national strike of 185,000 employees of Atlanta-based United Parcel Service.

For the overall American work force, “their benefits are disappearing and their hourly earnings are stagnating, if not declining,” said former Labor Secretary Robert Reich. To the extent take-home pay is rising at all, said Reich, workers by and large “are working longer hours.”

Since 1989, the wages and benefits of the American work force have risen a paltry 2.8 percent adjusted for inflation, according to the U.S. Bureau of Labor Statistics. That’s just under 3 cents on the dollar.

Over the same period, the economy has grown by 18 percent, the Dow Jones Industrial Average has soared to nearly 3-1/2 times its June 1989 level, and corporate profits, on track to top $760 billion this year, have doubled.

There are other issues in the UPS strike, to be sure. The company, for example, has cast the dispute as a battle as much between UPS and the International Brotherhood of Teamsters, the union that called the strike, as between UPS and its workers who belong to the union.

UPS claims further that the dispute has at its core a complicated restructuring of the company’s pension system, a plan UPS claims will mean better pension benefits for its own workers at the expense of Teamsters members who don’t work for UPS.

Union representatives, however, decry an offer to increase average pay by just $1.50 an hour over the next five years - not counting a profit-sharing plan UPS claims would be worth thousands of dollars per employee by the year 2000 - and, perhaps more pointedly, the growing use by UPS of part-time workers, who receive slightly more than half the $19.95 hourly average for fulltime UPS workers.

Faced with intensifying competition from developing countries such as China, whose half-billion-person labor force is available for as little as a few dollars a day, U.S. companies have been on a crusade against labor costs for the past decade.

In the corporate arsenal are threats to move production facilities overseas, the use of part-time or temporary workers, generally paid a lower wage and receiving fewer benefits than full-time employees, and the farming out of jobs once done in-house to private subcontractors.

Indeed, cost pressures have made the growing use of lower-cost part-timers “mandatory” at UPS, the company’s chief labor negotiator, David Murray, told reporters Monday.

By striking UPS, the Teamsters contend they are firing a shot across the bow of corporate America to send the message that American workers have been squeezed enough.

“What this strike is all about is that working people in America are falling behind or, at best, running in place, while big corporations and big stockholders are raking in record profits,” said Teamsters spokesman Steve Trossman. “The economic boom is leaving them behind.”

That’s not entirely true.

Six years of solid economic growth have driven down unemployment to 4.8 percent, the lowest level in 24 years. More than 63 million Americans own stocks, so the bull market’s effects are reaching deep into the hinterland, and low inflation has shielded all workers from the ravages of soaring prices.

It isn’t clear, moreover, that traditional tools to measure wages and benefits paint a complete picture of worker gains in a rapidly changing economy where incentive pay and stock options have become important, and often unmeasured, parts of worker’s overall pay.

“America’s work force today is not the time clock-punching, heavy industrial work force it was 20, 30 or 50 years ago,” said Rob Schwarzwalder, spokesman for the National Association of Manufacturers, a Washington-based trade organization representing 14,000 companies that together employ some 18 million workers.

Further, as the labor market tightens, workers in demand, such as accountants and people with special computing skills, are increasingly being offered bonuses to take new positions.

“It’s a kind of one-time fringe benefit up front,” said Stuart Hoffman, chief economist with the PNC Bank Corp., in Pittsburgh. “It doesn’t get billed into the base.”

What’s apparent from the UPS strike, however, is that a vast body of American workers feel they’ve been sidelined by the economic boom. The outcome of the strike could become an important barometer of things to come.

“If the Teamsters score a big win, it will draw a line in the sand suggesting that the shift toward part-time workers may not be as easy to pull off as some companies are expecting it will be,” said Reich, now teaching economics at Brandeis University in Waltham, Mass. “On the other hand, if UPS clearly wins, then it will be a signal to management across America that the use of part-timers can be, and will be, a critical part of business strategy.”

Tags: labor, strike

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