EconoMatters, Rethinking America

Americans Need Better Pay Before Longer Hours

What Jeb Bush and Scott Walker get wrong about U.S. workers with their war on wages.

(Credit: bernie_moto_photo - Shutterstock.com)

Takeaways


  • Republicans are a party that has gone all-in conducting a war on wages. They are winning.
  • The GOP’s vision of America is one where hard work is rarely rewarded with higher wages.
  • Workers and employers must return to being partners in prosperity.

The minimum wage is “lame,” declares Wisconsin’s Republican Governor and presidential candidate Scott Walker. He recently scrapped his state’s century-old law requiring living wages.

In criticizing minimum wages as a bad or “lame” concept, Walker mimics GOP lawmakers who view higher wages as a third rail of Republican politics.

Indeed, higher wages has joined same sex marriage and choice on abortion as lightening rods. Advocacy for higher wages is certain to spell electoral doom for Republican candidates in party primaries.

Opposition to minimum wages, unions, paid parental leave or greater overtime pay – these are the ideological building blocks of today’s Republicans. They are a party that has gone all-in conducting a war on wages. It is a war they are winning.

Since 1979, the median weekly wage adjusted for inflation has risen 2% – that’s a raise of $16 a week over an entire generation according to the Bureau of Labor Statistics. No general in world history has been more successful in vanquishing an enemy than the GOP in suppressing wages.

The war on wages began when the Reagan era ushered in assaults on labor rights. Meanwhile a Randian culture took hold of American executive suites.

Compounded by the Supreme Court’s 2010 Citizens United ruling that decriminalized corporate political bribery, the Republicans today have painted a bull’s eye squarely on wages.

Working harder with no reward

Americans have worked harder and smarter since 1979. Productivity is up 66.5% and Americans now work 1800 hours annually on average – 300 hours more than Germans. But the GOP’s vision of America is one where hard work is rarely rewarded with higher wages.

Exhausted employees must wonder at the remarkably rarefied air enjoyed by America’s wealthy, when multimillionaire GOP presidential candidates like former Florida Governor Jeb Bush urge them to work even harder. The Republican answer to wage stagnation is simple: With hourly pay stagnant, the solution is to work more hours.

The Republicans also have a second solution to stagnant wages. Exemplified by tax policies of George W. Bush, they praise trickle-down economics featuring tax cuts for top earners and corporations – you know, the job creators. New jobs emerged, to be sure, but there was an asterisk.

Creating worse jobs

It turned out that profits could be increased even faster by offshoring expensive higher wage jobs and replacing them with service sector jobs paying less. The National Employment Law Project, for instance, concluded that low-wage industries accounted for 22 percent of jobs lost during the slowdown from 2008-2010, but they have created 44% of new jobs since.

In contrast, the share of jobs created in high wage industries paying over $20/hour (30%) is lower than their share of lost jobs (41%).

The war on wages has succeeded in making America a low-wage nation. Wages in the capstone-manufacturing sector are higher in 13 other rich democracies – like Germany or Switzerland – now than in the United States, by a margin of more than $10 per hour.

This essentially means employees in other rich democracies work less with longer vacations, yet have higher standards of living. Plus, they enjoy free college tuition, affordable health care and secure retirements.

A better way

Defeating the GOP’s war on wages begins with proposals to raise wages immediately including higher minimum wages. But victory can only occur by drawing on the experience of America during the post World War II era, when the greatest middle class in history was created.

Unions were wage leaders and executive suites viewed them as partners in creating prosperity. Profits were broadly enjoyed, in a manner the Democratic presidential candidates now seek to restore.

Wage increases were coupled with productivity growth and corporate leaders saw their role broadly as trustees of the legal entities licensed by the society to promote family prosperity. They embraced higher wages, rather than making war on them. Back then, many lawmakers from both parties could agree.

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About George R. Tyler

George R. Tyler is an economist and the author of "What Went Wrong." Follow him @georgertyler

Responses to “Americans Need Better Pay Before Longer Hours”

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  1. On July 15, 2015 at 8:53 am Guy Pfeffermann responded with... #

    Americans are indeed working longer hours than almost anyone else – certainly Europeans. Might that, together with worse public transport – meaning more hours spent commuting – be one reason why there are far fewer street demonstrations protesting government policies than in Europe ? People just don’t have time and energy left for activism ?