A meaningful working-class recovery from the recession seems far away.
After seven months of job gains, although diminishing gains to be sure, we are again losing jobs. As the chart below shows, the number of jobs fell by 140,000 in December.
We are currently about 9.8 million jobs down from the February 2020 employment peak, having recovered only 55 percent of the jobs lost. And, as the following chart illustrates, the percentage of jobs lost remains greater, even now after months of job growth, than it was at any point during the Great Recession.
If the job recovery continues on its current pace, some analysts predict that it will likely take more than three years to just get back to pre-pandemic employment levels. However, this might well be too rosy a projection. One reason is that the early assumption that many of the job losses were temporary, and that those unemployed would soon be recalled to employment, is turning out to be wrong. A rapidly growing share of the unemployed are remaining unemployed for an extended period.
As we see below, in October, almost one-third of the unemployed had been unemployed for 27 weeks or longer. According to the December jobs report, that percentage is now up to 37 percent, four times what it was before the pandemic. And that figure seriously understates the problem, since many workers have given up looking for work; having dropped out of the workforce, they are no longer counted as unemployed. The labor force participation rate is now 61.5 percent, down from 63.3 percent in February.
Dean Baker, quoted in a recent Market Place story, underscores the importance of this development:
“This is obviously a story of people losing their job at the beginning of the crisis in March and April and not getting it back,” said Dean Baker, co-founder and senior economist with the Center for Economic and Policy Research.
Those out of work for 27 weeks or more make up a growing share of the unemployed, and that could have enduring consequences, Baker said.
“After people have been unemployed for more than six months, they find it much harder to get a job,” he said. “And if they do get a job, their labor market prospects could be permanently worsened.”
And tragically, the workers that have suffered the greatest job losses during this crisis are those that earned the lowest wages.
It is no wonder that growing numbers of working people are finding it difficult to meet their basic needs.
There is no way to sugar coat this situation. We need a significant stimulus package, a meaningful increase in the minimum wage, real labor law reform, a robust national single-payer health care system, and an aggressive Green New Deal designed public sector investment and jobs program. And there is no getting around the fact that it is going to take hard organizing and mutually supportive community and workplace actions to move the country in the direction it needs to go.
This is the first in a series of posts that aim to describe and evaluate the World War II mobilization experience in the United States in order to illuminate some of the economic and political challenges we can expect to face as we work for a Green New Deal.
This post highlights the successful government directed wartime reorientation of the U.S. economy from civilian to military production, an achievement that both demonstrates the feasibility of a rapid Green New Deal transformation of the U.S. economy and points to the kinds of organizational capacities we will need to develop. The post also highlights some of the strategies employed by big business to successfully stamp the wartime transformation as a victory for “market freedom,” an outcome that strengthened capital’s ability to dominate the postwar U.S. political economy and suggests the kind of political struggles we can expect and will need to overcome as we work to achieve a just Green New Deal transformation.
The climate challenge and the Green New Deal
We are hurtling towards a climate catastrophe. The Intergovernmental Panel on Climate Change, in its Special Report on Global Warming of 1.5°C, warns that we must limit the increase in the global mean temperature to 1.5 degrees Celsius above pre-industrial levels by 2100 if we hope to avoid a future with ever worsening climate disasters and “global scale degradation and loss of ecosystems and biodiversity.” And, it concludes, to achieve that goal global net carbon dioxide emissions must fall by 45 per cent by 2030 and reach net zero emissions by 2050.
Tragically, none of the major carbon dioxide emitting nations has been willing to pursue the system-wide changes necessary to halt the rise in the global mean temperature. Rather than falling, carbon dioxide emissions rose over the decade ending in 2019. Only a major crisis, in the current case a pandemic, appears able to reverse the rise in emissions.
Early estimates are that the COVID-19 pandemic will cause a fall in global emissions of somewhere between 4 and 7 percent in 2020. But the decline will likely be temporary. For example, the International Monetary Fund is forecasting an emission rise of 5.8 percent in 2021. This bounce back is in line with what happened after the 2008-09 Great Recession. After falling by 1.4 percent in 2009, global emissions grew by 5.1 percent in 2010.
Motivated by signs of the emerging climate crisis—extreme weather conditions, droughts, floods, warming oceans, rising sea levels, fires, ocean acidification, and soil deterioration—activists in the United States have worked to build a movement that joins climate and social justice activists around a call for a Green New Deal to tackle both global warming and the country’s worsening economic and social problems. The Green Party has promoted its ecosocialist Green New Deal since 2006, but it was the 2018 mass actions by new climate action groups such as Extreme Rebellion and the Sunrise Movement and then the 2019 introduction of a Green New Deal congressional resolution by Representative Alexandria Ocasio-Cortez and Senator Edward Markey that helped popularize the idea.
The Ocasio-Cortez—Markey resolution, echoing the Intergovernmental Panel on Climate Change, calls for a ten-year national program of mobilization designed to cut CO2 emissions by 40-60 percent from 2010 levels by 2030 and achieve net-zero emissions by 2050. Its program includes policies that aim at replacing fossil fuels with clean, renewable sources of energy, and existing forms of transportation, agriculture, and urban development with new affordable and sustainable ones; encouraging investment and the growth of clean manufacturing; and promoting good, high paying union jobs and universal access to clean air and water, health care, and healthy food.
While there are similarities, there are also important differences, between the Green Party’s Green New Deal and Ocasio-Cortez—Markey’s Green New Deal, including over the speed of change, the role of public ownership, and the use of fracking and nuclear power for energy generation. More generally, there are also differences among supporters of a Green New Deal style transformation over whether the needed government investments and proposed social policies should be financed by raising taxes, slashing the military budget, borrowing, or money creation. There are also environmentalists who oppose the notion of sustained but sustainable growth explicitly embraced by many Green New Deal supporters and argue instead for a policy of degrowth, or a “Green New Deal without growth.”
These arguments are important, representing different political sensibilities and visions, and need to be taken seriously. But what has largely escaped discussion is any detailed consideration of the actual process of economic transformation required by any serious Green New Deal program. Here are some examples of the kind of issues we will need to confront:
Fossil fuel production has to be ratcheted down, which will dramatically raise fossil fuel prices. The higher cost of fossil fuels will significantly raise the cost of business for many industries, especially air travel, tourism, and the aerospace and automobile industries, triggering significant declines in demand for their respective goods and services and reductions in their output and employment. We will need to develop a mechanism that will allow us to humanely and efficiently repurpose newly created surplus facilities and provide alternative employment for released workers.
New industries, especially those involved in the production of renewable energy will have to be rapidly developed. We will need to develop agencies capable of deciding the speed of their expansion as well as who will own the new facilities, how they will be financed, and how best to ensure that the materials required by these industries will be produced in sufficient quantities and made available at the appropriate time. We will also have to develop mechanisms for deciding where the new industries will be located and how to develop the necessary social infrastructure to house and care for the new workforce.
The list goes on—we will need to ensure the rapid and smooth expansion of facilities capable of producing electric cars, mass transit vehicles, and a revitalized national rail system. We will need to organize the retrofitting of existing buildings, both office and residential, as well as the training of workers and the production of required equipment and materials. The development of a new universal health care system will also require the planning and construction of new clinics and the development of new technologies and health practices.
The challenges sound overwhelming, especially given the required short time frame for change. But, reassuringly, the U.S. government faced remarkable similar challenges during the war years when, in approximately three years, it successfully converted the U.S. economy from civilian to military production. This experience points to the importance of studying the World War II planning process for lessons and should give us confidence that we can successfully carry out our own Green New Deal conversion in a timely fashion.
World War II economic mobilization
The name Green New Deal calls to mind the New Deal of the 1930s, which is best understood as a collection of largely unrelated initiatives designed to promote employment and boost a depressed economy. In contrast, the Green New Deal aims at an integrated transformation of a “functioning” economy, which is a task much closer to the World War II transformation of the U.S. economy. That transformation required the repression of civilian production, much like the Green New Deal will require repression of the fossil fuel industry and those industries dependent on it. Simultaneously, it also required the rapid expansion of military production, including the creation of entirely new products like synthetic rubber and weapon systems, much like the Green New Deal will require expansion of new forms of renewable energy, transportation, and social programs. And it also required the process of conversion to take place quickly, much like what is required under the Green New Deal.
J.W. Mason and Andrew Bossie highlight the contemporary relevance of the wartime experience by pointing out:
Just as in today’s public-health and climate crises, the goal of wartime economic management was not to raise GDP in the abstract, but to drastically raise production of specific kinds of goods, many of which had hardly figured in the prewar economy. Then as now, this rapid reorganization of the economy required a massive expansion of public spending, on a scale that had hardly been contemplated before the emergency. And then as, potentially, now, this massive expansion of public spending, while aimed at the immediate non-economic goal, had a decisive impact on long-standing economic problems of stagnation and inequality. Of course, there are many important differences between the two periods. But the similarities are sufficient to make it worth looking to the 1940s for economic lessons for today.
Before studying the organization, practice, and evolution of the World War II era planning system, it is useful to have an overall picture of the extent, speed, and success of the economy’s transformation. The following two charts highlight the dominant role played by the government. The first shows the dramatic growth and reorientation in government spending beginning in 1941. As we can see federal government war expenditures soared, while non-war expenditures actually fell in value. Military spending as a share of GNP rose from 2.2 percent in 1940, to 11 percent in 1941, and to 31.2 percent in 1942.
The second shows that the expansion in plant and equipment required to produce the goods and services needed to fight the war was largely financed by the government. Private investment actually fell in value over the war years.
The next chart illustrates the speed and extent of the reorientation of industrial production over the period 1941-1944. As we can see, while industrial production aimed at military needs soared, non-military industrial production significantly declined.
The next two charts illustrate the success of the conversion process. The first shows the rapid increase in the production of a variety of military weapons and equipment. The second demonstrates why the United States was called the “Arsenal of democracy”; it produced the majority of all the munitions produced during World War II.
Significantly, while the rapid growth in military related production did boost the overall growth of the economy, because it was largely achieved at the expense of nonmilitary production, the economy’s overall growth over the years 1941-44/45, was far from extraordinary. For example, the table below compares the growth in real gross nonfarm product over the early years of the 1920’s to that of the early years of the 1940’s. As we can see, there is little difference between the two periods, and that holds true even if we exclude the last year of the war, when military spending plateaued and military production began to decline. The same holds true when comparing just the growth in industrial production over the two periods.
Years Growth in real gross nonfarm product
Source: Harold G. Vatter, The U.S. Economy in World War II, New York: Columbia University Press, 1985, p. 22.
This similarity between the two periods reinforces the point that the economic success of the war years, the rapid ramping up of military production, was primarily due to the ability of government mobilization agencies to direct an economic conversion that privileged the production of goods and services for the military at the expense of non-military goods and services. This experience certainly lends credibility to those who seek a similar system-wide conversion to achieve a Green New Deal transformation of the U.S. economy.
Such a transformation is not without sacrifice. For example, workers did pay a cost for the resulting suppression of civilian oriented production, but it was limited. As Harold Vatter points out: “There were large and real absolute decreases in total consumer expenditures between 1941 and 1945 on some items considered important in ordinary times. Prominent among these, in the durable goods category, were major home appliances, new cars, and net purchases of used cars, furniture, and radio and TV sets.”
At the same time there were real gains for workers. Overall personal consumption which rose in both 1940 and 1941, declined absolutely in 1942, but then began a slow and steady increase, with total personal consumption higher in 1945 than in 1941. However, this record understates the real gains. The U.S. civilian population declined from 131.6 million in 1941 to 126.7 million in 1944. Thus, the gain in personal consumption on a per capita basis was significant. As Vatter notes, “real employee compensation per private employee in nonfarm establishments rose steadily ever year, and in 1945 was over one-fifth above the 1941 level. . . . More broadly, similar results show up for the index of real disposable personal income per capita, which increased well over one-fourth during the same war years.” Of course, these gains were largely the result of more people working and for longer hours; it was definitely earned. Also important is the fact that pretax family income rose faster for those at the bottom of the income distribution than for those at the top, helping to reduce overall income inequality.
In sum, there are good reasons for those seeking to implement a Green New Deal style transformation of the U.S. economy to use the World War II planning experience as a template. A careful study of that experience can alert us to the kinds of organizational and institutional capacities we will need to develop. And, it is important to add, it can also alert us to the kinds of political challenges we can expect to face.
Planning and politics
The success of the U.S. economy’s World War II transformation was due, in large part, to the work of a series of changing and overlapping mobilization agencies that President Roosevelt established by executive order and then replaced or modified as new political and economic challenges emerged. Roosevelt took his first meaningful action to help prepare the United States economy for war in May 1940, when he reactivated the World War 1-era National Defense Advisory Commission (NDAC). The NDAC was replaced by the Office of Production Management (OPM) in December 1940. The Supply Priorities and Allocation Board (SPAB) was then created in August 1941 to develop a needed longer-term planning orientation to guide the work of the OPM. And finally, both the OPM and the SPAB were replaced by the War Production Board (WPB) in January 1942. With each change, decision-making became more centralized, planning responsibilities expanded, and authority to direct economic activity strengthened.
The work of these agencies was greatly enhanced by a number of other initiatives, one of the most important being the August 1940 establishment of the Defense Plant Corporation (DPC). The DPC was authorized to directly finance and own plant and equipment vital to the national defense. The DPC ended up financing and owning roughly one-third of the plant and equipment built during the war, most of which was leased to private companies to operate for a minimal amount, often $1 a year. The aircraft industry was the main beneficiary of DPC investment, but plants were also built to produce synthetic rubber, ships, machine tools, iron and steel, magnesium, and aluminum.
Despite its successful outcome, the process of economic conversion was far from smooth and the main reason was resistance by capitalists. Still distrustful of New Deal reformers, most business leaders were critical of any serious attempt at prewar planning that involved strengthening government regulation and oversight of their respective activities. Rather, they preferred to continue their existing practice of individually negotiating contracts with Army and Navy procurement agencies. Many also opposed prewar government entreaties to expand their scale of operations to meet the military’s growing demand for munitions and equipment. Their reasons were many: they were reluctant to expand capacity after a decade of depression; civilian markets were growing rapidly and highly profitable; and the course of the war, and the U.S. participation in it, remained uncertain.
Their attitude and power greatly influenced the operation and policies of the NDAC, which was built on industry divisions run by industry leaders, most of whom were so-called “dollar-a-year men” who continued to draw their full salaries from the corporations that employed them, and advised by industry associations. This business-friendly structure, with various modifications, was then transferred to the OPM and later the WPB.
With business interests well represented in the prewar mobilization agencies, the government struggled to transform the economy in preparation for war. The lack of new business investment in critical industries meant that by mid-1941 material shortages began forcing delays in defense orders; aluminum, magnesium, zinc, steel, and machine tools were all growing scare. At the same time, a number of industries that were major consumers of these scare materials and machinery, such as the automobile industry, also resisted government efforts to get them to abandon their consumer markets and convert to the production of needed military goods.
In some cases, this resistance lasted deep into the war years, with some firms objecting not only to undertaking their own expansion but to any government financed expansion as well, out of fear of post-war overproduction and/or loss of market share. The resulting political tension is captured by the following exchange at a February 1943 Congressional hearing between Senator E. H. Moore of Oklahoma and Interior Secretary and Petroleum Administrator for War Harold L. Ickes over the construction of a petroleum pipeline from Texas to the East Coast:
Secretary Ickes. I would like to say one thing, however. I think there are certain gentlemen in the oil industry who are thinking of the competitive position after the war.
The Chairman. That is what we are afraid of, Mr. Secretary.
Secretary Ickes. That’s all right. I am not doing that kind of thinking.
The Chairman. I know you are not.
Secretary Ickes. I am thinking of how best to win this war with the least possible amount of casualties and in the quickest time.
Senator Moore. Regardless, Mr. Secretary, of what the effect would be after the war? Are you not concerned with that?
Secretary Ickes. Absolutely.
Senator Moore. Are you not concerned with the economic situation with regard to existing conditions after the war?
Secretary Ickes. Terribly. But there won’t be any economic situation to worry about if we don’t win the war.
Senator Moore. We are going to win the war.
Secretary Ickes. We haven’t won it yet.
Senator Moore. Can’t we also, while we are winning the war, look beyond the war to see what the situation will be with reference to –
Secretary Ickes (interposing). That is what the automobile industry tried to do, Senator. It wouldn’t convert because it was more interested in what would happen after the war. That is what the steel industry did, Senator, when it said we didn’t need any more steel capacity, and we are paying the price now. If decisions are left with me, it is only fair to say that I will not take into account any post-war factor—but it can be taken out of my hands if those considerations are paid attention to.
Once the war began, many businesses were also able to build a strategic alliance with the military that allowed them to roll back past worker gains and isolate and weaken unions. For example, by invoking the military’s overriding concern with achieving maximum production of the weapons of war, business leaders were able to defeat union attempts to legislate against the awarding of military contracts to firms in violation of labor law. They also succeeded in ignoring overtime pay requirements when lengthening the workweek and in imposing new workplace rules that strengthened management prerogatives.
If unions struck to demand higher wages or resist unilateral workplace changes, business and military leaders would declare their actions a threat to the wartime effort, which cost them public support. Often the striking unions were threatened with government sanctions by mobilization authorities. In some cases, especially when it came to the aircraft industry, the military actually seized control of plants, sending in troops with fixed bayonets, to break a strike. Eventually, the CIO traded a no-strike pledge for a maintenance of membership agreement, but that often put national union officials in the position of suppressing rank-and-file job actions and disciplining local leaders and activists, an outcome which weakened worker support for the union.
Business didn’t always have its own way. Its importance as essential producer was, during the war, matched by the military’s role as essential demander. And, while the two usually saw eye-to-eye, there were times when military interests diverged from, and dominated, corporate interests. Moreover, as the war continued, government planning agencies gained new powers that enabled them to effectively regulate the activities of both business and the military. Finally, the work of congressional committees engaged in oversight of the planning process as well as pressure from unions and small business associations also helped, depending on the issue, to place limits on corporate prerogatives.
Still, when all was said and done, corporate leaders proved remarkably successful in dominating the mobilization process and strengthening their post-war authority over both the government and organized labor. Perhaps the main reason for their success is that almost from the beginning of the mobilization process, a number of influential business leaders and associations aggressively organized themselves to fight their own two-front war—one that involved boosting production to help the United States defeat the Axis powers and one that involved winning popular identification of the fight for democracy with corporate freedom of action.
In terms of this second front, as J.W. Mason describes:
Already by 1941, government enterprise was, according to a Chamber of Commerce publication, “the ghost that stalks at every business conference.” J. Howard Pew of Sun Oil declared that if the United States abandoned private ownership and “supinely reli[es] on government control and operation, then Hitlerism wins even though Hitler himself be defeated.” Even the largest recipients of military contracts regarded the wartime state with hostility. GM chairman Alfred Sloan—referring to the danger of government enterprises operating after war—wondered if it is “not as essential to win the peace, in an economic sense, as it is to win the war, in a military sense,” while GE’s Philip Reed vowed to “oppose any project or program that will weaken” free enterprise.
Throughout the war, business leaders and associations “flooded the public sphere with descriptions of the mobilization effort in which for-profit companies figured as the heroic engineers of a production ‘miracle’.” For example, Boeing spent nearly a million dollars a year on print advertising in 1943-45, almost as much as it set aside for research and development.
The National Association of Manufactures (NAM) was one of the most active promoters of the idea that it was business, not government, that was winning the war against state totalitarianism. It did so by funding a steady stream of films, books, tours, and speeches. Mark R. Wilson describes one of its initiatives:
One of the NAM’s major public-relations projects for 1942, which built upon its efforts in radio and print media, was its “Production for Victory” tour, designed to show that “industry is making the utmost contributions toward victory.” Starting the first week in May, the NAM paid for twenty newspaper reporters to take a twenty-four-day, fifteen-state trip during which they visited sixty-four major defense plants run by fifty-eight private companies. For most of May, newspapers across the country ran daily articles related to the tour, written by the papers’ own reporters or by one of the wire services. The articles’ headlines included “Army Gets Rubber Thanks to Akron,” “General Motors Plants Turning Out Huge Volume of War Goods,” “Baldwin Ups Tank Output,” and “American Industry Overcomes a Start of 7 Years by Axis.”
It was rarely if ever mentioned by the companies or the reporters that almost all of these new plants were actually financed, built, and owned by the government, or that it was thanks to government planning efforts that these companies had well-trained workers and received needed materials on a timely basis. Perhaps not surprisingly, government and union efforts to challenge the corporate story were never as well funded, sustained, or shaped by as clear a class perspective. As a consequence, they were far less effective.
Paul A.C. Koistinen, in his major study of World War II planning, quotes Hebert Emmerich, past Secretary of the Office of Production Management (OPM), who looking back at the mobilization experience in 1956 commented that “When big business realized it had lost the elections of 1932 and 1936, it tried to come in through the back door, first through the NRA and then through the NDAC and OPM and WPB.” Its success allowed it to emerge from the war politically stronger than when it began.
Capital is clearly much more organized and powerful today than it was in the 1940s. And we can safely assume that business leaders will draw upon all their many strengths in an effort to shape any future conversion process in ways likely to limit its transformative potential. Capital’s wartime strategy points to some of the difficult challenges we must prepare to face, including how to minimize corporate dominance over the work of mobilization agencies and ensure that the process of transformation strengthens, rather than weakens, worker organization and power. Most importantly, the wartime experience makes clear that the fight for a Green New Deal is best understood as a new front in an ongoing class war, and that we need to strengthen our own capacity to wage a serious and well-prepared ideological struggle for the society we want to create.
It wasn’t that long ago that the country celebrated frontline workers by banging pots in the evening to thank them for the risks they took doing their jobs during the pandemic. One national survey found that health care workers were the most admired (80%), closely followed by grocery store workers (77%), and delivery drivers (73%).
Corporate leaders joined in the celebration. Supermarket Newsquoted Dacona Smith, executive vice president and chief operating officer at Walmart U.S., as saying in April:
We cannot thank and appreciate our associates enough. What they have accomplished in the last few weeks has been amazing to watch and fills everyone at our company with enormous pride. America is getting the chance to see what we’ve always known — that our people truly do make the difference. Let’s all take care of each other out there.
Driven by a desire to burnish their public image, deflect attention from their soaring profits, and attract more workers, many of the country’s leading retailers, including Walmart, proudly announced special pandemic wage increases and bonuses. But as a report by Brookingspoints out, although their profits continued to roll in, those special payments didn’t last long.
There are three important takeaways from the report: First, don’t trust corporate PR statements; once people stop paying attention, corporations do what they want. Second, workers need unions to defend their interests. Third, there should be some form of federal regulation to ensure workers receive hazard pay during health emergencies like pandemics, similar to the laws requiring time and half for overtime work.
The companies and their workers
In Windfall Profits and Deadly Risks, Molly Kinder, Laura Stateler, and Julia Du look at the compensation paid to frontline workers at, and profits earned by, 13 of the 20 biggest retail companies in the United States. The 13, listed in the figure below, “employ more than 6 million workers and include the largest corporations in grocery, big-box retail, home improvement, pharmacies, electronics, and discount retail.” The seven left out “either did not have public financial information available or were in retail sectors that were hit hard by the pandemic (such as clothing) and did not provide COVID-19 compensation to workers.”
Pre-pandemic, the median wages for the main frontline retail jobs (e.g., cashiers, salespersons, and stock clerks) at these 13 companies generally ranged from $10 to $12 per hour (see the grey bar in the figure below). The exceptions at the high end were Costco and Amazon, both of which had a minimum starting wage of $15 before the start of the pandemic. The exception at the low end was Dollar General, which the authors estimate had a starting wage of only $8 per hour.
Clearly, these companies thrive on low-wage work. And it should be added, disproportionately the work of women of color. “Women make up a significantly larger share of the frontline workforce in general retail stores and at companies such as Target and Walmart than they do in the workforce overall. Amazon and Walmart employ well above-average shares of Black workers (27% and 21%, respectively) compared to the national figure of 12%.”
Then came the pandemic
Eager to take advantage of the new pandemic-driven business coming their way, all 13 companies highlighted in the report quickly offered some form of special COVID-19-related compensation in an effort to attract new workers (as highlighted in the figure below). “Commonly referred to as “hazard pay,” the additional compensation came in the form of small, temporary hourly wage increases, typically between $2 and $2.50 per hour, as well as one-off bonuses. In addition to temporary hazard pay, a few companies permanently raised wages for workers during the pandemic.“
Unfortunately, as the next figure reveals, these special corporate payment programs were short-lived. Of the 10 companies that offered temporary hourly wage increases, 7 ended them before the beginning of July and the start of a new wave of COVID-19 infections. Moreover, even with these programs, nine of the 13 companies continued to pay wages below $15 an hour. Only three companies instituted permanent wage hikes. While periodic bonuses are no doubt welcomed, they are impossible to count on and of limited dollar value compared with an increase in hourly wages. So much, for corporate caring!
Don’t worry about the companies
As the next figure shows, while the leading retail companies highlighted in the study have been stingy when it comes to paying their frontline workers, the pandemic has treated them quite well. As the authors point out:
Across the 13 companies in our analysis, revenue was up an average of 14% over last year, while profits rose 39%. Excluding Walgreens—whose business has struggled during the pandemic—profits rose a staggering 46%. Stock prices rose on average 30% since the end of February. In total, the 13 companies reported 2020 profits to date of $67 billion, which is an additional $16.9 billion compared to last year.
Looking just at the compensation generosity of the six companies that had public data on the total cost of their extra compensation to workers, the authors found that the numbers “paint a picture of most companies prioritizing profits and wealth for shareholders over investments in their employees. On average, the six companies’ contribution to compensating workers was less than half of the additional profit earned during the pandemic compared to the previous year.”
This kind of scam, where companies publicly celebrate their generosity only to quietly withdraw it a short time later, is a common one. And because it is hard to follow corporate policies over months, they are often able to sell the public that they really do care about the well-being of their workers. That is why this study is important—it makes clear that relying on corporations to do the “right thing” is a losing proposition for workers.
We face a multifacited labor crisis. One of the most important aspects of this crisis is the U.S. economy’s diminishing capacity to provide employment. This development is highlighted in the chart below, which shows the trend in civilian employment over the last thirty years. Civilian employment includes all individuals who worked at least one hour for a wage or salary, or were self- employed, or were working at least 15 unpaid hours in a family business or on a family farm, during the week including the 12th of the month when surveys are taken.
As we can see, it took approximately 4 years to bring civilian employment back to its pre-crisis peak after the 2001 recession, and a much longer 6.5 years after the 2008 recession. The number of years it will take to regain the pre-crisis peak employment level after the end of this recession (which remains ongoing) can be expected to be far greater, with some analysts predicting it could take a decade or more. And of course, new people will be entering the labor force over that decade, generating a serious unemployment problem.
The following chart, which shows the trend in the civilian labor force participation rate, offers additional evidence of the economy’s declining job creating potential. The civilian labor force participation rate is calculated by dividing the sum of all workers who are employed or actively seeking employment by the total noninstitutionalized, civilian working-age population.
As we can see, this measure has been in sharp decline for many years, including over the years of expansion that followed the 2008 recession. With growing numbers of working-age people, including prime-age workers, forced to drop out of the labor force even during so-called “good times,” there is little reason to expect a significant improvement in employment opportunities in the years following the end of this recession.
These charts make clear that without a significant change in the workings of the economy, working people are facing a future of declining employment possibilities. And it certainly appears that there is no enthusiasm for major economic changes among the most powerful and wealthy in the United States. According to a recent report, U.S. billionaires saw their fortunes soar by $434 billion during the nation’s lockdown between mid-March and mid-May. And Market Watchreported that the S&P 500 and Nasdaq just booked the best postelection day gains in history. The reason:
Wall Street warmed to the possibility of a divided U.S. government and further political gridlock in Washington following a contentious election, potentially keeping Trump administration’s tax cuts in place no matter who sits in the White House.
In sum, if we want a meaningful economic recovery, one that serves majority needs, we will have to fight for it. Among other things, this means finding new ways to strengthen labor-community coalitions and engage people in sustained conversation about the class-contradictory nature of our economic system.
Workers in the United States are in the midst of a punishing COVID-19 economic crisis. Unfortunately, while a new fiscal spending package and an effective vaccine can bring needed relief, a meaningful sustained economic recovery will require significant structural changes in the operation and orientation of the economy.
The unemployment problem
Many people blame government mandated closure orders for the decline in economic activity and spike in unemployment. But the evidence points to widespread concerns about the virus as the driving force. As Emily Badger and Alicia Parlapiano describe in a New York Times article, and as illustrated in the following graphic taken from the article:
In the weeks before states around the country issued lockdown orders this spring, Americans were already hunkering down. They were spending less, traveling less, dining out less. Small businesses were already cutting employment. Some were even closing shop.
People were behaving this way — effectively winding down the economy — before the government told them to. And that pattern, apparent in a range of data looking back over the past two months, suggests in the weeks ahead that official pronouncements will have limited power to open the economy back up.
As the graphic shows, economic activity nosedived around the same time regardless of whether state governments were quick to mandate closings, slow to mandate closings, or unwilling to issue stay-at-home orders.
The resulting sharp decline in economic activity caused unemployment to soar. Almost 21 million jobs were lost in April at the peak of the crisis. The unemployment rate hit a high of 14.7 percent. By comparison the highest unemployment rate during the Great Recession was 10.6 percent in January 2010.
Employment recovered the next month, with an increase of 2.8 million jobs in May. In June, payrolls grew by an even greater number, 4.8 million. But things have dramatically slowed since. In July, only 1.8 million jobs came back. In August it was 1.5 million. And in September it was only 661,000. To this point, only half of the jobs lost have returned, and current trends are far from encouraging.
The unemployment rate fell to 7.9 percent in September, a significant decline from April. But a large reason for that decline is that millions of workers have given up working or looking for work and are no longer counted as being part of the labor force. And, as Alisha Haridasani Guptawrites in the New York Times:
A majority of those dropping out were women. Of the 1.1 million people ages 20 and over who left the work force (neither working nor looking for work) between August and September, over 800,000 were women, according to an analysis by the National Women’s Law Center. That figure includes 324,000 Latinas and 58,000 Black women. For comparison, 216,000 men left the job market in the same time period.
The relationship between the fall in the unemployment rate and worker exodus from the labor market is illustrated in the next figure which shows both the unemployment rate and the labor force participation rate (LFPR), which is measured by dividing the number of people 16 and over who are employed or seeking employment by the size of the civilian noninstitutional population that is 16 and over.
The figure allows us to see that even the relatively “low” September unemployment rate of 7.9 percent is still high by historical standards. It also allows us to see that its recent decline was aided by a decline in the LFPR to a level not seen since the mid-1970s. If those who left the labor market were to decide to once again seek employment, pushing the LFPR back up, unless the economic environment changed dramatically, the unemployment rate would also be pushed up to a much higher level.
Beyond the aggregate figures is the fact, as Heather Long, Andrew Van Dam, Alyssa Fowers and Leslie Shapiro explain in a Washington Post article, that “No other recession in modern history has so pummeled society’s most vulnerable.”
As we can see in the above graphic, the 1990 recession was a relatively egalitarian affair with all income groups suffering roughly a similar decline in employment. That changed during the recessions of 2001 and 2008, with the lowest earning cohort suffering the most. But, as the authors of the Washington Post article state, “even that inequality is a blip compared with what the coronavirus inflicted on low-wage workers this year.” By the end of the summer, the employment crisis was largely over for the highest earners, while employment was still down more than 20 percent for low-wage workers and around 10 percent for middle-wage workers.
Poverty is on the rise
In line with this disproportionate hit suffered by low wage workers, the poverty rate has been climbing. Five Columbia University researchers, using a monthly version of the Supplemental Poverty Measure (SPM), provide estimates of the monthly poverty rate from October 2019 through September 2020. They found, as illustrated below, “that the monthly poverty rate increased from 15% to 16.7% from February to September 2020, even after taking the CARES Act’s income transfers into account. Increases in monthly poverty rates have been particularly acute for Black and Hispanic individuals, as well as for children.”
The standard poverty measure used by the federal government is an annual one, based on whether a family’s total annual income falls below a specified income level. It doesn’t allow for monthly calculations and is widely criticized for using an extremely low emergency food budget to set its poverty level. The SPM includes a more complete and accurate measure of family resources, a more expansive definition of family, the cost of a broader basket of necessities, and is adjusted for cost of living across metro areas.
As we can see in the above figure, the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed by Congress and signed into law on March 27th, 2020, has had a positive effect on poverty levels. For example, without it, the poverty rate would have jumped to 19.4 percent in April. “Put differently, the CARE Act’s income transfers directly lifted around 18 million individuals out of poverty in April.”
However, as we can also see, the positive effects of the CARES Act have gradually dissipated. The Economic Impact Payments (“Recovery Rebates”) were one-time payments. The $600 per week unemployment supplement expired at the end of July. Thus, the gap between the monthly SPM with and without the CARES Act has gradually narrowed. And, with job creation dramatically slowing, without a new federal stimulus measure it is likely we will not see much improvement in the poverty rate in the coming months. In fact, if working people continue to leave the labor market out of discouragement and the pressure of home responsibilities, there is a good chance the poverty rate will climb again.
It is also important to note that the rise in monthly rates of poverty, even with the CARES Act, differs greatly by race/ethnicity as illustrated in the following figure.
The need to do more
Republican opposition to a new stimulus ensures that that there will be no follow-up to the CARES Act before the upcoming election. Opponents claim that the federal government has already done enough and the economy is well on its way to recovery.
As for the size of the stimulus, the United States has been a lagger when it comes to its fiscal response to the pandemic. The OECD recently published an interim report titled “Coronavirus: Living with uncertainty.” One section of the report looks at fiscal support as a percent of 2019 GDP for nine countries. As the following figure shows, the United States trails every country but Korea when it comes to direct support for workers, firms, and health care.
A big change is needed
While it is natural to view COVID-19 as responsible for our current crisis, the truth is that our economic problems are more long-term. The U.S. economy has been steadily weakening for years. In the figure below, the “trend” line is based on the 2.1% average rate of growth in real per capita GDP from 1970 to 2007, the year before the Great Recession. Not surprising, real per capita GDP took a big hit during the Great Recession. But as we can also see, real per capita GDP has yet to return to its historical trend. In fact, the gap has grown larger despite the record long recovery that followed.
Since 2009, the growth rate has averaged 1.6%. Last year , which Trump touted as the greatest economy ever, it managed to get back to the pre-2008 average of 2.1%, an average that includes two deep recessions (1973–1975 and 1981–1982).
At the end of 2019, actual [real GDP per capita] was 13% below trend. At the end of the 2008–2009 recession it was 9% below trend. Remarkably, despite a decade-long expansion, it fell further below trend in well over half the quarters since the Great Recession ended. The gap is now equal to $10,200 per person—a permanent loss of income, as economists say.
The pre-coronavirus period of expansion (June 2009 to February 2020), although the longest on record, was actually also one of the weakest. It was marked by slow growth, weak job creation, deteriorating job quality, declining investment, rising debt, declining life expectancy, and narrowing corporate profit margins. In other words, the economy was heading toward recession even before the start of state mandated lockdowns. The manufacturing sector actually spent much of 2019 in recession.
Thus, there is strong reason to believe that a meaningful sustained recovery from the current COVID-19 economic crisis is going to require more than the development of an effective vaccine and a responsive health care system to ensure its wide distribution. Also needed is significant structural change in the operation and orientation of the economy.
We need strong unions, all of us. Tragically, even during the pandemic, businesses continue to aggressively resist worker attempts at unionization. And recent decisions by the NLRB only add to worker difficulties.
Here is one example of what is at stake: a recently published study of New York State nursing homes found that mortality rates from COVID-19 were 30 percent lower in unionized nursing homes than in facilities without health care worker unions. By gaining better protection for themselves, unionized workers were also able to better protect the health of those they served.
Although the pandemic makes organizing and solidarity actions more difficult, it is essential that we find effective ways to support worker struggles for strong unions.
Work during the pandemic
Many workers, especially those now celebrated as “essential” or “frontline,” don’t feel safe at work, and for good reason. Many have been denied needed personal protective equipment (PPE) or even information about the health status of their coworkers.
While surveys find that many employers have implemented new workplace cleaning procedures, they also find that a large percentage of workers continue to work without access to PPE, especially masks and gloves. Strikingly, according to one study,
If [worker] access to PPE was limited in our data, policies mandating that workers wear protective gear were even more uncommon. Around a third of workers in restaurants, fast food, coffee shops, and hotels and motels reported requirements to wear gloves. This share was dramatically lower (around 12%) in big-box stores, department stores, retail stores, grocery stores, and pharmacies. The share of workers required to wear gloves was even lower in warehouses, fulfillment centers, and in delivery. Mask requirements were vanishingly uncommon across workplaces, at between 2% and 7% in convenience stores, coffee shops, fast food, restaurants, grocery stores, retail, department stores, and big-box stores. Just 12% of those in fulfillment centers reported a mask requirement, which was significantly higher than the 5% of warehouse and delivery workers.
Adding to the danger, many companies are aggressively trying to keep information about worker infections secret from coworkers and the public. As a Bloomberg Law post explains:
U.S. businesses have been on a silencing spree. Hundreds of U.S. employers across a wide range of industries have told workers not to share information about Covid-19 cases or even raise concerns about the virus, or have retaliated against workers for doing those things, according to workplace complaints filed with the NLRB and the Occupational Safety and Health Administration (OSHA).
Workers at Amazon.com, Cargill, McDonald’s, and Target say they were told to keep Covid cases quiet. The same sort of gagging has been alleged in OSHA complaints against Smithfield Foods, Urban Outfitters, and General Electric. In an email viewed by Bloomberg Businessweek, Delta Air Lines told its 25,000 flight attendants to “please refrain from notifying other crew members on your own” about any Covid symptoms or diagnoses. At Recreational Equipment Inc., an employee texted colleagues to say he’d tested positive and that “I was told not to tell anybody” and “to not post or say anything on social media.”
These policies may help the corporate bottom line, but they endanger workers and those they serve, and thereby help to spread the pandemic.
Without unions, workers have limited ways to force their employers to create a safe work environment. One is to file a complaint with the Occupational Safety and Health Administration. And, despite fears of retaliation, many workers have done just that. As a Brookings blog post reports:
Using data from the Occupational Safety and Health Administration (OSHA), [the figure below] shows the cumulative number of COVID-19 related workplace safety complaints. Between April 20 and August 20, total COVID-19 related workplace safety complaints rose over 350 percent.
Unfortunately, these complaints have achieved little. According to the Bloomberg Law post, “Many thousands of OSHA complaints about coronavirus safety issues have yielded citations against just two companies—a health-care company and a nursing home—totaling about $47,000.” OSHA has still not issued any regulations that address the pandemic.
OSHA rarely sends out inspectors to investigate complaints. The Bloomberg Law post describes one case in which a mechanic at Maid-Rite, a company that supplies frozen meat products to military bases, nursing homes, and schools, wrote to OSHA describing unsafe conditions:
The mechanic says OSHA called him to say it would be sending Maid-Rite a letter instead of coming to inspect the plant, and that was the last he ever heard from the agency about his complaint. Letters between OSHA and Maid-Rite show OSHA told Maid-Rite in April to investigate worker allegations itself, and Maid-Rite wrote back saying that it was providing and mandating masks and that 6-foot distancing sometimes wasn’t feasible.
No changes were made and so other workers followed up with more complaints over the following weeks, leading OSHA to finally send an inspector to the plant. However,
in a break from typical protocol, [the inspector] gave the company a heads-up. “OSHA is here, so do everything right!” a supervisor told staff during the inspection, the mechanic later wrote in an affidavit. Fifteen minutes later, the supervisor returned to say “Never mind,” because the visit was over, the mechanic wrote: “As soon as OSHA left, everything went exactly back to the way it was.”
Unions can help
Unions are far from perfect, but they are one of the most effective means workers have to protect their interests, and by extension those they serve. That point is highlighted by the results of the above noted study on COVID-19 deaths in nursing homes which found that mortality rates from COVID-19 are lower in unionized nursing homes. This is significant because approximately 43% of all reported COVID-19 deaths in the United States have occurred in nursing homes.
The three authors–Adam Dean, Atheendar Venkataramani, and Simeon Kimmel–focused on nursing homes in New York State, which has had over 6,500 COVID-19 nursing home deaths, second only to New Jersey. The authors built a model that attempted to explain the variation in confirmed COVID-19 deaths at these New York State nursing homes with an eye to determining if the presence of a health care union made a difference. They used “proprietary data from 1199SEIU United Healthcare Workers East, the International Brotherhood of Teamsters, and the Communication Workers of America (CWA), as well as publicly-available data from the New York State Nurses Association (NYSNA) to determine if a labor union represented health care workers in each facility.”
Their cross-section regression model also included a range of nonunion variables as possible causes for the variation. These variables included: whether or not a facility had an adequate supply of PPEs, including masks, eye shields, gowns, gloves, and hand sanitizer; the average age of residents; Resource Utilization Group Nursing Case Mix Index of resident acuity, which classifies patient care needs based on diagnosis, proposed treatment, and level of needed assistance with activities of daily living; occupancy rates; staff-hours-to resident-days ratios for RN, CNA, and licensed practical nurses; percent of residents whose primary support comes from Medicaid or Medicare; Overall 5-Star Rating; whether the nursing home was part of a chain; whether the nursing home was for-profit or non-profit; and county-level data on confirmed cases of COVID-19 and population.
Their main regression result, confirmed by several sensitivity tests, was that, taking all the other variables into account, the presence of a health care labor union was associated with a 30% relative decrease in the COVID-19 mortality rate compared to facilities without a health care labor union.
In examining possible reasons for this result, they ran two other regressions. One found that the presence of a health care labor union was associated with a 13.8% relative increase in access to N95 masks and a 7.3% relative increase in access to eye shields. Labor union status was not a significant predictor of access to other types of PPE. The other regression found that the presence of a health care labor union was associated with a 42% relative decrease in the COVID-19 infection rate.
The struggle ahead
There is good reason to believe that the union benefits found by Dean, Venkataramani, and Kimmel in their study are not limited to New York State nursing homes. Unions are one of the most effective ways for workers to ensure access to critical PPEs and implementation of safety regulations, things that as noted above workers desperately seek.
But of course, corporations don’t want to pay the higher costs that come with unionization. They prefer the status quo, where working people are forced to pay far greater costs, individually and collectively. And even in the midst of the pandemic, the NLRB continues to pass new rules making it ever more difficult for workers to unionize.
Workers are increasingly coming to understand that they cannot rely on OSHA or the NLRB to defend their interests. Thus, growing numbers of workers are bravely engaging in direct action, risking their jobs, to fight for their rights and the safety of their co-workers. We need to find ways to support them and improve the broader environment for organizing and unionizing. A recent Gallup poll offers one hopeful sign: approval of unions continues to grow.
The current economic crisis has hit workers hard. Unemployment rates remain high, with total weekly initial claims for unemployment insurance benefits continuing to grow. Recent reports of a sharp rise in median earnings for full-time workers appear to complicate the picture. However, a more detailed examination of worker earnings and employment not only helps to sharpen our understanding of the devastating nature of the current crisis for working people, but makes clear that low wage workers are the hardest hit.
The labor department recently published data showing wages skyrocketing. As Federal Reserve Bank of San Francisco researchers reported in a recent Economic Letter:
Recent data show that median usual weekly earnings of full-time workers have grown 10.4 percent over the four quarters preceding the second quarter of 2020. This is a 6.4 percentage point acceleration compared with the fourth quarter of 2019. The median usual weekly earnings measure that we focus on here is not an exception. Other measures of wage growth—like average hourly earnings and compensation per hour—show similar spikes.
The spike can be seen in the movement in the blue line in the figure below (which is taken from the Economic Letter). As we can see, nominal average weekly earnings for full-time employees grew by 10.4 percent between spring of 2019 and spring of 2020, the fastest rate of growth in nearly 40 years.
While this earnings trend suggests a strong labor market, it is, as the researchers correctly note, highly misleading. The reason is that this measure has been distorted by the massive loss of jobs disproportionally suffered by low wage full-time workers. The decline in the number of full-time low wage workers has been large enough to change the earnings distribution, leading to a steadily growing value for the median earnings of the remaining full-time workers.
In other words, the spike in median earnings is not the result of currently employed workers enjoying significant wage gains. This becomes clear when we adjust for the decline in employment by only considering the nominal median earnings of those workers that remained employed full-time throughout the past year. As the downward movement in the green line in the above figure shows, the gains in medium earnings for those continuously employed has been small and falling.
Disproportionate job losses for full-time low-wage workers
The researchers confirmed that it was low-wage workers that have disproportionately suffered job losses by calculating the earnings distribution of the full-time workers forced to exit to, in the words of the researchers, “nonemployment” – by which they mean either unemployment or nonparticipation — each month over the past two decades.
They began by estimating the yearly share of full-time worker exits to unemployment and nonparticipation. As we see in the figure above, in non-recession years, about 7 percent of those with full-time jobs become nonemployed each year—2 percent become unemployed and 5 percent leave the labor force. During the Great Recession, nonemployment peaked in August 2009 at 11 percent, with most of the increase driven by a sharp rise in unemployment (as shown by the big bump in green area). There was little change in the rate at which full-time workers dropped out of the labor force.
The severity of our current crisis is captured by the dramatic rise in the share of workers exiting full-time employment beginning in March 2020. Exits to nonemployment peaked in May 2020 at 17 percent, with 9 percent moving to unemployment and 8 percent to nonparticipation. Not only is this almost twice as high as during the Great Recession, the extremely challenging state of the labor market is underscored by the fact that the share of nonemployed who chose nonparticipation and thus exit from the labor market was almost as great as the share who remained part of the labor force and classified as unemployed.
The next figure shows the share of workers exiting to nonemployment by their position in the wage distribution. The three areas depict exits by workers in the lowest quarter of the earnings distribution, the second lowest quarter, and the top half, respectively.
As the researchers explain,
In the months following the onset of COVID-19, workers in the bottom 25 percent of the earnings distribution made up about half of the exits to nonemployment. In contrast, the top half of the distribution only accounted for about a third of the exits. . . .
Therefore, the recent spike in aggregate nominal wage growth does not reflect the benefits of pay raises and a strong labor market for workers. Instead, it is the result of the high levels of job loss among low-income workers since the start of the pandemic.
Tragically, low wage workers have not only suffered disproportional job losses during this pandemic. Those who remain employed are increasingly being victimized by wage theft. As Igor Derysh, writing in Salon, notes: “A paper released this week by the . . . Washington Center for Equitable Growth found that minimum wage violations have roughly doubled compared to the period before the pandemic.”
These are indeed hard times for almost all working people but, perhaps not surprisingly, those at the bottom of the wage distribution are suffering the most.
In the month following the May 25th death of George Floyd, the largest technology companies collectively pledged more than a billion dollars in support of racial justice. Sounds like a lot of money, but for these companies it is pocket change. And, despite the accompanying corporate statements of support for structural change to fight racism, there is little indication that they plan to back up their words with meaningful action.
Big tech is riding high
In early June Apple announced the launch of a $100 million Racial Equity and Justice Initiative to “promote racial equality for people of color with a focus on ‘education, economic equality, and criminal justice reform.’” But, as Jay Peters, writing in The Verge, makes clear, the amount doesn’t sound so impressive when you consider Apple’s earnings.
Apple is now the world’s most valuable company. Apple made $6.3 million in profit every single hour in 2019, which means that its initiative cost it about 16 hours of business on one day of the year.
And despite the current recession, big tech appears set to earn more this year than last. “Right now, it’s big tech’s world and everyone else is paying rent,” said Wedbush Securities analyst Dan Ives. “They are consumer staples now and this crisis has bought their growth forward by about two years.”
Combined, Amazon, Apple, Alphabet and Facebook reported revenue of $206 billion and net income of $29 billion in the three months ending in late June 2020. As the New York Timessummarized:
Amazon’s sales were up 40 percent from a year ago and its profit doubled. Facebook’s profit jumped 98 percent. Even though the pandemic shuttered many of its stores, Apple increased sales of all its products in every part of the world and posted $11.25 billion in profit. Advertising revenue dropped for Alphabet, the laggard of the bunch, but it still did better than Wall Street had expected.
Very modest giving
To put tech company racial justice donations in perspective, Peters calculated what the equivalent giving would be for person earning the median U.S. salary of $63,179. The calculation was based on the size of the corporate donation relative to company revenue, not profits, since the $63,179 is the median worker’s salary and not disposable income. As the following figure shows, recent corporate donations are indeed quite modest.
If someone earning the median U.S. salary donated the same percentage of their salary to racial justice as Amazon, that person would be contributing a yearly amount of just $4.17. The median salary annual equivalent donation would also be under $5 for Dell, Intel, Disney, and Verizon. Even for Facebook, the biggest giver, the equivalent would only be $100. It would take Dell 6 minutes to recuperate its pledge, Intel 35 minutes, and Disney and Verizon less than 5 hours.
And as highlighted above, the reason for such modest giving is not low profits. The figure below shows the pledged amount for racial justice by major U.S. tech companies and their annual profit.
As Peters commented:
Frankly, a lot of these contributions seem even tinier when you consider how much these companies tend to spend on other things. AT&T reportedly spent $73 million on a single campaign to advertise its fake 5G network, which is more than three times its commitment to Black lives. At $7 to $11 million per episode, Amazon would have been hard-pressed to produce three episodes of its alternate reality Nazi-fighting show The Man in the High Castle with the money it’s pledged since Floyd’s death. Microsoft spent over $100 million trying to reinvent the Xbox gamepad only to wind up nearly all the way back where it started.
Money isn’t everything
Of course, there are other things companies can do to promote racial equality. One is to change their hiring policies. For example, the share of Black employees is just 3 percent at Google and 9 percent at Apple. And beyond increasing numbers, it is essential that tech companies also reconsider how they organize and compensate the work of their Black employees.
An even more important action tech companies could take would be to listen to their workers and BIPOC leaders and reconsider the nature of the goods and services they choose to develop and sell. Johana Bhuiyan, writing in the LA Times, highlights the contrast between corporate statements in opposition to racism and corporate profit-driven production priorities to illustrate what is at stake. Here is her portrait of Amazon:
What [Amazon] said: “The inequitable and brutal treatment of black people in our country must stop. Together we stand in solidarity with the black community — our employees, customers, and partners — in the fight against systemic racism and injustice.”
What the record shows: At the center of the protests demanding justice for Floyd are calls for police reform and an end to racist policing. Amazon has several contracts with law enforcement agencies. Of particular note, Ring, Amazon’s home surveillance company, has partnerships with at least 200 police departments across the country, as Motherboard has reported. As part of its contract with some police departments, Ring incentivized police to encourage citizens to adopt the company’s neighborhood watch app — which has reported issues with racial profiling. After reviewing more than 100 posts on the app, Motherboard found that the majority of people who users deemed “suspicious” were people of color.
“Given the reality of police violence, with impunity, impacting primarily people of color in the United States, these kinds of acts threaten the lives of third parties who are simply, in some cases, doing their jobs or living in their own neighborhoods,” Shahid Buttar, director of grass-roots advocacy for the Electronic Frontier Foundation, told Motherboard.
Amazon also licenses facial-recognition software, called Rekognition, to law enforcement agencies. A study by the MIT Media Lab found that the software performed worse at identifying the gender of individuals with dark faces, although Amazon contested the validity of the findings. Other facial-recognition algorithms have struggled to accurately identify non-white faces.
We shouldn’t forget that it is the strength of the Black Lives Matter movement that pushed corporations to project themselves as supporters of racial justice and make their well-publicized donations. And it is better to have them promoting racial equality than opposing it. But to this point, corporate actions remain largely limited to public relations statements. Since real change will require a fundamental rethinking of the organization and aims of corporate production, we shouldn’t count on CEOs going beyond that in any meaningful sense in the near future. At the same time, as the movement for change grows both inside leading tech companies and in the broader community, we shouldn’t discount the possibility of winning meaningful shifts in corporate policy.
The U.S. economy is undergoing a major transformation largely driven by the coronavirus pandemic. One hallmark of that transformation is the explosion in what is called “remote” work.
In 2017, according to a Census Bureau study, only 3 percent of full-time workers in the United States reported that they primarily worked from home. Today, in response to the pandemic, some 42 percent of the U.S. labor force is working from home—with only 26 percent still working on-site.
Corporate leaders appear to have embraced this shift to at-home work and are pursing the use of new technologies designed to increase managerial control over the remote work process. The response of workers to these changes is still evolving.
The pandemic and the corporate embrace of at-home work
Although most corporations initially viewed the shift to remote work as a necessary short-term response to government mandated closures and consumer and worker health concerns, a number are now planning for a permanent, post-pandemic increase in its use. As the New York Timesreports:
Facebook expects up to half its workers to be remote as soon as 2025. The chief executive of Shopify, a Canadian e-commerce company that employs 5,000 people, tweeted in May that most of them “will permanently work remotely. Office centricity is over.” Walmart’s tech chief told his workers that “working virtually will be the new normal.”
Quora, a question-and-answer site, said last week that “all existing employees can immediately relocate to anywhere we can legally employ them.” Those who do not want to go anywhere can still use the Silicon Valley headquarters, which would become a co-working space.
And these large firms are not alone. As Luke Savage, writing in Jacobin, notes:
With the lockdown still only a few weeks old, a survey of company CFOs by PricewaterhouseCoopers found that almost 30 percent were already planning to reduce their business’s physical footprint, with an April study by Gartner suggesting that some three-quarters were planning to shift at least some employees to remote work on a permanent basis.
It’s a different world
Of course, this is not the first time that corporations have embraced remote work. A number—including such major companies as IBM, Aetna, Best Buy, Bank of America, Yahoo, AT&Tand Reddit—actively promoted telecommuting as recently as 15 years ago. But they all eventually reversed course, concluding that employee productivity, loyalty, and innovation suffered. Tech companies, in particular, responded by building expansive and expensive new facilities that offered a range of free on-site benefits such as communal cafeterias and gyms to keep employees motivated and loyal.
Because of this history, some analysts doubt that the current corporate celebration of remote work will last long. But there is reason to believe that this time is different. Certainly, early indications are that at-home workers remain focused and hard at work. Savage cites a Globe and Mail article that leads with this head: “Employers used to believe remote workers were happier but less productive. Turns out it’s the opposite.” The Globe and Mail article goes on to say:
One fear about shifting to a work-from-home culture is that it would lead to operational chaos: missed meetings, spotty WiFi, games of broken telephone (both figurative and literal). Instead, even companies with tens of thousands of employees are finding that the IT infrastructure is holding up and so are lines of authority. Workers are responding to their emails and joining Zoom calls at approximately the right time. Everyone is always reachable.
The Globe and Mail is not alone in finding evidence of high worker productivity. For example, the New York Timesquotes John Sullivan, a professor of management:
“The data over the last three months is so powerful,” he said. “People are shocked. No one found a drop in productivity. Most found an increase. People have been going to work for a thousand years, but it’s going to stop and it’s going to change everyone’s life.” Innovation, Dr. Sullivan added, might even catch up eventually.
And Bloomberg came to much the same conclusion, reporting that corporate executives at several different finance and investment companies all see evidence of gains in productivity.
Underlying these gains are three potentially long-lasting developments that provide support for the view that the current corporate commitment to expanding remote work needs to be taken seriously. The first is the availability of relatively low cost and easy-to-use online communication platforms like Zoom that allow managers to easily communicate with their workers and for workers to engage in group work when necessary. The online infrastructure for corporate communication continues to improve.
The second is the recent and ongoing development of technologies that allow management to monitor and evaluate the online work effort of their employees. As the New York Timesexplains: “Demand has surged for software that can monitor employees, with programs tracking the words we type, snapping pictures with our computer cameras and giving our managers rankings of who is spending too much time on Facebook and not enough on Excel.”
Of course, corporations have long used technology to monitor and direct work, and large companies like Amazon have pioneered the development and use of software for directing and intensifying the pace of warehouse workers. Josh Dzieza, writing in the Verge, offers an example:
Every Amazon worker I’ve spoken to said it’s the automatically enforced pace of work, rather than the physical difficulty of the work itself, that makes the job so grueling. Any slack is perpetually being optimized out of the system, and with it any opportunity to rest or recover. A worker on the West Coast told me about a new device that shines a spotlight on the item he’s supposed to pick, allowing Amazon to further accelerate the rate and get rid of what the worker described as “micro rests” stolen in the moment it took to look for the next item on the shelf.
But as Dzieza makes clear, there is also growing availability and use of new software that makes it possible for corporations to easily oversee the work effort of their online workers. One example is WorkSmart. Dzieza describes the experience of a software engineer in Bangladesh who was required to download the software as a condition of his employment with Austin-based Crossover Technologies. Among other things:
The software tracked his keystrokes, mouse clicks, and the applications he was running, all to rate his productivity. He was also required to give the program access to his webcam. Every 10 minutes, the program would take three photos at random to ensure he was at his desk. If [he] wasn’t there when WorkSmart took a photo, or if it determined his work fell below a certain threshold of productivity, he wouldn’t get paid for that 10-minute interval.
Other recently developed software programs currently in use to monitor the work of call center employees could easily be used to monitor home-based employees doing the same work. Recording the number and length of calls is old hat. These new programs, using artificial intelligence, can now evaluate the “emotional” tone of the worker’s voice during their conversations with customers. Some programs can even “coach workers in real time, telling them to speak more slowly or with more energy or to express empathy.” The growing corporate interest in remote work can be expected to spur the development of ever more sophisticated products that will allow even tighter control over at-home work and more detailed evaluation of at-home workers.
The nature of the ongoing transformation of the economy is the third reason that this period may well mark the start of a major shift in the location of work. Simply stated: unemployment is now high and, when possible, workers welcome a safe alternative to on-site employment.
In the past on-site work was the standard corporate practice and most workers preferred it. Thus, workers were generally able to undermine individual corporate attempts to push them into working from home. Now, not only is remote work the new norm, because of the virus it has actually become the desired alternative. With fear of the virus likely to remain for some time, corporations are in a far stronger position than in the past to normalize remote work and win worker acceptance of new work relations even after the pandemic is brought under control.
Benefits and costs
It is easy to understand why corporations are excited about increasing their use of remote work. One reason is that it will allow them to greatly reduce their spending on facilities. Gains on the labor side are likely even larger. Companies will be able to expand their job search, hiring workers who may live thousands of miles away from the location of corporate operations with no need to pay moving expenses and with the possibility of cheapening the cost of labor by paying salaries commensurate with local living costs. And, as a bonus, the more a company’s labor force is geographically separated and isolated, the harder it will be for its workers to build the bonds of solidarity needed to challenge management demands.
The use of remote work opens up possibilities for even greater labor savings by making possible the reclassification of new hires into independent contractors. After all, many remote workers are already paying for the equipment they need (desks, chairs, computers, webcam), the supporting technological infrastructure (high speed Wi-Fi), and office maintenance (cleaning).
Of course, most workers also viewed at-home work positively, at least initially. They appreciated being able to remain employed and work safely from their homes during the pandemic. But the costs of remote work, as currently structured, are mounting up for workers.
As a Bloomberg article summarizes, “We log longer hours. We attend more meetings with more people. And, we send more emails.” The article highlights a recently published study by the National Bureau of Economic Research which was based on surveys of some 3 million people at more than 21,000 companies across 16 cities in North America, Europe and the Middle East. The researchers:
compared employee behavior over two 8 week periods before and after Covid-19 lockdowns. Looking at email and meeting meta-data, the group calculated the workday lasted 48.5 minutes longer, the number of meetings increased about 13% and people sent an average of 1.4 more emails per day to their colleagues.
An online survey of 20,262 people in 10 countries by the technology company Lenovo Group Ltd. found that “A disturbing 71% of those working from home due to Covid-19 have experienced a new or exacerbated ailment caused by the equipment they now must use. . . the most common symptoms [being] back pain, poor posture (e.g., hunched shoulders), neck pain, eye irritation, insomnia and headaches.”
Looking just at the United States, a study done by NordVPN, based on tracking when at-home workers connected and disconnected from its service, found that at-home workers logged three hours more per day on the job than before the start of city and state lockdowns. And a survey of 1,001 U.S. employees by Eagle Hill Consulting found that “By early April, about 45% of workers said they were burned out. Almost half attributed the mental toll to an increased workload, the challenge of juggling personal and professional life, and a lack of communication and support from their employer.”
Given the direction of corporate planning, it is likely that the costs of remote work for workers—physical and emotional—will only increase. As one public relations executive explained when discussing why his company now views remote work so positively: The technology is better. Moreover, “we have rules now,” he said. “You have to be available between 9 a.m. and 5:30 p.m. You can’t use this as child care.”
For many workers, it is the pandemic, with its forced isolation of family in small housing units, that has made remote work so difficult and emotionally wearing. And, for many, the experience of on-site work before the coronavirus pandemic forced closures was also far from ideal. Thus surveys show, as the New York Timesreports,
Most American office workers are in no hurry to return to the office full time, even after the coronavirus is under control. But that doesn’t mean they want to work from home forever. The future for them, a variety of new data shows, is likely to be workweeks split between office and home.
For example, a survey by the company Morning Consult done in mid-June found that:
Overall, 73 percent of U.S. adults who have careers where remote work is possible report that the pandemic has made them feel more positively about the prospect of remote work. And given the option, three quarters of these workers say they would like to work from home at least 1-2 days a week once the pandemic is under control.
At issue, then, is who will decide the place of work and perhaps even more importantly, the conditions of work, including remote work. Current indications are that corporations plan to push workers into more remote work than surveys suggest they want, and definitely under conditions of surveillance and evaluation that they will find objectionable. It is less clear whether those working remotely or threatened with remote work will be able to organize rapidly enough to force corporations to bargain with them over both the location of work and the work process, on- and off-site, including the aim and uses of new technology.
If there is a reason for optimism it is that there appears to be a growing solidarity between white- and blue-collar workers in the tech industry that includes support for unionization, especially at some of the large firms like Google and Amazon. As Tyler Sonnemaker and Allana Akhtar, writing for Business Insider, describe:
Even a year ago, the idea that tech’s cafeteria workers and office workers were on the same page about forming a labor union would have seemed unthinkable.
The recent wave of employee activism and organizing efforts represents a widening rift between the industry’s rank-and-file employees and its executives. For the first time, developers and product managers with higher pay and closer ties to management are siding with their lower-paid colleagues in warehouses, cafeterias, and contract gigs. . . .
Frequent leaks to the media – notable given the historically tight-knit culture at tech companies – and the emergence of groups like Rideshare Drivers United, Tech Workers Coalition, Athena, and Amazonians United are just two signs of the rise in employee activism in recent years. But over the past few months, emboldened by the pandemic and racial justice protests, workers at startups like Away and giants like Facebook have become a vocal chorus of critics.
Passively allowing management to use technology to shape the work process and the resulting final product is a recipe for ever worsening working and living conditions for the great majority of working people. Hopefully, the ongoing worker agitation and organizing in the United States will continue regardless of the unpredictable nature of the pandemic, producing a shared critique of profit-driven work and support for new organizational forms, including unions, that can fight for a more humane economic system.
Although the date drew little notice in the U.S. media, July 27, 2020 marked the 67th anniversary of the Korean War Armistice Agreement, an agreement that ended the fighting but not the war between the United States and the Democratic People’s Republic of Korea (North Korea).
The government of North Korea continues to seek a peace treaty with the United States, with the support of the current president of the Republic of Korea (South Korea), to finally bring an end to the Korean War. The leadership of the United States remains opposed. The costs of maintaining this state of war are immense. Tragically, the media has done little to educate Americans about the actual history and consequences of U.S. policy towards Korea
Founded in 2005, the Korea Policy Institute (KPI) is an independent research and educational institute that works to increase popular awareness and understanding of developments on the Korean peninsula and to promote a U.S. policy towards Korea that respects the Korean peoples’ desire for peace, sovereignty, reconciliation, and the reunification of Korea—I am a member of its board of directors. In line with its mission, KPI has just published its second reader—this one titled Seeking Peace on the Korean Peninsula.
This 93-page reader, which features articles from leading analysts, journalists, and scholars in the United States, Asia, and the Pacific, offers critical context to developments on the Korean Peninsula. The reader is divided into four sections:
1. The Continuing Korean War 2. The Costs of U.S. Sanctions on North Korea 3. Trump’s North Korea Legacy: Failed U.S.-DPRK Summits 4. Time for a People’s Policy Toward Korea.
There is great need for a new U.S. policy towards Korea, one that promotes peace on the Korean Peninsula:
The ongoing state of war between the United States and North Korea helps to fuel an ever-growing U.S. military budget, an expanding U.S. military presence in Asia, the militarization of Japan, and an East Asian arms race, all at the expense of needed spending on social programs.
U.S. hostility towards North Korea strengthens conservative political forces in South Korea, restricting the ability of labor and other social movements to freely pursue progressive political changes.
U.S. policy towards Korea continues to undermine attempts by the leaders of South Korea and North Korea to end the division of Korea, keeping millions of families separated, including some 100,000 Korean Americans.
U.S. sanctions on North Korea, which deny the country access to international aid, loans, and investment, and severely limit the country’s ability to engage in international trade, are causing wide-spread human suffering in North Korea, especially among women and children.
U.S. militarism encourages the militarization of South Korea by pressuring the country to engage in joint military exercises that involve training for invasion and occupation of North Korea; purchase and deploy new U.S. missile defense systems aimed at both China and North Korea; construct new naval facilities for use by U.S. warships; and boost its military spending to, among other things, pay a large share of the costs of hosting U.S. bases and obtain increasingly expensive U.S. military weaponry.
And then there is the real threat of a new, nuclear Korean War, with human and environmental costs that cannot be calculated.
To learn more about these and related issues, check out the new KPI reader, Seeking Peace on the Korean Peninsula. And if you have the time, you might want to check out the 130-page, 2018 KPI reader, U.S. Policy and Korea, which can also be viewed and downloaded for free.