Reports from the Economic Front

a blog by Marty Hart-Landsberg

The “Just-in-Time” Worker

Business Week recently published an article on “The Disposable Worker.”  It is well worth reading.

It highlights the ways in which corporations have used their international mobility and the recession to restructure work relations.  As a consequence we are getting a bigger and bigger disconnect between what corporations want and what working people need.  This means that our crisis is not a corporate crisis and there is no reason to expect that those with power will be responsive to majority interests.  Said differently, if we don’t like existing trends we will have to marshal our collective power to change them.

Here are a few quotes from the article:

Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, says the brutal recession has prompted more companies to create just-in-time labor forces that can be turned on and off like a spigot. “Employers are trying to get rid of all fixed costs,” Cappelli says. “First they did it with employment benefits. Now they’re doing it with the jobs themselves. Everything is variable.” That means companies hold all the power, and “all the risks are pushed on to employees.” . . .

In a typical downturn, the percentage decline in payrolls is about the same as the percentage decline in gross domestic product. But in the recessions that began in 2001 and 2007, the decline for payrolls was much steeper—1.8 percentage points more during the latest downturn. Worse yet, only about 10% of the layoffs are considered temporary, vs. 20% in the recession of the early 1980s.

All that cutting [of workers] has been good for corporate profits. Earnings rebounded smartly as companies kept payrolls down after the 2001 recession; by 2006 profits had hit a 40-year high as a share of national income, at 10.2%, according to Bureau of Economic Analysis data. The credit bust sent that figure plunging to 5.6% during the final quarter of 2008. But over the past year corporate profits’ share has rebounded to 7.4% of national income, equaling the 40-year average. . . .

The Iowa Policy Project, a nonpartisan think tank, estimates that 26% of the U.S. workforce had jobs in 2005 that were in one way or another “nonstandard.” That includes independent contractors, temps, part-timers, and freelancers. Of those, 73% had no access to a retirement plan from their employer and 61% had no health insurance from their employer, the Iowa group said. . . .

When employment in the U.S. eventually recovers, it’s likely to be because American workers swallow hard and accept lower pay. That has been the pattern for decades now: Shockingly, pay for production and nonsupervisory workers—80% of the private workforce—is 9% lower than it was in 1973, adjusted for inflation.

Check out this Business Week page; it includes charts illustrating the growing length of time it takes employment to recover from a recession.

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