With consumer demand still down, American wage-earners are working an average of between 32-33 hours of work per week, and pay levels are dropping like stones tossed off the “Lean” Tower of Pisa. Overtime used to be a regular feature of so many paychecks. Now, for most that is becoming a distant memory. Labor unions are getting used to “give backs,” in pay as well as benefits, and entire industries facing extinction, from newspapers to automakers, have seriously reset their pay-benefits packages for their vastly reduced pool of remaining labor.
Companies are reexamining their practices in engaging outside vendors. Professionals are hardly exempted. There are major corporations who won’t accept any increases in hourly billing rates from top law firms, and some won’t allow new young attorneys or law students clerking for the summer to be charged at all. Some are requiring law firms to place a dollar cap on services that really cannot be ascertained at the inception (a major lawsuit for example), allowing a reexamination only under extraordinary circumstances.
During the early phases of this economic malaise, folks were laid off, but the pay levels of the remaining workers remained the same, even as overtime and other benefits might have been reduced. Now, even the basic wage and salary structures are being challenged. The October 13th NY Times: “In recent decades, layoffs were the standard procedure for shrinking labor costs. Reducing the wages of those who remained on the job was considered demoralizing and risky: the best workers would jump to another employer. But now pay cuts, sometimes the result of downgrades in rank or shortened workweeks, are occurring more frequently than at any time since the Great Depression.” There are no “other employers” to jump to.
Here in California, there are cuts going on in the State University and College system. We see governments elsewhere (Georgia, for example) slashing pay. Big companies – airlines, computer manufacturers, steel companies, etc. – are reducing their compensation levels as well. Forced unpaid leaves and furloughs are another tool of wage and salary reduction. The trend is less than subtle.
“The Bureau of Labor Statistics does not track pay cuts, but it suggests they are reflected in the steep decline of another statistic: total weekly pay for production workers… representing 80 percent of the work force. That index has fallen for nine consecutive months, an unprecedented string over the 44 years the bureau has calculated weekly pay, capturing the large number of people out of work, those working fewer hours and those whose wages have been cut. The old record was a two-month decline, during the 1981-1982 recession…. ‘What this means,’ said Thomas J. Nardone, an assistant commissioner at the bureau, ‘is that the amount of money people are paid has taken a big hit; not just those who have lost their jobs, but those who are still employed.’” The Times.
Yeah, I’ve seen the reports that 80% of economists think our recession is over. For them maybe. We’re measuring the end of the recession not by what life is like for the average American… but by the stock market rise. The recession may have ended for the big financial institutions, but not for everybody else. Who are we kidding?!
We bailed out Wall Street financial institutions in significant part to put lending capacity back in the market – taxpayer money – but they didn’t lend, particularly to the small businesses that needed loans most and hold the key to jobs in this country. The used their new found taxpayer-supported wealth to play the market and get rich again. Goldman Sachs shareholders (mostly Goldman executives), management and professionals – earning money made on the economic upswings and downswings built on the misfortunes of the masses – have made a killing with one of the most profitable years in their history - $3.03 billion in earnings just announced and $5.35 billion in total compensation paid from July-September. JP Morgan is on a similar track.
I have a dear friend in New York real estate. With prices down, business in Manhattan is brisk; apartments and homes are selling like hotcakes. What, no mortgage money to be found? No problem. The buyers are paying cash! The Dow crossed 10,000 (for a while)… bet they’re cheering at the unemployment office. Oh, they’re not.
I’m Peter Dekom, and I approve this message.