Trouble On The Horizon

It seems that the only news is bad news anymore. One of my recent blog entries described our recent week, and boy was it a week. However, it doesn’t look like it is getting better. As I stated yesterday greed is getting the better of us. It made me think of an Old Testament event where God provided food in the wilderness for the Israelites, Manna and Meat. God’s word stated that those that gathered little had plenty left over, and those that gather much did not. It may be that what we are going through right now is the result of all of us attempting to gather too much, and living beyond our means. However, the lion’s share of the problem just may be with corporate leaders in this country.

According to Joe Light in the Wall Street Journal this morning Exiting Workers Are More Disgruntled. It appears that recent research found that three-quarters of departing employees state that they would not recommend their employer to others who may be thinking about applying there. In 2008 that number was 42%. This indicates a severe drop in employee satisfaction.

Other indications of relational problems in the workplace are Verizon and Continental Airlines. Yesterday 45,000 Verizon employees walked off the job and went on strike. They stated that they are fighting for middle class wages. Field Technicians can make as much as $100,000, and an additional $50,000 in benefits. Verizon has stated that current wages were established in a time when competition was not as strong, and thus need to be reduced.

The other example of current management/labor relationships happened at the Annual Stockholder’s Meeting for Continental. While airlines were hemorrhaging cash, Pilots had their wages cut in half and pensions eliminated. Now that the airlines are back in the black Pilots want some of what they lost back.

Managers are saying that costs need to be cut to maintain profitability, and employees are saying that they cannot live on the wages that corporations want to pay them. This is truly a dilemma.

Robert Reich in his 2010 book, Aftershock, gives some very interesting details about our current situation. In fact he states that our current economic situation will not improve until we deal with our social and political predicament.

Socially the American middle class began to get hit in the 1980s by global competition and labor-saving technology. I truly believe this, and if we do not address the structural changes of our economy by providing educational opportunities for our middle class workforce we are destined to maintain a 9% natural unemployment rate. In fact, according to Reich our current political policies are destroying our middle class. He argues that policies of privatization and deregulation have attacked and diminished labor unions, while cutting taxes for the wealthy have shredded social safety nets. Overall the result has been stagnant wages for the middle class, and the reduction of jobs with living wages being replaced with lower paying jobs at Wal-Mart.

Although I believe in the efficiencies of the free market, Robert Reich just may have a point. In 1970 the richest 1% of our nation received about 9% of the nation’s income. By 2007, the top 1% of the richest people in our nation now accumulate 23.5% of the nations income. These numbers are not falsifications, I have read them in many different books and articles. The facts speak for themselves. No wonder people are upset with the companies they work for.

Karl Marx discussed this phenomenon many years ago when he wrote on exploitation. The Capitalist keeps the Proletariate living on subsistent wages, thus under the control of the company. This according to Marx will lead to revolution. I am not a Marxist, but I do believe that one should learn from the enemy.

Maybe I am stupid, but it seems to me that having 1% of the people of the US paying a reduced tax is worse that having 96% of the labor force working and paying a fair tax. I have to agree with Reich on this one. “Unless Americans address the deeper distortion in our economy, it will continue to haunt us. Without enough purchasing power, the middle class will be unable to sustain a strong recovery. Over the longer term, the economy will stagnate.” This means we will need to live with higher rates of unemployment and lower wages, which in turn will lead to greater levels of conflict unless we deal with it now.

Managers, learn from Moses. Tell your corporations that if you pay your employees a living wage, and give them creative work to do, you will be able to compete with the world (look at Germany). Happy employees take care of customers and work hard. This results in customer retention, and greater sales. Instead of 20% profits maybe you have to live with 18%. I think shareholders would be ok with that.

And that is my thought for the day!

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