Where are we headed?
The significant finding in a recent US Census report (Income, poverty, and health insurance coverage in the United States: 2010) isn’t that the poverty rate is highest since 1993. Rather it is that the poverty rate had been steadily declining between 1993 (15.1%) and 2000 (11.3%) and steadily increasing to its present 15.1% since 2000. What caused a worsening upward trend to emerge from what had been an improving outlook? What policies affected the difference between these two periods?
As quoted in a Huffington Post article, historian Alice O’Connor (University of California, Santa Barbara, and author of Poverty Knowledge: Social Science, Social Policy and the Poor in Twentieth Century U.S. History) said “a growing number of Americans have come to understand that the availability of living-wage jobs plays a large role in determining a family’s economic state.” O’Connor points to “the role social policies—such as those that make collective bargaining difficult, or tax income from work and investments differently—contribute to increased poverty.”
As reported, O’Connor claimed the combination of a cut in social safety net measures and many workers earning less than they did three decades ago, coupled to a diminished access to health insurance and other benefits, adversely impacts the rate of poverty. Accordingly, O’Connor stated, “what we are looking at today is really the result of decades of eroded protections for workers and just a declining number of good jobs.”
Scarcity of jobs gives the upper hand to those offering jobs and so in our egoistic economic system those in authority might even create scarcity of jobs for greater personal gain and profit.
Management’s New (old) Idea
The two-tier wage structure of the Chrysler Corporation (as well as in GM and Ford) wherein labor for their U. S. manufacturing is hired at the rate of $14/hour. Some might say this creates more jobs, but if the jobs weren’t there already a low hourly rate wouldn’t create them. That is to say, it doesn’t create jobs it just makes it far more profitable for corporations who have the work to hire people to perform that work. It appears that it is an issue of where corporations make more with the cash they have on hand, in the financial markets or in the labor market. The guiding premise is if a corporation can get people to work for nothing it could make a lot of money.
Everyone knows—especially graduates of business school—that the business of business is profit! You see, following the precepts of egoistic economics, corporations aren’t committed to making products and services, they are committed to making profit—products/services are mere costs to the business of making profit.
So what material self-interest maximizing CEO wouldn’t hire people at a low wage to fill a work need! It is not to hard to imagine that we could have corporations bringing back (to the U.S.) previously exported jobs as wages are lowered. As more corporations follow suit we have the prospect of becoming the greatest technologically advanced third-world wage provider. Unfortunately for these manufacturers—who seem ignorant of the lesson from Henry Ford—those they employ won’t be among the pool of customers who will be able to purchase the products they are producing.
Given the current economic recession, with millions of people out of work for years and meager future prospects people are happy to have any job that pays—even a $14/hour job (at least for a while). When there are no jobs, then even not-so-good jobs start to look better. So initially a low-wage structure will be accepted because $14 is more than $0.
According to Herzberg’s Two Factor Theory pay is a dis-satisfier. That is, if a hygiene factor, which pay is, is not adequately realized then people become dissatisfied. Dissatisfied people will become disenchanted with their work situation. When inequality exists people tend to resolve it, if not materially then psychologically as they disengage from their work. Also a little understanding of Maslow’s Needs Hierarchy tells us that if a lower level need is unmet—and pay is part of the second level security needs cluster—then higher level needs do not gain attention. Consequently this means that the quality of work produced will inevitably suffer. Yet another lesson not learned by management in authority.
Moreover, as more people realize that $14/hour (which is approximately $29,000 annually) is not a living wage for a family, the sense that our society is a two-tier society, the haves versus the have-not, will spread. It will be a society divided, one in which labor serves the capitalist. This wage level is just barely above the poverty line for a family of four, thus ensuring the vast majority of people will be among the working poor.
Further this scheme is subjugation of the working class—just as was the case during the Roman Empire—and is tantamount to an enlightened self-interest form of slavery, a slightly more humane form but it is domination nonetheless.
If more manufacturers follow suit, coupled to government officials advancing austerity, the elimination of minimum wage and the evisceration of unions, then the poverty rate is likely to continue its climb upward. Correspondingly, the push to privatize government services will make the wealthy wealthier and hasten the decline of a society of, for and by the people. As this unfolds we will likely need far stronger social safety net programs not weaker ones. Could this be the beginning of the fall?
Sure this level of wage makes more jobs available and benefits the organization’s bottom line, but it does little for advancing the prosperity America. It is about time we revolutionize our system of economics.