Are Wage Cuts Also ‘Structural’?

A phrase that has entered the political lexicon recently is ‘structural unemployment’, which means that the unemployment were seeing is not due to a recessionary (or depressionary*) downturn, but represents job loss due to a fundamental restructuring of the economy. In the NY Times, we find an article about wage cuts (boldface mine):

Local and state governments, as well as some companies, are squeezing their employees to work the same amount for less money in cost-saving measures that are often described as a last-ditch effort to avoid layoffs….

Pay cuts are appearing most frequently among state and local governments, which are under extraordinary budget pressures and have often already tried furloughs, i.e., docking pay in exchange for time off. Warning that they will have to lay off people otherwise, many governors and mayors are pressing public employee unions to accept a reduction in salary of a few percentage points, without getting days off in exchange….

Mr. Chaison says the latest wave of private-sector pay cuts is reminiscent of those in the early 1980s, when many companies — especially those with unionized work forces — cut wages in response to a recession, intensified competition from imports and new low-cost competitors spawned by government-backed deregulation. Now, as then, companies frequently say that compensation for unionized workers, in both wages and benefits, is out of line. For instance, the Westin Hotel in Providence, R.I., after failing to reach a new contract with its main union, has sliced wages 20 percent, saying its previous pay levels were not competitive with those at the city’s many nonunion hotels.

Not exactly sure how that’s ‘structural’, since it’s apparently been happening for three decades. But maybe this will explain things?

At the Mott’s apple juice and sauce plant in Williamson, N.Y., 30 miles east of Rochester, 300 unionized workers have been on strike since May 23 over management’s demands for a $1.50-an-hour wage cut, a reduction in company 401(k) contributions and higher employee contributions to health insurance. The strikers are seething over management’s demands because the plant has been profitable and Mott’s corporate parent, the Dr Pepper Snapple Group, reported record profits last year.

They keep piling more and more work on us, but they want to pay us less and less,” said Michele Morgan, a Mott’s employee. “It’s a slap in the face.”

Chris Barnes, a company spokesman, said the Mott’s employees were overpaid, at $21 an hour, given that the average in the area for food manufacturing workers was $14 an hour. The union disputes those figures.

“Our only objective,” Mr. Barnes said, “was to continue to enhance the competitiveness and flexibility of our operations.”

This doesn’t seem structural at all–they’re making large profits. Hmm.

I’m sure some jobs have been lost due to structural factors, but, as far as I can tell, employers are using this as an opportunity to cut payrolls through salary cuts and worker firings, pile more work on existing workers, and ship jobs overseas to raise profits. The current fiscal and monetary policies are a perfect opportunity to grab the worker by the balls, so they’re doing it (why are Marxists never around when you need them?). This phenomenon is not like gravity, in that things fall down whether you like it or not; there are entities and individuals with agency, and they have agendas that serve many Americans poorly.

Or maybe I’m just being cynical. After all, who am I to stand in the way of enhancing the competitiveness and flexibility of business operations?

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5 Responses to Are Wage Cuts Also ‘Structural’?

  1. BaldApe says:

    I worked in a union retail job for 30 years. Once the Alzheimer’s President paved the way for pulling the rug out from under workers, we had to listen to the same old song at every contract negotiation. “We can’t afford to pay you decently and stay competitive.”
    Of course, a couple of months later, we were getting a letter announcing how proud they were of the most profitable year ever.
    The sad thing, as always, is that working people buy this crap. People who don’t stand to inherit a paper clip cry about the “death tax.” Joe the not-a-plumber complains about taxes he doesn’t pay on a business he doesn’t own that doesn’t make the kind of money he was talking about anyway. Even when tax cuts are clearly and obviously only for the rich, as in the current proposed change in tax laws, poor people are bamboozled into supporting them.
    But I’m not an economist, and my wingnut family assures me that I don’t know what I’m talking about. They support this with quotes from “Caribou Barbie” Palin, Michelle “Prom Queen of Wingnuttia” Bachmann, and such impartial sources as the Washington Times, Fox News, and the Wall Street Journal. [/irony]

  2. NewEnglandBob says:

    Great article, thanks.

  3. jrkrideau says:

    I don’t see anything structural there. I see greed.
    I believe that the buggy whip makers in the 1920’s were victims of structural unemployment.

  4. Bud Bristol says:

    I happen to work at the motts plant and I can tell you this is all greed and nothing but. The top three in the company raised their own salaries by over 113% in the last year. They gave local management a 2% adjustment as well as a serious bonus..(see plant manager’s new boat). There are many other factors to which we are on strike that you do not list. feel free to contact me and or leave me a contact num and I will give you a complete unabridged version of the current situation.

  5. rugosa says:

    While doing some routine shopping in a CVS a few days ago, I noticed the dearth of cashiers. When the line got long, an automated voice summoned someone out of the back to work the register. Two things occurred to me (a)Corporate will spend any amount on technology rather than have a person do a task and (b) in this economy, there can’t possibly be a shortage of people willing to work even for crap wages. Yep, greed is good again.

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