Tag Archives: wages

Productivity, Inequality, Poverty

18 Aug

Obama made waves two days ago when he asked public employees for “shared sacrifice and burden sharing,” on the grounds that they were somehow doing better off than private employees. Daily Kos showed┬áthat average compensation for public employees is less than private ones, but that comparison isn’t really the point, or at least the only point. The real howler of Obama’s speech is the implication that there has not been “shared sacrifice and burden sharing” up until now. It’s not just that public workers, even in states with Democratic governors, like New York, have already had to accept yet another round of wage and benefits cuts. The point is that, since the late 1960s, workers in general have been keeping hold of less and less of what they produce. Doug Henwood’s ‘productivity wedge’ shows the growing gap between productivity and compensation:

Henwood’s graph shows the gap in terms of overall compensation (wages plus benefits). As the graph below demonstrates, the gap between productivity and compensation is largely in terms of flatlining real wages:

Asking workers to sacrifice benefits, on top of stagnating wages, is just piling on. And it misses the point that most workers have been “burden and sacrifice sharing” for more than thirty years. Obama’s typically tone deaf appeal used almost exactly the same language as managers and CEOs used during the labor battles of the 70s and 80s. The promise then, of course, was that, if workers worked harder, increased their productivity, and sucked it up then, then they would reap gains sometime in the future.

We can find a similar mismatch between productivity and real gains on a global scale. Consider the relationship between food production and malnourishment. Below is data showing the enormous increase in productivity in wheat. It shows that the amount of land dedicated to world wheat production has remained flat, while wheat production dramatically increased:

In 2011, enough wheat was produced to make 405 loaves of bread per person per year. Or, just over one loaf per person per day (our calculations, and graph based on data taken from the USDA). Yet, as this graph from the UN Food and Agriculture Association shows, during the same time span global undernourishment has increased:

We have more than enough to feed the global population, yet about one in six does not get enough to eat. Wheat production is a very crude measure of the ability to meet global food needs generally. But it speaks to the basic point: increased productivity has not gone hand in hand with the satisfaction of human needs.

What holds together the facts about food/absolute poverty and the facts about wages/compensation is the story they tell about productivity and power. The burden sharing and shared sacrifice of the past thirty to forty years has been decidedly one-sided. Increased productivity has come at the price of belt-tightening by those who can least afford it. The real story of the past decades, then, is not increased productivity so much as the declining ability of workers and those in need to capture even a decent share of what is so efficiently produced. Perhaps a further lesson is that one should distrust a request for sacrifice today in the name of future gains. All that seems to translate into is a long-run weakening of a worker’s ability to lay claim to what he or she produces.

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