Working conditions, wages still deteriorating

By Charles M. Kelly

Special to the Courier

     What great news – for investors, and consumers who have good jobs and investment income. The new union contract at Fry’s and Safeway reduces the pay range for newly hired employees from $7.50-$14.97/hour to $6.50-$12.05/hour.

     This, at a time when inflation is still going up, productivity and corporate profits nationwide are going up, the stock market is still going up, and the wealth of the already rich continues to grow.

     Why? Because of the “free market” and the presence of corporations like Wal-Mart who insist on paying employees as little as possible, despite what would be a fair or necessary income in our American economy.

     Advocates of a free market – without government-imposed standards – present a distorted view of our economic history. Sure, private capital investment and free markets have encouraged innovations of all kinds, financed new technologies, and brought about productivity improvements and more efficient work procedures. This has allowed, not caused, the development of a strong middle class and the elimination of poverty on a scale never before seen in history.

     But the free market did not, of itself, create the middle class or eliminate poverty. Those were the results of government. The 40-hour work week, time-and-a-half for overtime, and the elimination of child labor were the result of a progressive president and Congress who gave us the Fair Labor Standards Act of 1938.

     At a time of high unemployment (19 percent), they decided that more breadwinners should be at work, and that investors should share the benefits of our economy with those who actually were producing the wealth of our country.

     This and other legislation relating to minimum wages, protection of American jobs from unfair global competition, Social Security, the regulation of financial markets, workplace safety requirements – and a whole host of other actions – were designed specifically to protect the interests of middle- and working-class Americans against the unrestrained greed of rich and powerful investors and corporate executives.

     If we were to increase today’s national minimum wage to, say, $7.50/hour, it would raise the wage-floor of the market for everyone, including the corporations. In effect, this would create a market in which corporations with higher moral standards would be free to effectively compete. As it stands now, they are in danger of bankruptcy if they don’t join the predators in depressing wages below even the poverty level.

     Of course, the minimum wage is but one issue that affects the so-called free market. Clinton – with the cooperation of a Republican Congress – created a “globalization” economic strategy (NAFTA, WTO, Fast Track legislation).

     This has been a major cause of the degeneration of working conditions and wages in this century. The loss of good-paying working-class jobs, and the resulting increase in the national labor supply, has given almost total power to investors and corporate executives, and has left workers powerless to negotiate for higher wages and better working conditions.

     In effect, government is encouraging investors and corporations to sell out the class of people who built this country and made them rich. With apparently no regrets, they are abandoning America’s communities and workers purely in the name of labor-cost reduction, and placing their money in countries where workers have few or no workplace protections, guaranteed low incomes, and low standards of living.

     This has created an almost unlimited pool of desperate American workers who consider even the jobs at Wal-Mart “good” by today’s new standards.

     President Bush is exacerbating Clinton’s ill-advised economic strategy and has also defined the free market as the freedom of corporations to place their money where work protections are fewest and wages are lowest.

     To make matters worse, Bush and the conservative Congress are transferring our country’s tax burdens from investors to workers.

     According to our leading conservative investor publication, Barron’s (Feb. 16), “Bush … is engineering a fundamental change in the tax system. By gradually taking capital out of the tax base through reductions in levies on dividends, capital gains and inheritances, Bush is transforming the income tax into a pure tax on wages. If Bush can finish his work, the capital gains, dividend and estate taxes may disappear entirely.”

     That’s clearly a belief in aristocracy and an economic strategy to establish it: People should inherit wealth and government should tax work, not capital.

     So, when are the statements at the beginning of this article true? When government leaders define the free market as one in which corporations are free to provide the best product or service at the lowest cost – while meeting at least minimum moral standards.

     And when are the statements deliberate lies? When government leaders define the free market as one in which corporations are free to do whatever they wish – to workers, the environment, and even to investors – while assuring the voting public that their policies benefit everyone.

(Chuck Kelly is a retired management consultant living in Prescott. E-mail him at


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