EMPR200- American Workers Struggle Financially Despite Corporate Success

As corporate profits rise in the post-recession era of the economy, employees are suffering financially while companies experience economic success. The recent increase in strikes is linked to the decreasing share in national income for workers, which is a prevalent issue in the labour market. This post will examine the reasons behind this issue, the impact it has on the American workforce, and solutions that have been implemented to aid employees.

The reasons behind increasing strikes and the decreasing share of national income for workers are increased global competition, technological advancements and automation, the decreased power of unions, and changes in employee contracts. To begin, globalization has increased global competition due to the availability of cheaper labour and material costs in developing countries. As competitors outsource labour, companies that employ domestic workers are forced to lower wages in order to remain competitive (Manyika, J., et al., 2019). With regards to automation, as automated systems play a greater role in production processes, labourers will see a decline in their share of income. Companies are looking to invest capital in efficient technological processes, rather than increasing employee wages (Manyika, J., et al., 2019). Due to the declining role of unions in the US workforce, many workers do not have the support to fight for higher wages and increased benefits (Sheiber, N., 2019). Lastly, the increased use of noncompete clauses in employee contracts allows corporations to keep wages down, resulting in decreased share of national income for workers (Sheiber, N., 2019).

According to McKinsey & Company, the impacts of declining labour share in the USA are, slowing income growth, developing inequality, and decreasing consumer purchasing power (Manyika, J., et al., 2019). A specific example of these effects was the Arizona teachers strike. It was the largest strike in 2018 with 486,000 missed days of work (Campbell, A.F., 2019). The teachers in Arizona walked out because of the cuts to public school funding, coupled with the fact that they are among the lowest-paid teachers in the USA (Campbell, A.F., 2019). General Motors (GM) is an example of issues facing workers in the automotive industry. The company’s wage system caused immense dissatisfaction among workers. “Employees hired after 2007 make up to 45% less than the $31 an hour that veteran workers currently earn” (Sheiber, N., 2019). This issue is a result of pressure from global competitors to reduce labour costs, considering that GM’s sales in the US and China are slowing (Sheiber, N., 2019).

Although solutions are being implemented, many companies are not satisfying all of their employees’ demands. The Arizona teacher’s strike resulted in a “20 percent salary raises over three years, and some extra funding for public education” (Campbell, A.F., 2019). However, the teachers’ request to have the public education cuts paid for by wealthy Arizonans’ taxes was not met (Campbell, A.F., 2019). With regards to GM, although a deal was made with the United Automobile Workers union, many of GM’s employees are concerned that the company’s promises will not be upheld. Ultimately, they fear that temporary workers who are planned to transition to permanent workers will be fired before their temporary term is completed (Sheiber, N., 2019).

The bottom line is that the American workers feel that they are treated unequally and are not receiving an appropriate share of corporate profits.  Although solutions are being implemented, more work must be done to support the American labour force as they strive for fair wages and benefits.

I look forward to hearing my peers’ opinions and feedback on this topic!

Sources:

Sheiber, N. (2019, October 19). In a strong economy, why are so many workers on strike? The New York Times. https://www.nytimes.com/2019/10/19/business/economy/workers-strike-economy.html?action=click&module=RelatedLinks&pgtype=Article

Manyika, J., Mischke, J., Bughin, J., Woetzel, J., Krishnan, M., & Cudre, S. (2019, May).      A new look at the declining labor share of income in the United States. McKinsey & Company.https://www.mckinsey.com/featured-insights/employment-and-growth/a-new-look-at-the    -declining-labor-share-of-income-in-the-united-states

Campbell, A. F. (2019, February 13). A record number of US workers went on strike in 2018. Vox. https://www.vox.com/policy-and-politics/2019/2/13/18223211/worker-teacher-strikes-2018-record