Thread: Seem like you're earning less? You aren't alone

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Seem like you're earning less? You aren't alone
By Charles Stein | October 16, 2005

If you think you've had a bad week at the office, imagine what it would be like to be an employee of Delphi Corp. The auto parts giant recently filed for bankruptcy court protection, and its chief executive, Robert Miller, wants to cut the pay and benefits of union workers to $20 an hour from $65 an hour. Miller has made it clear that in today's global economy, unskilled workers can't command such lofty compensation.

The situation at Delphi may be extreme, but it is by no means unique. Pay is under pressure for a great many workers -- not just blue-collar people with limited skills.

''The combination of trade and offshoring has increased the supply of labor available in the United States," said Frank Levy, an economics professor at MIT.

To Levy's list you could add competition, technology, and immigration. All of them have allowed employers to tap into a expanded pool of workers -- both at home and abroad. As everyone who takes Econ 101 knows, when you increase supply, prices, in this case, the cost of labor, are bound to fall.

Consider the plight of pilots -- a pretty highly skilled group. At Delta, an old-line carrier, pilots earn an average salary of $157,000, according to the Department of Transportation. At JetBlue, one of the most successful upstarts, the average pilot salary is $91,000. With benefits tossed in, the gap is even greater.

Like Delphi, Delta is in bankruptcy. And like Delphi, Delta will almost certainly use the bankruptcy process to bring wages down -- probably way down. The JetBlues of the world have already demonstrated that there are people willing and able to fly planes for less. Presumably there have always been such people. Deregulation made it possible for the airlines to hire them.

In construction, the threat to wages comes from immigration. Over the past decade immigrants, both legal and illegal, have made huge inroads in the construction field, especially in residential construction. In 2004, 20 percent of the country's 10.7 million construction workers were foreign-born. According to Mark Erlich, executive secretary of the New England Regional Council of Carpenters, many of the illegal immigrants get paid in cash -- about $10 or $12 an hour -- and work for employers who pay neither taxes nor benefits. Those contractors clearly have an edge when it comes to submitting bids for work.

''Wages are depressed because the underground economy has taken over," Erlich said.

At Home Depot stores around the country, immigrants line up each morning to find work as laborers and handymen. If lawyers and doctors lined up outside Home Depot offering their services for modest fees, what do you think would happen to the paychecks in those professions?

Real estate brokers have earned a good living the past few years. Total real estate commissions reached $61 billion last year, thanks to the rising price of homes and the 5 to 6 percent slice of the pie brokers routinely take. But today those commissions are threatened by technology. Discount brokers, with the aid of the Internet, are willing to take smaller commissions, typically 3 percent, to provide the same service.

So far the traditional brokers have done a good job of protecting their turf. Still, you have to think that over time technology will erode their position and their compensation.

I don't want to paint an overly gloomy picture here. Not everyone's wages are falling. Over the past year, wages nationally climbed 2.4 percent. That was the smallest increase in more than 20 years, but it was a gain nonetheless. With benefits included, the gain was somewhat bigger.

But there are pockets throughout the economy where the pressure to cut is powerful. We live in a big and an increasingly open world economy, filled with people looking for an opportunity to do better. If employers can find them -- in India or on the Internet -- they will hire them. If those people happen to do what you do, be prepared for a decline in living standards. As the workers at Delphi have learned, sometimes the drop-off can be awfully steep.

I saw the story about DELPHI on Lou Dobbs. The company's CEO said they were cutting employees wages by 63%. But get this, the executives got themselves a big ole raise! This CEO said it was not about the individual(the American worker), it was all about the company's bottom line. It infuriates me to know that this trend will not stop until we all are working for peanuts

I watch a bit of Lou that night too rebel. I loved how Lou looked at the company and personally slammed the critter about his "big plan". Why would I want to go to College and spend the time and money on a p.Hd in eco to just higher cheep labor? Shoot give me control of a company now, it doen't take a great mind to sell-out all your employees.

The crazy thing is they use the "free market" to justify both lowering employee wages as well as raising their own (executive) wages.

They say we need to lower employee wages to stay competitive in the industry, because we're competing with others in the world which pay their workers much less.

They say we need to raise executive wages to stay competitive with prevailing executive salaries, because the executives (they always refer to themselves in the 3rd person) might leave, as a result of the tremendous demand for their skilled labor....

It's like they're saying, "I need to raise my wage, otherwise I might leave, which would be devastating for the company."..

As Lou Dobbs said, "And he wants to -- there's a shortage of management? There's a shortage of good management at Delphi. Why does he want to keep people that drove the company into that mess?"
http://transcripts.cnn.com/TRANSCRIPTS/ ... dt.01.html

"... CEOs of the country's largest corporations last year were paid about 300 times the average factory worker. In Europe, in contrast, chief executive pay tops out at 30 times the average worker."
http://moneycentral.msn.com/content/P85061.asp

Of course, in the 3rd world countries, executives make much less than those in Europe do... I think our CEOs should lower their own salaries first, if they want to stay cost-competitive... That seems to be where the big bloat is... And frankly they need to fire themselves (at least a large % of themselves.)..

And they should raise their employees wages in order to stay cost-competitive with the wages of workers in other industrialized, developed countries which get paid more than American manufacturing workers... After all, we could leave.

Part of the reason these executives are commanding high salaries is a result of graduating from Yale and Harvard and because they were born into the "rich club".

The kind of networking seen in the rich club starts in college. Places like Harvard and Yale bond alumni together into cohesive groups that do each other favors. For example, a graduate from Harvard can call any other Harvard graduate, and the fact that they both went to Harvard virtually guarantees that the called party will pick up the phone and listen to the pitch. Yale graduates are issued a leather-bound alumni directory at graduation to help the process along.

"These alumni can provide access to hard-won interviews, 'lobby' for worthy students, and provide as well hands-on information about career opportunities, job openings within the industry, and advice about interviewing (such as commenting on a firm's corporate culture)…. According to London Business School, the typical MBA graduate changes jobs within 24 months. Thus, the alumni network becomes vital in isolating those firms looking to replace senior managers or otherwise hiring mid-career MBA grads." [ref]

This kind of networking is also hereditary. Any private college will accept almost all "legacies". If your mother or father went to Harvard, you are likely to get into Harvard automatically through the legacy system. That plugs you right into the rich club. It is affirmative action for rich people.

http://karmak.org/archive/2003/12/manna/etq-double.htm

As a dues paying union member I am totally disgusted that my fellow union members will buy a Toyota or Honda or BMW or any other vehicle that is not either made in the US of A or by GM or Ford! (Chrysler is German now?) Ok I know Toyota has a plant in Kentucky but what kind of benefits do those workers receive and where do the profits go? Tokyo?

The union members sit there and bitch about what they perceive as inferior US cars so now Delphi is in trouble but do my fellow union members care? NOPE! However, if our wages and benefits are cut they cry like fish out of water.

Export jobs and import people! Buy on credit! Charge it brother!

Nafta, Cafta, FTAA.....end of Boeing....one company markets "outsourcing" on a commercial I have seen. Computer jobs to India....Paul Harvey says %8 of our food supplies comes from overseas....

Free trade is not good for America when all you can do is send a few raw materials overseas....

These hot shot executives are just paper pushers and when they close a plant and lay off Americans they increase the profit and the stock. It is all about Walll Street not main street.

I hate the Democratic Party but I would even vote for Hilary if I felt she would do something to stop this outsourcing and stop the importing of illegals but I don't see either party doing anything since all they seem to care about is their own pocketbooks and corporate friends.....$1,000 a plate dinners etc....

I just think that at the end of the day Americans don't care about Americans....dog eat dog mentality.....letting 15 milion Latin Americans build a community within the community does not help either!

I hate the Democratic Party but I would even vote for Hilary if I felt she would do something to stop this outsourcing and stop the importing of illegals but I don't see either party doing anything since all they seem to care about is their own pocketbooks and corporate friends.....$1,000 a plate dinners etc....

Yea, that's generally true, but there are a couple good ones here and there... Dennis Kucinich was a presidential candidate that wanted to break from the WTO and rip-up all the free-trade agreements to-date... Yet, on the other hand, he is pretty soft on illegal immigration... Still, better than Bush or Hillary, for that matter.

And don't forget Congress... Every single member of the House is up for re-election in 2006... So, vote in the primaries and vote in the general election next year... See if you can find a good primary candidate to support.

My strategy will be to look for good primary candidates to support and to vote out all globalist incumbents, in order to send a message.