You've come to an old part of SW Online. We're still moving this and other older stories into our new format. In the meanwhile, click here to go to the current home page.

Jobs growing, but wages stagnate...
Why won't they raise the minimum wage?

By Lee Sustar | April 9, 2004 | Page 12

GOVERNMENT STATISTICS show that job creation is finally on the rise. But there's too little hiring to drive down the unemployment rate, and wage increases continue to lag behind inflation.

And if the White House and congressional Republicans have their way, wages will stay low. They're blocking legislation that would increase the federal minimum wage from $5.15 an hour to $7 an hour over the next two years.

Considering that a year's pay on the minimum wage is just $10,712--compared to the poverty line of $15,670 for a family of three--raising the minimum wage is an urgent necessity. But even this is far from enough.

If the minimum wage had kept pace with inflation since 1968, it would have reached $8.29 an hour in 2002. A higher minimum wage, moreover, also would boost pay in the retail and service jobs that make up a large chunk of the 308,000 jobs created in March, according to the U.S. Department of Labor.

The Bush administration celebrated the employment gains last week. Nevertheless, there's a long way to go before the net loss of jobs under the Bush administration--still more than 2 million--is erased.

It's still likely that Bush will be the first president since the Great Depression of the 1930s to oversee an overall loss in jobs during his term of office. Even with last month's gains in employment, payrolls remain 323,000 below their level at the start of the recovery in November 2001, and 2 million below the pre-recession peak in March 2001.

"And while the pace of job growth has accelerated since last fall," observed the Economic Policy Institute, "the average monthly gain has been 108,000 since payroll growth turned positive. At this point in the early 1990s recovery, job growth averaged 220,000."

Manufacturing employment stayed the same in March--but that's after a loss of 2.7 million factory jobs since 2001. And manufacturing jobs have a higher "multiplier effect" because they create other jobs in the economy.

Rather than new hiring, employers have been making gains by driving factory workers hard. Productivity in the durable goods industries increased at an average of 7.7 percent over two years, even as wages stagnated or declined.

Meanwhile, because some of the half a million discouraged workers--who aren't counted in the official statistics because they aren't "actively" looking for employment--began looking for jobs again, the overall jobless rate went up a notch to 5.7 percent. The overall percentage of the population that is employed fell slightly in March to 62.1 percent--the lowest level since 1988.

That slack job market makes it easy for employers to hold down pay. Workers' wage growth remains below the rate of inflation even as leading U.S. corporations prepare to announce their best earnings in years.

And not all job gains are indicators of economic health. Another factor in the job creation figure is the addition of tens of thousands of strikers at the Southern California grocery stores--who returned to work after accepting a contract that includes a big increase in workers' health care costs and lower pay for new hires.

Heather Boushey of the Center for Economic and Policy Research noted that "older workers continue increase their labor force participation, due to lost retirement savings. Workers 55 and over gained 75,000 jobs last month, while those age 16 to 19 lost 78,000 jobs." In other words, older workers--with pensions and retiree health benefits on the chopping block--are increasingly forced to compete with teenagers for crummy pay in retail sales and fast food restaurants.

In fact, the systematic attack on pensions continues. George W. Bush is set to sign a new bill that allows Corporate America to slash $80 billion of pension obligations, increasing the likelihood of pension fund failures in the future.

The crisis is even worse in the case of employer-provided health care, the core of the so-called health care system in the U.S. Last year, a study by Families USA found that one in four of the uninsured--some 9.6 million people--are employed by, or have a family member who works in, a large corporation.

That number is bound to be higher today as workers forego health care benefits even when they're offered, because a larger part of the cost has been shifted onto them. The new retail jobs created in March--and those expected to be added in the months ahead--won't reverse any of these trends.

Democratic candidate John Kerry has sounded off about jobs, but he doesn't have any solution besides rewarding business with tax cuts. Employers may add new jobs, but they'll keep wages as low as possible and the benefits as miserable as they can--and with a punishing pace of work to boot.

Today, getting a "good job" means fighting to make them decent--by organizing unions, building a movement for a national health care plan and defending and expanding Social Security.

Home page | Back to the top