Friday, May 31, 2013

Capitalists - Never had it so good

As if we needed to be told, the lack of protection from a union increases employers profits.


The study, "The Capitalist Machine: Computerization, Workers' Power, and the Decline in Labor's Share within U.S. Industries," by Tali Kristal, an assistant professor of sociology at the University of Haifa in Israel, appears in the June issue of the American Sociological Review.
Kristal found that from 1979 through 2007, labor's share of national income in the U.S. private sector decreased by six percentage points. This means that if labor's share had stayed at its 1979 level (about 64 percent of national income), the 120 million American workers employed in the private sector in 2007 would have received as a group an additional $600 billion, or an average of more than $5,000 per worker, Kristal said:
"However, this huge amount of money did not go to the workers," Kristal said. "Instead, it went to corporate profits, mostly benefiting very wealthy individuals."

The question is: why did this happen?

“...what we have is a large decrease in labor's share of income and a significant increase in capitalists' share in industries where unionization declined, and hardly any change in industries where unions never had much of a presence. This suggests that waning unionization, which led to the erosion of rank-and file workers' bargaining power, was the main force behind the decline in labor's share of national income."

Kristal also found that rising unemployment as well as increasing imports from less-developed countries contributed to the decline in labor's share. "All of these factors placed U.S. workers in a disadvantageous bargaining position versus their employers."
"Some economists contend that computerization is the primary cause and that it has increased the productivity of machines and skilled workers, prompting firms to reduce their overall demand for labor, which resulted in the rise of corporate profits at the expense of workers' compensation," Kristal said. "But, if that were the case, and computerization was the principal cause for the decline in labor's share of national income, then labor's share should have declined in all economic sectors, reflecting the fact that computerization has occurred across the board in the past 30 to 40 years."

Kristal conclusion is:
 "In short, my study shows that capitalists have rarely had it as good as they did from 1979 through 2007. The empirical analysis of this study ends at 2007, but updated data reveal that although the great economic recession reduced corporate profits as a share of national income, it was only a short-run effect (of about 2 years) and the golden age of corporate profits has continued well into 2010 and beyond."

According to this report in the Irish Times, workers’ share of national income has been in decline in most countries for more than three decades, but the decline has been concealed by growth.

Only 26.7 per cent of the income of the top 1 per cent is from working (CEO salaries and bonuses). The rest comes from ownership of capital.

60 per cent of Americans  on middle incomes, saw their shares of after-tax income fall since 1979. The top 20 per cent did very well, but the top 5 per cent did even better. But it was the top 1 per cent who did extraordinarily well.

 On all continents, labour’s share of national income has been falling. The share in developed countries has fallen from about 75 per cent in the mid 1970s to 60-65 per cent, with some, like the US, at 59 per cent. Labour’s share in Asia is down 20 per cent since 1994, including a fall in China. For Ireland, the labour share is exceptionally low at 50 per cent in 2012.

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