OPINION AND EDITORIAL
IN AMERICA AS YOUR PRODUCTIVITY INCREASES, YOUR WAGES DECREASE
April 01, 2012
Opinion By John Burbank
John Burbank is Executive Director of the Economic Opportunity Institute in Seattle
Executive Director, Economic Opportunity Institute
The drumbeat for economic advancement is filled with warnings that our kids must get a college education to get ahead. So it’s instructive to see where those college educations can lead. Take my friend’s son Dale, for example.
He’s 28, with a bachelor of arts degree from the University of Washington. He is highly skilled with computers, audio-visual equipment and other technical systems. He’s personable, articulate, and gets along well with almost anyone.
After graduation, Dale targeted the computer technology sector for job searches. His first job was through a labor supply agency, a three-month contract doing customer service at Nintendo through a new product launch and the Christmas holidays. He was paid $13 an hour, with no sick leave, vacation or paid holidays, or other benefits. His schedule was changed every week, averaging 35 hours or so.
This prevented him from taking a second job or attending classes, since he was never sure what days he would be told to work. And it left him 30 hours short of qualifying for unemployment insurance when he was laid off. So much for job security from a corporation that netted over $930 million last year.
In his current job, Dale has a six-month contract. He works at Microsoft’s Bing, but he is an employee of a different temporary services firm. Now we all assume that if you are at Microsoft, you are well paid. So let’s look at Dale’s situation.
He makes $14 an hour. No health care, no paid sick days, no retirement savings. He does get a bus pass. His job is somewhat mindless and extremely repetitive — and there are productivity standards tied to very modest team bonuses. The bonus structure was changed without notice, however, so those are more difficult to attain.
It is a weird world we live in. Productivity — the added value that each worker creates at his or her job — has doubled overall since 1973. Corporate profits per unit of value added have quadrupled. You can do the math — productivity increases two times and profits increase by four times, so where does the money come from? It comes from workers.
Altogether, workers in the middle of the middle class have seen their wages go up 8 percent since 1973 — that’s two-tenths of a percent per year. They have added a lot more value than that.
But what we hear about more is the young people who are hired at Microsoft, Amazon and Google at salaries that make a lot of older middle class workers look downright poor. I know this because I have relatives who are among that lucky bunch. And they get health coverage, retirement savings, paid time off, and even corporate-paid lunch brought into work.
But the prosperity and the privilege of the few mask the narrowing of opportunity for the many, whether they have high school diplomas, community college degrees or university degrees. And this prosperity also masks that generations-old transfer of income and wealth from workers to the Fortune 500.
The result is we have Dale, a university graduate, working a temporary job with no benefits, hoping and hoping that he will be brought on permanently, while his actual employer — Microsoft — was making over $23 billion in net profits last year. Not to mention that its top five executives were given between $1.3 million and $9.3 million, each!
Dale has a job. But does he have a future in the middle class? That’s debatable.
Yesterday Microsoft released a study it sponsored that discussed the opportunity divide for youth. The report “documents the growing economic and social challenges facing youth around the world and the urgent need to provide the education, skills and employment opportunities required for them to succeed in today’s rapidly changing global economy.”
That wasn’t a message intended for Microsoft itself or the rest of the Fortune 500 in the United States. But it sure should be.
It is definitely an economic challenge when you make wages that put you hovering above poverty, unable to pay for health insurance that your company won’t provide, saddled by student loans, and wondering how to scrape together the money for further training and education — and don’t even mention saving for retirement.
That is not the economic future Americans have bargained for — and it isn’t a future with which we should saddle our kids.
John Burbank is Executive Director of the Economic Opportunity Institute in Seattle. (www.eoionline.org) an independent, nonpartisan, non-profit public policy center. Its mission is to restore the promise of the middle class and to build an economy that works for everyone through research, education and advocacy.
He can be reached at email@example.com.