Why incomes plunged during capitalist ‘recovery’

The mass of the people fell back financially during the latest so-called capitalist recovery — even more than they did during the crisis of 2007 to 2009.

A Sentier Research LLC analysis of U.S. Census Bureau data shows that median household income in the U.S. fell 2.7 percent during the crisis that began in December 2007 and officially ended in June 2009. But household income fell 4.8 percent — almost double that — since the downturn through June 2012. The Sentier report was written by two former Census Bureau analysts.(bloomberg.com, Aug. 23)

Both younger and older workers have been hit hard, with the Black population hit hardest. Those between ages 25 and 34 had a median income decline of 8.9 percent and those between 55 and 64 had a 9.7 percent decline. The Black population overall had an 11.1 percent decline.

The median household income was $54,916 in December 2007, when the crisis began. As of June, it was $50,964. So this measure of income has fallen almost $4,000, or 7.2 percent, since the crisis began. And there is no end in sight.

The Pew Research Center recently issued a 140-page report entitled “The Lost Decade of the Middle Class.” The study documented that this past decade has been the first since the Great Depression in which income steadily declined, without any letup, from 2000 to 2010. The report uses the term “middle class” for the mass of working-class households which had incomes between $39,000 and $118,000. This use of “middle class” as an income category obscures the defining characteristic of the exploited working class — that it works for wages and sells its labor to the bosses — which constitutes the vast majority of households.

With the official unemployment rate staying above 8 percent and the total unemployment rate — including those who have stopped looking for work and those forced into part-time jobs — at over 17 percent, there are 25 to 30 million unemployed in the U.S.

Attacks on workers: Givebacks & robots

The studies are silent on what is behind this drop in household income. The capitalists are recovering, but for the workers this is a long-term, endless jobless recovery. And the bosses are using high unemployment to attack workers’ wages and benefits. Caterpillar workers, for example, were just forced into taking a six-year wage freeze and big benefit givebacks in one of the greatest setbacks for the labor movement since the crisis began.

The bosses are not only attacking workers’ wages through giveback contracts and increased exploitation. The employers have used the crisis to escalate the development and installation of advanced robots to replace workers altogether.

It is a law of the profit system and capitalist development that each capitalist seeks to defeat its rivals by lowering labor costs and increasing profits. Robotization in the digital age is a principal means of technological attack on the workers.

The Aug. 18 New York Times gave a few examples in the recent article “Skilled Work, Without the Worker.” Flextronics near San Francisco has an assembly line that runs 24 hours a day, seven days a week, at which robots do all the lifting and almost all the precise work in turning out solar panels. Humans are left to do some trimming and fastening.

Vision technology enables giant machines to move rapidly over the skin of widebody Boeing commercial jets and make precise rivets. Earthbound Farms in California has robot arms with suction cups that package lettuce. Each robot arm replaces two to five workers.

Philips Electronics, the giant transnational Dutch firm, installed giant glass cages at its plant in Drachten. Video cameras above the cages guide robot arms to pick parts and assemble them. The arms “bend wires within millimetric accuracy, set toothpick-thin spindles in tiny holes, grab miniature plastic gears and set them in housings, and snap pieces of plastic into place.” The cages replace hundreds and hundreds of workers.

Tesla Motors has a plant in Fremont, Calif., with 8 – to 10-feet-tall robots that can change their own “hands” to be able to perform welding, riveting, bonding and installing. This is a huge advance over single-function robots in most industrial plants.

The largest grocer in the U.S., C&S in Newburgh, N.Y., has installed 128 “rover robots” that race along tracks at 25 miles per hour to retrieve or drop off items. Each rover is connected to a central computer and races toward its destination on command. The operation also has robot arms that have “the grace and dexterity of a skilled supermarket bagger” to operate on cases of food.

Technology and capitalist overproduction

Technology under capitalism, instead of being a blessing to lift the burden of labor from workers, is a curse, used by the bosses to lay off more workers and intensify exploitation.

This race by the capitalist corporations and groupings to shed labor is going on behind the scenes across the globe. Foxconn in China, which employs more than 1 million workers, is planning to install 1 million robots.

This is a worldwide trend in capitalism that can only be stopped by the massive intervention of the working class.

The spread of job-killing technology is making the skills of even low-skilled workers obsolete. It is leaving a generation of youth entering the labor market to face unemployment or dead-end jobs. It is putting more and more pressure on unions as well as on the mass of the unorganized working class.

Furthermore, overproduction is occurring because all the productivity increases stemming from robotization and automation have created piles of goods that cannot be sold for a profit. That is why the U.S. economy is on the brink of another downturn.

That is why the British economy is now in a downturn. The projection for the German economy is for contraction as well. Greece and all of southern Europe are in crisis. And China, Brazil, India and the hundredsof millions of workers in the developing world are faced with insecurity, low wages and new waves of unemployment.

This development is not just an aberration. Karl Marx explained the general law of capitalist accumulation, which dictates that the capitalist class as a whole must use greater and greater technology to get rid of workers and to lower wages.

This law means capitalist stagnation, recession and depression without letup. The latest reports on income decline, unemployment and underemployment, and the jobless recovery show that capitalism as an economic system is reaching a dead end.

Classwide fightback needed

But Marx also indicated the way out in a famous address on the future of the trade unions to the First International in Geneva in 1866. In this speech he actually dealt with the type of crisis now facing the workers, immigrants and all oppressed people, not only in the U.S. but around the world. Marx had a sweeping vision that has never been more urgent for the working class to adopt.

Marx’s address is quoted as it appears in the book “Low-Wage Capitalism” by this author:

“Apart from their original purpose, they [the unions] must now learn to act deliberately as organizing centers of the working class in the broad interest of its complete emancipation. They must aid every social and political movement tending in that direction. Considering themselves as acting as the champions of the whole working class, they cannot fail to enlist the non-society men [the unorganized men and women — FG] into their ranks. They must look carefully after the interests of the worst paid trades, such as agricultural laborers, rendered powerless by exceptional circumstances. They must convince the world at large that their efforts, far from being narrow and selfish, aim at the emancipation of the downtrodden millions.”

— Karl Marx, “Instructions for the Delegates of the Provisional General Council,” Geneva Congress of the First International, September 1866.

Nothing could better speak to the needs of the labor movement, the working class movement, and what the goals of the new revolutionary generation should be.

The old form of class organization and the old method of class organizing in which 60-plus different labor federations operate in competition with each other or in isolation, each seeking to protect the interests only of its own members in disregard of the working class as a whole — and with passivity in the face of racism and persecution of immigrant workers, women, lesbian, gay, bi, trans, queer people — that form of class organization is obsolete and self-defeating.

This antiquated form of struggle allows the bosses to divide us and to pick us off one at a time. It fails to marshal the true strength of the multinational working class. It means that the multinational working class fights with both hands tied behind its back. This orientation allows the entire labor movement to stand passively by as the Caterpillar Corporation delivers a near-lethal blow to the workers of the Machinists union, while they are left to stand alone against a predatory transnational giant.

The policy of collaboration with the Democratic Party as opposed to class struggle allows the labor movement to engage in stalling tactics and futile electoral diversions after, for example, the workers and students, supported by the community, heroically seized the state Capitol in Wisconsin to defend public workers in 2011.

It allows the labor movement to take a hands-off attitude to the racist murder of Trayvon Martin, the railroading to prison of Cece McDonald, and so many other racist, sexist and bigoted atrocities. This narrow outlook permits not putting up resistance to militarism and war while vital human services are slashed.

The only way to fight back in this age of globalization, technological assault, and divide and conquer is to organize and mobilize on a classwide basis and to break out of the deadly, no-win framework of the capitalist profit system.

Goldstein is the author of “Low-Wage Capitalism” and “Capitalism at a Dead End.” More information is available at www.lowwagecapitalism.com; the author can be reached at fgoldstein@workers.org.