The New Republic

Perhaps Americans just like being bullied and/or dismissed by corporations? Masochism has sometimes been in the mix in other places too.

- ironyroad

June 6, 2012 at 1:55pm

Cut tax rates. Wealthy have more to invest...in the political system. Cut rates lower. Debt goes up. Not enough money to invest in the bottom half. Wipe up what's left of economy with sponge.

- Nusholtz

June 6, 2012 at 2:04pm

"But liberals need also something more than that: They need to rebuild the labor movement, perhaps by reinventing it, or they need to replace it." To a lot of people, "labor" and "public employee" don't belong in the same sentence. I understand why unions targeted public employees (at a time of declining numbers of blue collar workers): they were the largest group of white collar employees, had the most in common (with each other), and (at the time) the easiest to organize (because government wasn't going to put up much resistance). But banking on public employees as the future of the labor movement was, to say the least, the dumbest idea since Jimmy Hoffa went for a swim with a concrete block tied to his ankle.

- rayward

June 6, 2012 at 2:16pm

Sadly, Walker and his out-of-state moneyed interests were allowed to slant the recall as a "Union Busting" issue. "Union Busting" is popular, has always been popular, and is part of this "We Don't Trust Public Institutions" theme in America. We don't want "The Government" nor "Organized Labor" shoving crap down our throats. But that's not the function of Government OR Labor. That the Republicans have managed to place both on Government AND Labor these attributes is a shocking failure of the media. Or a shocking success of right-wing media. Or both. And the result is that the only entities left with any power are the Corporation, and Management. If you manage to sow distrust of Government of the people, by the people, and for the people, then Corporations are the only power left.

- AllanL5

June 6, 2012 at 2:21pm

The Walker recall should have been that he lied. He lied during the election what he was going to do. It wasn't about Union Busting -- that's the after-the-fact story. Instead it's about screwing people over. He had no respect or support for Public Employees. The only reason he went after the Unions was that they were preventing his screwing people over. But screwing people over was the goal. For him to have successfully changed the story to become "preventing Union Dictatorship" is appalling, untrue, and won him the election. Let this be a lesson: If the issue becomes "Fighting Union Power", progressives lose.

- AllanL5

June 6, 2012 at 2:25pm

I am worried about my public pension in Washington state (which involves some similar issues). I am no fan of the 1%. Nevertheless, the issue of "what is fair," is not that easy, and an attempt to change what happened in Wisconsin by the extraordinary action of a "recall election" (rather than working toward and organizing for the next regular election) was a dubious tactical decision. Obama was probably sensible to choose what "hill to die on" in keeping his distance from the Wisconsin recall efforts.

- skahn

June 6, 2012 at 2:45pm

People often don't see union members as friends, neighbors, fellow citizens, and the like. The individual becomes assimilated to the collectivity and the collectivity has been demonized (with some help from itself, admittedly) without letup for forty-plus years. People really believe that they have a free weekend because employers are nice people and gave it to them once.

- ironyroad

June 6, 2012 at 3:00pm

Quoted in the article: "Labor is getting weaker. And corporations, in part due to Citizens United, are getting much stronger." Unions and corporations (and nonprofits) are all the same under Citizen's United. If you believe Unions have the right to spend, then how can you argue corporations don't? Note, too, that union participation rates dropped in half when members were given the option to join. In other words, half of member felt their union was NOT giving them a good deal. That speaks volumes right there. Allan writes: "The only reason he went after the Unions was that they were preventing his screwing people over." No, he want after unions because the economics of the union was unsustainable. The citizens of Wisconsin rejected the idea that they would pay their tax monies to fund benefits and perks that the normal citizens could never dream of getting. Is it really fair for government workers to receive benefits many times more lavish than what their citizens receive? Is that what we want? Shouldn't those working in government get benefits that mirror those that the average citizenry are receiving? Given a public and private worker, both similarly qualified, the government worker earned 20% more in salary and benefits. Why should a private snowplow operator be taxed so that he can pay his public equivalent a higher wage than the is receiving? Is that really fair? Shouldn't government pay a wage (salary + benefits) that is comparable to private pay? If your answer is "no" then I'm sure this loss in Wisconsin was a big surprise. If your answer is "yes", then congrats, the majority agrees with you.

- seattleeng

June 6, 2012 at 3:06pm

Seattle wrote: "Shouldn't those working in government get benefits that mirror those that the average citizenry are receiving?" Why are you drawing the line at the 'average' citizen. That is completely arbitrary. Isn't it just as reasonable to say, "Shouldn't those working in government get benefits that mirror those that the most suffering citizenry are receiving?" In fact, why limit it to the US? Why shouldn't taxpayers get just as good a deal on services as they do in, say, North Korea? I'm so utterly persuaded by your logic that I now submit that those working in government should get a ration card and an alloted space in the community barracks, and nothing more.

- Fishpeddler

June 6, 2012 at 3:25pm

Skahn is right. When labor challenges robber barons in public, it risks getting its ass kicked in public, which it did in Wisconsin. Unions are pretty much gone, anyway, in America. Once American corporations went global, the bargaining power of unions was on its way out. How can we compete with 10-cent-an-hour child labor, which Republicans and the people who vote for them love? The only thing that can turn this around is tens of millions of Americans out in the streets 24/7 yelling for change. But that won't happen either. The people who vote Republican are too cowardly to challenge their masters, even as their masters press their boot heels deeper and deeper into their necks. Because unions are almost gone in American, the rights of non-union workers and even management-level workers are on the way out, too. Fear of unions is one of the things that semi-humanizes employers, at least on the surface. skahn, don't worry about your Washington state pension just yet. We still have a Democrat in the governor's mansion. Just make sure you vote in November, at least to put some Democrats in the state legislature. Myself, I'll put voting at the top of my to-do list as soon as I get my ballot in the mail. Voting can make things better--or worse, as we saw in Wisconsin. There are two kinds of people in the world, those who are afraid to challenge their masters, and those who at least question their masters. Republican voters are too ignorant to even realize who their masters are. They think the government controls them. Not. Guess again.

- magboy47.

June 6, 2012 at 3:32pm

Fishpeddler, markets indeed have borders. That's why a big mac in Aspen costs more than a big mac in Boise. But inside a particular border, the prices should be very close to the same. Do you believe a government snow plow driver should make more than a private snow plow driver, all else equal?

- seattleeng

June 6, 2012 at 3:33pm

The supposed over-compensation of public employees is another right-wingnut myth. See, e.g.: http://www.sj-r.com/top-stories/x66784260/Comparing-pay-of-public-vs-private-employees-Pick-your-study?zc_p=1 But, let's go for it. While I think it is too dangerous to lose control of the Federal government, maybe drofnats is right and the only way out of the mess the Republicans have created, including the economic fraud they perpetrate both in practice and in their utterly unfounded economic claims, is for them to keep on immiserating more and more of the population until there is a reaction fierce enough to be rid of them. Unfortunately, people lack historical memory and it may be that we cannot move forward again until the Republicans succeed in putting so much of our income in so few pockets, destroying income security, health security, public education, and worker safety, that we are back to 1900. I loathe them and their endless lies. There is no other way to put it.

- roidubouloi

June 6, 2012 at 3:34pm

Seattle: "Is it really fair for government workers to receive benefits many times more lavish than what their citizens receive? Is that what we want?" First, Seattle, how many public sector workers do you know who drive BMWs? I heartily resent the word "lavish." And the answer is, yes, when private sector wages are being eviscerated by corporate greed. "Shouldn't government pay a wage (salary + benefits) that is comparable to private pay?" No, not when private sector pay is falling miserably for the reasons it is. It's actually very tricky business to compare public and private sector work. The entire philosophy and structure of the two sectors is very different with different rules of operation and purposes. I'm sorry private sector pay for line workers and middle management sucks. (Back to the union issue, aren't we?) But to compare that to public sector conditions is like comparing ponies and pineapples - two very different things. I'm sick of people trying to make direct comparisons between the two! (And most people have the facts about what Wis. public sector employees earn, contribute to benefit plans, etc. very wrong.) Unfortunately, the electorate doesn't seem to understand the idea of services v. products you can hold in your hand. When they can no longer drive on good roads, turn on their faucets and get clean, potable ware, plug in a computer and get instant power, and count on their children receiving good educations without paying private tuition, maybe then they will have learned. But it will be a long haul back to even the status quo.

- Claris

June 6, 2012 at 3:42pm

"clean, potable water"

- Claris

June 6, 2012 at 3:52pm

Roid and Claris, Search on the NYT article "A Watershed Moment for Public-Sector Unions" They report the wage of a non-degreed public worker is $37K, while a private is $33.2K. Adn this does not include benefits. We can guess what the health care and retirement probably is for a state worker without a degree, and we can guess what the health care plan for a $33K worker looks like. I'll venture that gap is another $10K. That is a massive gap overall. Claris, rather than obfuscating with reasons why we cannot compare, I'll ask you the simple question: Should a snow plow driver working for the government make more than a private-sector snow plow driver, all else equal? based on the NYT numbers, I'm guess the public drivers are making a lot more 40% more than their private counterparts. Is this right?

- seattleeng

June 6, 2012 at 3:55pm

Claris writes: "First, Seattle, how many public sector workers do you know who drive BMWs? " Not talking about cars. I'm talking more about benefits. If a normal $40K/year worker has a bare bones health care plan worth $8K/year and must self-fund his own retirement and will work until the age 65, and the governmetn worker with the same skills is earning $47K AND has a gold plated $15K/year health care plan and the ability to retire at age 55 at 60% of salary, that is indeed the very definition of lavish. Is it not?

- seattleeng

June 6, 2012 at 4:00pm

Always darkest before dawn, isn't it folks? I mean, all this liberal garment-rending reminds me of the bad old days of November 2004 (or November 1994, November 1988, or November 1980) -- Republicans and corporate interests have the whole system locked up, we are on the way to becoming a banana republic, Pinkertons will be gunning people down in the streets as the plummed to the ground from the twentieth floor of the burning Triangle Shirtwaist Factory. Funny how it manages to come back around, eh? Clinton wiping the floor with Gingrich and Dole in 1996, the impeachment boomerang of 1998, the Republican debacles of 2006 and 2008? History doesn't necessarily repeat itself, but past is often prologue in American politics. Especially for the majority of the electorate that are not hard-core partisan. But one can't sugar-coat this as a major fail for organized labor in America, especially the public-sector union portion thereof. Not to say that they should have seen this one coming, but they should have realized that the relatively generous comp packages they negotiated for their members would be endangered in Great Recession-era America. They will need to make major adjustments to their message and strategies, perhaps by emphasizing the real value of public goods that they provide to taxpayers as opposed to generic concepts of "fairness" and complaints about how the blame should be allocated elsewhere. As for "corporate power", let's not get ahead of ourselves -- "corporate power" will continue to exist with fewer fetters than the power of labor unions unless the US somehow manages to turn the global economy to its comparative advantage they way it did from 1940 until 1970 (hopefully not be means of a global cataclysm from which the US emerges as the only major economic power in one piece). Again, that's not to say that business interests will always get whatever they want from the Federal government or even state governments, as things business interests want can sometimes be surprisingly unpopular with actual voters, no matter how many TV ads you run. As the health care industry has learned over the past 20 years and the financial industry has been learning to its detriment since 2008, there are limits to what voters will put up with in the search for corporate profits cushioned by socialized risk insurance.

- wildboy

June 6, 2012 at 4:01pm

The death of unions in America is tied into the takeover of our economy by the finance industry. Kasich of Ohio was on Meet the Press Sunday (combative as hell) poo-pooing the number of jobs that Obama created in his state by saving the auto industry and trumpeting the number of jobs he himself created in the financial industry. When the major export in America is money, we are headed for a cataclysmic crash and a post-crash world that will bring the Dystopia that the Right so loves. So, all I can say is down with unions, up with money! Up where I won't elaborate.

- magboy47.

June 6, 2012 at 4:09pm

"Do you believe a government snow plow driver should make more than a private snow plow driver, all else equal?" Yes, if we have good reason to believe that the private driver is being undercompensated or that the savings we obtain through lower salaries are illusory because they will simply result in a shifting of costs to other public expenditures, like Welfare, Medicaid, etc. I know the word 'undercompensated' is probably sending you into severe spasms, but just keep in mind that I don't accept the definition of 'fair compensation' as 'whatever we can currently get away with after having stacked the deck against the private laborers for several decades in our pseudo free-market system'.

- Fishpeddler

June 6, 2012 at 4:16pm

The blue collar deal used to be that private sector jobs paid more but were less secure; public sector jobs paid less but were secure. The public sector also secured the private sector -- roads, education, law enforcement, and the like. So there was a synergy. Rolling back toward 1900, the current Republican strategy is to convince people that only the private sector has any legitimacy and good roads etc can be had for free. It's stupid, but it can work.

- ironyroad

June 6, 2012 at 4:22pm

"They (Liberals/Progressives) need to rebuild the labor movement, perhaps by reinventing it, or they need to replace it." Liberalism or Progressive-ism is different from labor unions. If conservatives lose, it would be silly to say to win, conservatives must rebuild the Chamber of Commerce. Pregressives/Liberals in Wisconsin were outspent 8-1 in a recall election in which many (at least 10% voting 95-5 for Walker) voters believed only for crimninal activity should a governor be recalled. Progressives should spend their time and $ electing Progressives at all levels.. If BHO loses in November (a quite-possible result), Progressives need take the opportunity to remake the Dem party into a party led by Progressives. The current BHO, Reed and Clinton blue-dog-corporate leadership need be reformed/replaced or Dems will continue to decline-- leave labor unions to reform themselves or continue to decline.

- drofnats1

June 6, 2012 at 4:32pm

Fishpeddler writes: "Yes, if we have good reason to believe that the private driver is being undercompensated or that the savings we obtain through lower salaries are illusory because they will simply result in a shifting of costs to other public expenditures, like Welfare, Medicaid, etc" What makes you think the private worker is being under compensated? Across all our workers, a high school graduate earns a median salary of $36K, those with some college $42K, those with a BS $60K, those with a masters $75K, those with a doctorate $85K. That seems exceedingly fair. If you make the high school grad earn as much as the PhD, then we won't have many PhDs. A snowplow driver probably has just a high school education, and thus he will end up around $36K. And if a snow plow worker wasn't being fairly compensated, then he'd find another field that would pay him more and then there'd be a shortage of snowplow drivers. And wages would go up. So, we must assume the private-sector snow-plow worker is being fairly compensated. And assuming he is, what justifies the government snow plow worker earning more for the same job? Irony writes: "The blue collar deal used to be that private sector jobs paid more but were less secure; public sector jobs paid less but were secure." Also, there was the understanding that the private worker took more of his compensation in salary, while the public worker took more of their compensation in retirement benefits. Teachers make make less than their private sector counterparts (used to, anyway), but they retire with a benefit worth almost $2M, which is much greater than what their private sector counterparts retire with. The total package for being a teacher is far more than that of civil engineer and architect. And that is what should be looked at: the total package. What teachers don't quite understand is that if they took their retirement benefit as cash and invested that themselves in tbills and equities, they'd have far more than the retirement system pays them. The retirement system is making the exact same investments, just skimming off the top.

- seattleeng

June 6, 2012 at 4:42pm

"Unions and corporations (and nonprofits) are all the same under Citizen's United. If you believe Unions have the right to spend, then how can you argue corporations don't?" Except, seattle, corporations and their front organizations like American Crossroads have much more money to spend than unions. That's why they won in Wisconsin. They buried them with campaign contributions. Obama only started taking money at the Super-Pac level after the Republicans got their way with Citizens United. Maybe there'll come a day when multi-billionaire Democrats will unite and start buying elections themselves. Then the poor, oppressed Republicans will be running with their heads on fire to the U.S. Supreme Court, begging Clarence Thomas to help them overturn Citizens United. Unions have contributed only in a minor way to buying elections. Republicans and their money buy them directly and completely. Very few Democratic voters even think about unions when they vote. Even though I grew up in union country and I support unions, I agree that they went too far with their demands in the past. The UAW was almost as corrupt as their corporate bosses. But they've changed, and they will never again have even an opportunity to go too far. But eliminating unions altogether, which is what Republicans want, is a giant step towards turning America into a Third World nation of wage slaves. And your income will be truncated, too, seattle. Unions protect wages from plummeting at all levels, except at the predatory CEO plateau. Good luck.

- magboy47.

June 6, 2012 at 4:47pm

"Obama only started taking money at the Super-Pac level after the Republicans got their way with Citizens United. Maybe there'll come a day when multi-billionaire Democrats will unite and start buying elections themselves. Then the poor, oppressed Republicans will be running with their heads on fire to the U.S. Supreme Court, begging Clarence Thomas to help them overturn Citizens United." Isn't that how bipartisan coalitions to effect genuine social change are formed nowadays? Here's hoping.

- wildboy

June 6, 2012 at 4:57pm

Seattle, I thought my term 'pseudo free-market system' would provide my answer in advance, but you don't appear to have picked up on it, as evinced by your comment, "And if a snow plow worker wasn't being fairly compensated, then he'd find another field that would pay him more." This only makes sense in the context of a truly free market system, which we aren't even close to in the US. Just as one example out of the countless possible, what if the snow plow driver has developed a health problem that leaves him effectively unable to leave his current job (and thereby lose his insurance coverage)? I don't know any snow plow drivers, but I know several people in exactly this situation. This is just one of the circumstances that diminish the mobility of labor, and employers are the beneficiaries by being able to set compensation lower than they would otherwise. But the point isn't the particulars of my example, but merely that your conclusions depend on a false premise -- that private labor compensation is set under free-market conditions. And while libertarians will often acknowledge that distortions in markets exist, they seldom acknowledge that those distortions are often the deliberate result of legislation designed to favor employers against their employees.

- Fishpeddler

June 6, 2012 at 4:59pm

"They need to rebuild the labor movement, perhaps by reinventing it, or they need to replace it." Labor unions need not be workplace specific. Organized labor should find ways to enroll non-organized workers as fraternal members. I've known people who joined the Jewish Workmen's Circle for its membership benefits even if they were themselves not organized workers. Also, unions, or their successors, need to stick to economic issues. Non-economic issues like abortion or gay rights are too divisive and should be handled by other organizations. It's totalitarian to expected everybody in a broad-based American organization to completely agree about a whole set of both economic and cultural issues

- amidut

June 6, 2012 at 5:08pm

I took a terrible time to come back to the states. Lord I miss my life in Mexico, not being a citizen there I did not concern myself with who the leaders were. It really sucks to be here now, especially since eventually I am going to have to get a job. In Mexico it is easy to be fairly poor since healthcare is provided and expectations are modest. I almost wish I had gone to Mexico in the first place and married a Mexican woman instead of going to China and marrying a Chinese woman. I simply do not understand how so many millions of Americans are so complicit in their own misery. To this I have to say to the people in Wisconsin, if you want to live like Alabamans, go right ahead, I don't care.

- blackton

June 6, 2012 at 5:59pm

Seattle states: "What teachers don't quite understand is that if they took their retirement benefit as cash and invested that themselves in tbills and equities, they'd have far more than the retirement system pays them." That must be why all those folks who lacked defined benefit retirement plans, but had their retirement savings in 401Ks instead, and planned on retiring after the stock market crash of 2008, but found their plans destroyed, don't... uh...exist? I used to think, years before retiring (in '09) from my career in education exactly what Seattle says. "What a rip-off", I thought. "I can do so much better investing that employee retirement system contribution myself!" As it turned out, I had a fair pot of money in equities set aside too, when I did retire, to supplement the defined benefit plan provided by the state teachers' retirement system of which I am a member. (No, not overpaid Seattle - just very frugal.) The value of that basket of investments (mutal funds) is currently slightly below that which it had four years ago. as the stock market has slowly clawed its way back. Good thing it wasn't the mainstay of my retirement income, or else there would have been no retirement.

- Haole45

June 6, 2012 at 6:00pm

blackton, as a fifth-generation Alabamian, I wouldn't wish that on a dog.

- zardoz67

June 6, 2012 at 6:11pm

Fishpeddler writes: "But the point isn't the particulars of my example, but merely that your conclusions depend on a false premise -- that private labor compensation is set under free-market conditions. " And so do you think the median national salary for those with a high school diploma is fair or not? In other words, do you think it's fair that someone with a college degree makes 66% more than someone with just a HS diploma?

- seattleeng

June 6, 2012 at 6:29pm

Cheer up, Jon, as the Fix pointed out, exit polls showed Wisconsin voters liked Obama over that robo-candidate by 7 points, about 3 times the RCP poll margin. Exit polls to me are like, not great, and it's still five months from the general election but it should make pundits hesitant about generalizing.

- wamba1

June 6, 2012 at 6:35pm

Blackton: "I simply do not understand how so many millions of Americans are so complicit in their own misery." That's how I see it, too. (Back to my effect of "big money" observations.)

- Claris

June 6, 2012 at 6:48pm

I find it quite ironic when Seattle trumpets the overpayment of engineers in the private sector as proof of market demands even when they don't provide much of a benefit but then laments the lavishness of the public sector snowplow man. I mean, why shouldn't a snowplow man be paid a decent salary to work in inclement & dangerous conditions in subzero weather in Chicago? Certainly one would want to hire the best driver for the job would we not? So if Bob's Sno-Plow Service pays their drivers $30K a year and doesn't give them any benefits and the same driver can go work for the city and make $35K a year plus healthcare then obviously the "market" has determined that the snowplow worker is worth hiring at $35K a year. Do you fault the city for trying to hire quality employees or the private sector Bob who underpays his staff while he vacations at his vacation house in the Virgin Islands in January? We like to complain about how the government is incompetent, etc. but then if we can't hire quality people what do we expect? I mean, let's extend this logic further to say...Caltrans which has in-house transportation engineers. Average salary is about $79K a year w/ benefits. An equivalent transportation engineer with AECOM (one of the largest engineering firms in the U.S.) will see an average salary of approximately $70K a year w/ benefits. One could say that the Caltrans employee is making bank with his/her lavish salary compared to the AECOM employee. But that salary comparison doesn't tell us how long either has been at the job, seniority, experience, etc. Of course we can also make the suggestion that the higher salary at Caltrans is compensation for working at soul-sucking Caltrans. Or we could say that the AECOM employee is under-paid and overworked and "feels lucky" if his vacation is approved because the higher-ups know they can find another engineer willing to do the same job for less, so why pay him more. If he doesn't like working at AECOM he can go beat the street. But let's take the other side. Why not fire the City engineers and contract out to a private contractor that can do the same job for less and more efficiently. Sound familiar? Well, the City of New Orleans tried that. They hired MWH to manage projects for them after the mayor shut the projects department down. Guess what. The City ended up paying a 20% premium over what they paid in salary & benefits to their former employees and MWH effectively wasted millions of dollars due to mismanagement, overbilling and underperformance. What they did do was milk the City dry for 4 years until the new Mayor fired them and began rebuilding the City building department all over again and paying salaries that are slightly above market rate here in New Orleans. I'm sure I could move over to the City, get a higher paying job with better benefits that the bare-bones ones I have at my current firm. But then I'd be working for the City managing projects and pushing paper versus actually designing. No the real issue isn't so much that labor is going the way of the dodo bird (that's inevitable) and I'm not a "union" fan so much because I've worked with union labor before on various projects. But what isn't and shouldn't be inevitable is the race to the bottom when it comes to fair compensation. Corporations and businesses have led the effort and have been squeezing the labor pool tighter and tighter every year with less and less. Where literally the "perks" of working are essentially limited to just getting a paycheck. The current labor unions act as a speed bump in that race to the bottom. The GOP is driving the truck and we're in the back wondering if we're going to arrive alive.

- singlspeed

June 6, 2012 at 6:54pm

Yes it is unfair, because it is the result of our trade policy that forces blue collar workers to compete with offshore labor. The current differentials between white collar and blue collar and the share of output going to the top 10% are not the result of some imaginary free market but of the anti-labor policies of the United States government, pursued at the behest of the wealthiest so that they can be even wealthier. All this free market bullshit is just that, bullshit. The high income differentials throughout the economy are the result of rents, the antithesis of free markets. Rent-seeking behavior, with the aid of government and every other tool imaginable is the primary economic activity of the rich.

- roidubouloi

June 6, 2012 at 7:00pm

Here it is. What liberals are up against: http://www.salon.com/2012/06/05/can_liberals_cure_stupidity/singleton/ (And this is a money issue?)

- Claris

June 6, 2012 at 7:06pm

"I simply do not understand how so many millions of Americans are so complicit in their own misery." I do, blackton. Most people who vote against their own interests exercise intellect in some areas of their lives--but not in economics or politics. They have neither the talent nor the education needed to competently discuss these subjects. So they just repeat things that others say, like "unions are more powerful than corporations." Anyone who thinks this has an economic and political IQ of about 10, maybe less. Someone who has a very high IQ in his or her chosen field, can be as dumb as dirt about economics and/or politics. IQ does not apply to all subjects that people comment on. I give you Fox News and Rush Limbaugh. They're very intelligent as far as manipulating the ignorant masses goes, but they know almost nothing about economics or politics. That's why the people they and their Dittoheads vote into office crash our economy.

- magboy47.

June 6, 2012 at 7:42pm

Roid writes: "Yes it is unfair, because it is the result of our trade policy that forces blue collar workers to compete with offshore labor." All our workers compete with offshore labor. If you think me as an engineer isn't facing a guy in China that will do my job for 1/5 the price you are wrong. I keep him at bay by giving my employer more than he can get from the guy in China. Ultimately, my boss understadns that 5 workers working at 1/5th my price will not give him better advice than I can give. But that day that is no longer true, I'm toast. I know that. And what do you expect would happen if there was no offshore competition? Would the gap between degreed and non-degreed workers close? I'd submit that if we cut off all offshore competition, very quickly we'd have other countries cut us off. And if Microsoft and Boeing weren't able to sell outside our borders, then the need for PhD, ms and bs degrees would dry up severely, and the wages of degreed workers would fall. And the wages of high school graduate would fall too.

- seattleeng

June 6, 2012 at 9:52pm

singlespeed writes: "I find it quite ironic when Seattle trumpets the overpayment of engineers in the private sector as proof of market demands even when they don't provide much of a benefit but then laments the lavishness of the public sector snowplow man." You are kidding, right? A team of 200 engineers that works on a smartphone that sells 5M units for $500/phone makes their employer $2.5B dollars....That is $12.5M gross per engineer. You say that isn't "much of a benefit?" Your salary, very simply, will be strongly related to the revue you are able to bring, and how many people are able to do the job. Lots of value for employer, few able to do the job = high salary Not much value for employer, everyone can do the job = low salary What you guys want to happen is that people with very limited skills doing a job that nobody really wants to pay much for will suddenly make a lot of money. That just won't happen. I wish it would, but it just won't happen. The only way to make it happen on a large scale is to convince people to dramatically overpay for a service or to use the government to force it.

- seattleeng

June 6, 2012 at 10:12pm

Singlespeed writes: "But what isn't and shouldn't be inevitable is the race to the bottom when it comes to fair compensation. Corporations and businesses have led the effort and have been squeezing the labor pool tighter and tighter every year with less and less. " And why do corporations do this? They are responding to consumer desires. If product A is 5% less than product B and of better quality, we pick product A. Sometimes it costs less but isn't quite as good. That is OK too. That is a choice consumers love to make. In fact, every entity does this. People. Households. Employers. Corporations. Unions. The basic optimization is what drives society forward at the quick pace we have today. It is responsible for the gains we have made. When you say "fair compensation" what you really mean is "I don't want to be judged based on the value I produce. I want to be judged on something else such as seniority" Which is fine, I guess, but unless you can find like minded folks that also value "something else." If you can't, you are stuck...

- seattleeng

June 6, 2012 at 10:27pm

You're contribution here, seattle, consists of shameless asskissing for everyone who is more successful than you are and disdain for everyone who is less successful that you are. How did you become the pivot of justice in America? You purport to believe in free markets, but only when markets produce outcome you like, more money for people above you and less money for people below you, so that you can maintain some kind of self-importance: Seattle, the measure of all things. Thus, you see that more people with the ability to do a certain job lowers the wage -- that is not a productivity differential as you like to claim on other days, as you do contradict yourself from one post to the next. That is a rent differential due to supply, demand, and lack of labor mobility to empty the excess pool of labor and shift it elsewhere. At the same time that you seem to understand that more labor available to do a given job reduces the wage, you then suddenly get stupid and fail to understand that the relevant pool of labor includes offshore labor when the goods produced are tradeable. Are auto workers suddenly less productive or less capable of producing value because the labor pool in which they participate grew ten-fold? That is patently absurd. So, of course wage rates would go up if if were not for foreign competition as the jobs that are most subject to that competition of blue collar jobs. The excess labor in the blue collar sector is the cause of declining relative wages, nothing more, nothing less. You understand this perfectly well, unless you find it ideologically inconvenient to acknowledge that our trade policies have something to do with that. Then you don't. There is no meaning to "overpay" or "underpay." There is only supply and demand. No absolute value that is the "true" value relative to which we can measure over or under. When the supply abruptly increases, the price falls. The only reason your job is not either vanished or in the shitter is that the balance of supply and demand in your sector is not nearly that unfavorale -- yet. It has nothing to do with the value that you imagine you offer. You don't. The price of your services is a function of the supply and demand in your sector and has not much to do with your self-important, self-imagined virtue. If market forces snuffed you out tomorrow, you would be just as mediocre tomorrow as you are today. Even you Smartphone example is lame. If one takes your "much of a benefit" literally, those engineers should make $12.5 million each. But they don't. Why? Because they get paid just enough to supply the employer with the services it needs and not more. And then is not a function of the revenues of the product. It is a function of the supply and demand in the market for engineers. We could balance our trade by fiat, without making any decisions about who buys what or how much they pay. But we won't. We could use the tax system to maintain income equality, high demand, and tight labor markets. But we won't. Because capital wants cheap labor and the easiest way to break the power of labor is to provide a few billion extra workers from overseas who can do the job. The fact that the individual greed is destroying our aggregate economy doesn't mean shit to them and doesn't mean shit to you. You want to believe in your libertarian fantasies and will continue to do so no matter how many times you have to contradict yourself in a single paragraph to do it. Pure nuttery. The economic equivalent of the earth is flat and was created in seven days five thousand years ago.

- roidubouloi

June 6, 2012 at 10:33pm

Sorry, Roid, wrong. I have tons of respect for those that have created amazing things from nothing. Some are wealthy, some are not. And I have very little respect for the millionaires that have created nothing but just exist. Sometimes via inheritance, usually because they were in the right place at the right time. But regardless, I don't harbor anymore ill will towards them than I do the guy that won the lottery. Some are blessed with great looks, great athletic ability, great personalities, great determination, whatever. I have never felt a moment of envy towards anyone that has something I do not. Regardless of how they got it. There is a very interesting study from Harvard professors Verba and Orren back in 1985 . They picked nearly 3,000 leaders in America--leaders from academia, business, minority groups, religion, the left, the right, across an entire spectrum. Adn they asked the basic question "What do you think is a fair wage gap is for an elevator operator and an engineer?" The response was 3.1X. The actual number at the time was 2.9X. That is, the salaries were closer together than these 3000 leaders believed they should be. Now, we can hem and haw over CEO salaries. But as I've noted before, there just aren't enough CEOs to matter. And in typical progressive fashion, if there's not enough of something to matter, then it MUST become the #1. But to me, since the CEO salary has little bearing on my salary, I really don't' care what those guys get paid. My only concern is that if their salary is squashed to $1M, then it will be really hard to justify my salary. And the janitors salary. But we've had that discussion before. So there's not much point in covering that ground again. The fact is, the salary bands established by the free market for jobs most all of us have are exceedingly fair. They are intuitively fair to the average Joe, and they are fair to thousands of leaders noted in the paper above. People might not like them. I can understand that. But they are not anywhere near unfair. So, what do you think is a good median salary for a high school grad and a PhD?

- seattleeng

June 7, 2012 at 3:20am

Sorry, seattle, more of your standard bullshit. You have nothing but disdain for anyone who has not "created" something but merely works to earn a living. Everything you write here drips with it. Disdain is probably not a strong enough word. They are all overpaid, producing no value, unproductive, and on and on. Of course, if they made the cut yesterday of being worthy of your respect and today, due to macroeconomic events that are far beyond anything they control they are thrust into unemployment or underemployment or find their incomes slashed, then, in your weird, twisted weighing of humanity they have abruptly become what you disdain. Did they suddenly stop working hard? No, but because you insist that whatever anyone receives in the market on this day is exactly their moral worth, they are now unworthy. It is such preposterous nonsense all ginned up by that walking farce, Ayn Rand, as justification for unbridled viciousness. Typically, the rightwing response to anything is denial. Not enough CEOs to matter? How about the fact that the income share of the top 10% has risen from 33% in 1980 to about 50% today? Not enough to matter? How about the fact that almost all of the differential has come from the bottom half? Still not enough to matter? How about we just take that 17% of GDP from the top 10% by any means possible, tax it, steal it, seize it. According to you, it is not enough to matter, so surely they won't miss it. Here's what's fair. Anyone who works a full-time job should have their healthcare fully insured, a $20,000 per year retirement income, and the education of their children, through college and graduate school if they qualify, paid for. Plus $20,000 per year net to live on. Employment at that level should be guaranteed to anyone willing to work. Divvy up the rest of it however you like. I don't care. Any outcome for the rest is fair. Those who are not in that bottom category have all the means they need politically to fight it out and will. You won't like the outcome, because it will be far too equal, but, trust me, the educated and upper middle class would not allow the top 10% of thieves to take it out of their pockets, which is exactly why the gains of the top 10% have come from the bottom 50%. When the rich and the upper middle have divvied up the balance and ordered economic life so that they get it, you can then declare that the magic market has given everyone their just desserts.

- roidubouloi

June 7, 2012 at 7:34am

Roid writes: "Anyone who works a full-time job should have their healthcare fully insured, a $20,000 per year retirement income, and the education of their children, through college and graduate school if they qualify, paid for. Plus $20,000 per year net to live on" This I can agree with you on for someone willing to work full time. And it's the responsibility of the leaders of this country (public and private) to ensure that these jobs exist.

- seattleeng

June 7, 2012 at 12:53pm

PS. I have no disdain for someone that "merely works". I have the utmost respect for those in this country that have spent a lifetime installing sprinkler systems or changing sheets on hotel beds. In fact, I have much more respect for them than I do most college grads working in cushy jobs that have never held a real job in their life. By real job I mean a job where the boss is constantly watching you, you are little to no autonomy to do the right thing, and there is a physical component that means your best years are behind you once you hit 35. I shared previously that did a few years as a cook at Chili's, and I cooked a few places prior to that too. And bussed, waiting tables, etc. Make no mistake: Those jobs were more demanding than any job I have held sense. It was a physical demand, no question. But the demands of having a boss constantly watching you if you even stopped during peak times to grab a drink was mentally very, very tough. I had to do those types of jobs just 8 years or so (started working at 15). I was fortunate that I could always to myself "just another few years and I'm done with college" and that was a huge motivator to keep me going. But I don't know how any steels themselves enough to cope with the fact that they are 20, a short order cook, and they might have another 40 years of this. So, let me be crystal clear: My respect for those that have done a menial job over a long span is immeasurable.

- seattleeng

June 7, 2012 at 1:05pm

Seattle, How is it every time someone gives you examples of other industries where salary compression occurs your response, typically, is to revert back to the silicon valley example of outsized pay to performance? As roid pointed out, why isn't the design engineer's salary reflective of the actual value he brings to company if he designs a phone that nets the company $5B? The engineer is "worth" $12M as you say. But he's not. He's "worth" what the company is willing to pay for his services. And if corporations finds cheaper labor is it safe to say wage compression will occur within the industry? You then ask this question: "And why do corporations do this? They are responding to consumer desires. If product A is 5% less than product B and of better quality, we pick product A. Sometimes it costs less but isn't quite as good. That is OK too. That is a choice consumers love to make." Where that it were always so Seattle. As Henry Ford famously said "You can have any color you like as long as it's black." Corporations don't search for the cheapest labor nor try to compress wages because they respond to consumer demands. Corporations do this because they are trying to maximize profits by paying the lowest labor rate possible. You delude yourself into thinking that Qualcomm or Apple acts purely out of consumer concern or altruism. For-profit Corporations exist purely to maximize profits for their shareholders. And I don't fault them for that. But let's not pretend it's something purely altruistic. You assert that my question of "fair compensation" is related to "being paid based not on value but because of seniority." Not so. It's based on the value that one believes they are worth based on their experience. That has a value. Don't you think? Your desire to not tie yourself in knots to justify wage compression is amazing. Given examples of paying someone based on experience you claim it's based not on value. You say in one sentence how the Lead Engineer with 20 years of experience is worth more than the LE who just walked in off the street with only 5 yrs experience. But then claim a traffic engineer getting paid more based on experience...err seniority is wrong. Why? The LE with 20 yrs only has seniority and experience according to you so really why is he worth more? What if the guy off the street can "prove" his worth at half-pay? Do you agree to that guy taking your job at half the compensation or do you accept your paycut to keep your job? If so, that would be wage compression based on the value of the engineer's labor. My point, which you support in a round-about way but won't readily admit to, is that a person is paid based not simply on "market value" but on what they bring to the company. The engineer with 20yrs has more experience and is worth paying more if he brings value to the company right? But by your same logic, the company doesn't have an obligation to pay you a fair wage because really, they can just shop around for another engineer that can do the same job for less. Is there a reason to pay someone with more experience more? If not why? If I think I'm worth more and ask for more am I out of line? If you ask for more relative to what you bring to your company are you out of line? Maybe I think you are over paid compared to an engineer in Bangalore doing the same job. He can lead a team of engineers and deliver a smartphone design in the same time at half the salary. And he doesn't demand healthcare insurance or paid vacation. By using wage compression I succeed in lowering your compensation and as a result you provide even more value to the company now. I gave you a concrete example of similar traffic engineers in the public and private sectors. Both doing similar jobs but your position is that because Caltrans pays more, there must be something wrong going on. Those public engineers living high on the hog or some level of government malfeasance is surely at play. But there isn't. Caltrans has found that offering more pay with benefits is how they hope to attract quality people to come work for them. You skipped right past that. So why can't a government department pay more to attract talent? If it means they can provide better services to the public (shareholder)? If AECOM paid $20K more than Caltrans that be fair. No? If no why? Why is it acceptable for a private company to pay a traffic engineer more than Caltrans and not vice versa? The two traffic engineers act an example of wage compression when people insist that the publicly employed engineer doesn't deserve to be paid more because a privately employed engineer is paid less. Effectively creating wage compression. Then you argue that paying design engineers tons of money is based on the value they bring to the corporation. Maybe the issue isn't that the Caltrans engineer is paid too much, but that the AECOM engineer is paid too little all things being equal.

- singlspeed

June 7, 2012 at 1:16pm

singlespeed writes: "The engineer is "worth" $12M as you say" I didn't say the engineer was worth $12M. I said he created $12M of value. A phone that sells for $500 has part cost of $200, assembly, warranty, IPR and advertising brings that up to about $305 out the door.So, the *net* revenue per phone per engineer is then ~$2M in this particular case. And then you have...shareholders. Yes, the folks that made the entire venture possible by investing their money and providing capital so that you could actually build the factory that lets you make the consumer good. When all is said and done, you end up with a pretty tidy salary for the engineer, and big gains for the investors. If everything works to plan. Singlespeed writes: "Corporations do this because they are trying to maximize profits by paying the lowest labor rate possible. You delude yourself into thinking that Qualcomm or Apple acts purely out of consumer concern or altruism." Wrong. Corporations want to ship good products as quickly as possible. I have worked on many products that shipped with $10 to $20 of extra cost in them because we needed to ship them before the holiday season. Make no mistake: Corporations will overpay all the time to get something done that will give them a competitive advantage. Hiring the smartest (and not the cheapest) is another example of that rule in action. Paying to get the smartest is done all the time. And corporations bend over backwards to please the consumer. Almost to a fault. singlespeed writes: "So why can't a government department pay more to attract talent?" They can, and in some places they should (eg enforcement in DoJ). But every single government job needs to be paid more than the private sector? No way. singlespeed writes: "Maybe the issue isn't that the Caltrans engineer is paid too much, but that the AECOM engineer is paid too little all things being equal." But AECOM is paying market rates. And the Caltrans engineer is protected from market forces by a union, is that true? So they are not at all subjected to market forces. And, if AECOM was underpaying, then they'd have trouble hiring more folks to help them get the job done. So, they'd need to raise pay. Why would we accept caltrans pay is fair when they aren't subjected to any market forces?

- seattleeng

June 7, 2012 at 2:21pm

Well, seattle, what you and I appear to agree on as a minimum level for a full-time worker comes out to $10 per hour take-home pay, that is, net of taxes, with health care, education, and retirement taken care of. The net alone is 40% more than the current Federal minimum wage. How exactly do you propose to reconcile that with your notions of the free-market and fair labor income?

- roidubouloi

June 7, 2012 at 2:21pm

Roid writes: "Well, seattle, what you and I appear to agree on as a minimum level for a full-time worker comes out to $10 per hour take-home pay, that is, net of taxes, with health care, education, and retirement taken care of. " We can already look at median salary for those with high school diploma. They are earning $32K to $34K, which is about $16/hour. The market has already taken care of that. There is nothing else we need to do there except make sure those jobs don't go away. When kids start out, they make less, later in life they make more. Yes, its tough, but they have been told life with just a high school diploma will be tough since first grade. With a base salary of $34K, a $6,000 per year forced retirement plan (16%, same as fica, and get rid of fica), an flat income tax that begins around what a high school graduate earns (which has a median around $34K already). Health insurance comes from the government providing a free catastrophic care policy to everyone such that if any year your expenses exceed 10% of your earnings, they are covered. Unexpected events, such as urgent medical care and unemployment come from the forced savings plan. If the forced savings plan doesn't have the funds in it yet because you are just starting out, the government can provide a low-interest loan. Parents with kids of college age will have roughly $150 to $200K in the forced savings plan. That money may be used for college expenses, but cannot exceed 30% of the fund. That means a family with 2 kids in college can pull out $25K per kid for college. The shortfall would need to be made up via work by the student or live at home while attending college and take courses remotely or commute. The forced savings plan at a 4% return will amass $726K after 45 years of work at $34K/year with $6K saved. That gives $48K per year in retirement.

- seattleeng

June 8, 2012 at 12:37am

Ya got funny numbers there, seattle, as usual. First, assuming that you are correct and $34,000 is the median gross wage or salary, that means that half are below. But, let's take the median. Take $6,000 of federal and state income and $2,000 of payroll taxes off the top. We spend nearly $20,000 per year per household on medical. Let's cut that down to $15,000 per year over a 45 year working life and 20 year retirement. To pay for retirement income of $20,000 per year and retirement medical of $15,000 per year requires a $475,000 nest egg at your 4%. Saving that requires $4,000 per year. So current medical and retirement cost $19,000 per year. $100,000 for college tuition 18 years out has a future value at retirement of $288,000. Funding that over a working life time (including debt paid off post-college) is $2,250 per year. Add back the payroll taxes of $2,000, since we have already figured in retirement income. The household starts with $34,000, pays $6,000 of taxes, and has to apply $21,000 to education, medical and retirement (being very conservative). That leaves only $7,000 for living expenses. The MEDIAN household is short $13,000 per year of after-tax income assuming 4% after-tax rates of return. And, of course, by definition half are below the median.

- roidubouloi

June 8, 2012 at 5:36pm