Between the Lines Q&A

A weekly column featuring progressive viewpoints
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under-reported in mainstream media
for release March 17, 2010

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As Worker Productivity Rises,
Unemployment Remains at Record Levels

RealAudio MP3

Interview with Max Wolff,
economist and instructor
at The New School's graduate program
in international affairs,
conducted by Scott Harris

wageslave

U.S. workers lost 8.4 million jobs since the economic meltdown began in December 2007, and although economists tell us the deepest recession since the Great Depression has officially ended, the unemployment rate is steady at 9.7 percent as of February. In a sign of rising pessimism about the economic future, 41 percent of the nation's unemployed have been out of work for at least 27 weeks.

The U.S. Bureau of Labor Statistics reported that in the fourth quarter of 2009, worker productivity increased at a 6.9 percent annual rate, revised upward from the initial 6.2 percent reported in February. The rise in productivity provides an explanation how the U.S. economy could have grown at an impressive rate of 5.9 percent in the final quarter of 2009, while unemployment remained at near record levels.

Increased worker productivity reflects the current strategies that businesses have employed to cut costs to the bone by both laying off their work force and demanding ever-increasing productive output and efficiency from fewer workers. With jobs scarce and labor unions in an extremely weak position to make demands on employers, wages and benefits for an increasingly more productive workforce are stagnating or in decline. Between The Lines' Scott Harris spoke with economist Max Wolff, an instructor at The New School's graduate program in international affairs. Wolff provides an overview of the ailing U.S. economy and the challenges for workers as productivity increases and unemployment remains high.

MAX WOLFF: Generally speaking, the top 20 percent by income here are doing OK, and the stock market is now up 68 percent from its March 2009 lows. So exactly one year ago, we would have been talking about an absolute freefall disaster, and about the worst 18th-month period in the modern history of the stock market had been clocked going into March 2009. And as we stand here one year hence, the stock market is up 68 percent from a year ago. We've seen no increase in taxes and no new financial regulations. So, while there are still lots of huge and undealt-with underlying economic problems, for the top 20 percent of large corporations and financial markets, it's been one of the best years of the past 100, of course with some noteworthy exceptions -- homebuilders have had some trouble and some of the retail space have fared poorly. But generally speaking, the top 20 percent by income here, are doing OK.

Unfortunately, the other 80-plus percent of the population still faces officially 9.7 unemployment and underemployment, which includes people who have given up looking and people who are what we call involuntarily part-time -- so they want full-time work, they need full-time work, but they can't find it. That's now 16.5 percent of the U.S. public that's involuntary part-timers. So we really do see a lot of Main Street pain. We have 7.1 million homes on which the mortgages are at least 30 days late at the present time and a clogged-up foreclosure pipeline. So the bottom 80 percent and the top 20 percent are almost like they're in two different economies here. And I think we've begun to see the reflection of that in some of these sort of more outrageous political events of the last six months.

BETWEEN THE LINES: Max, review for us some of the most recent data on productivity vs. unemployment in the U.S. economy.

MAX WOLFF: We saw productivity soar across the second half of 2009, particularly in the last quarter of 2009. And unfortunately, that's the newest data we have, so we don't have productivity for 2010 yet. The first estimates of that won't begin to come out for a little bit more than a month hence. So we really don't know the whole first quarter. But at the end of 2009, and the beginning of 2010, we saw two things happen together. We saw a massive increase in productivity, which measures the value or output produced per worker per hour. And we saw this occur at the same time as employment tanked and total wages fell. So the total value produced by American workers rose but the hours and the pay of American workers fell as people worked harder and harder as various employers around the country just ran skeleton crews, or a smaller number of people were producing an enormous amount of things.

This begins to give us the kind of politics we have as an expression of this, too. You have people scared to lose their job with stingy benefits who are afraid to complain, who aren't getting wages increased -- you know, wage increases or salary increases -- who are worked ragged and to the bone, and then we have 14-and-a-half to 15 million people who can't find a job at all. And unfortunately these things are obviously related. And because the labor market is so weak, you're able to work your remaining employees very hard, demand a lot from them, and pay them relatively little. And this isn't in one part of the country vs. the other, or in one sector or type of job vs. another. This is kind of on the macro-level, all 50 states.

So this is a pattern. And we've seen a version of this, really since the '70s, where productivity keeps rising, and wages don't. But this is going kind of hyperbolic. If you think of it in terms of its image, the slope or the grade on the curve has suddenly shifted, kind of radically up in the last maybe 12 months.

I think a lot of people feel this at work. They're either out of work, or they're working extra hard because people they should have hired or who used to work with them quite simply aren't there any more.

BETWEEN THE LINES: Well, Max, are there alternative policies that the Obama administration could pursue or Congress could push or grassroots movements at the street level could protest in favor of? What could be done at this point to kind of get this back in balance so that workers are being compensated for their increased productivity?

MAX WOLFF: The first thing is, we can start where the Obama administration did suggest and broadcast what I think were some pretty valuable ideas when they were in the process of becoming the administration and running for office. And that is, this real commitment we were going to see to green jobs and infrastructure and thus far, it takes awhile to do this, and you don't want to unfairly harshly judge too quickly, but paying for it and actually getting the ball rolling in this area has been a day late and a dollar short all along.

I think the things that people could really begin to look at is we need a national system of public transit. We need it for the environment, we need it for our balance of trade, and I think the federal government also needs to be honest and say, the private sector can't find anything to do for 15 million people and the economy is struggling and we have 7 million homes in the foreclosure pipeline.

And the federal government itself has to throw off this sort of ideological yoke that it can't hire people. It has to go out and it has to hire people. Not in some highly corrupt thing where the local party bosses pick their cousins for no-show jobs, but where the government really and in an audited, transparent way, goes out and starts doing things that the society needs that the private sector is not going to do, like infrastructure, public goods and public transit, that gives people jobs. Because part of the reason you give people jobs isn't just for the income -- although, of course, that's important -- but it's to give them a record of work, to get them ready to work, and to give people dignity and a sense that they're the master of their own destiny.

And giving people checks and inducements to buy houses and cars doesn't give people a resume, it doesn't give them a sense of meaning and importance in the world, and it give them the dignity that a job gives them and I think we all could agree that there's a lot we need to get done in this society that isn't getting done. We have the people, we have the need. I think that's more than enough to throw off this ideological yoke about the government never hiring anyone, and beging to roll up our shirtsleeves and get back to work. We've seen it work before and I think we need it again.

Read Max Wolff's commentaries online at www.huffingtonpost.com

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Scott Harris is an executive producer of Between The Lines, which can be heard on more than 45 radio stations and in RealAudio and MP3 on our website at http://www.btlonline.org. This interview excerpt was featured on the award-winning, syndicated weekly radio newsmagazine, Between The Lines for the week ending March 19, 2010. This Between The Lines Q&A was compiled by Anna Manzo.

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