Monday, September 06, 2010

Unhappy Labor Day

Labor doesn't have much to celebrate today, nor do the rest of us. Unemployment is still unconscionably high, companies continue to lay people off, and those companies which are hiring are doing so at the low-wage end of the spectrum. About the only thing we have to be grateful for is that this day also marks the unofficial end of Summer, which has been brutally hot for large sections of the country.

I surveyed some folks last night at Eschaton as to whether their hometowns were having any kind of Labor Day Parade or celebration. Most replied that they were unaware of any such events. Only one, Ralphie, who is in Milwaukee (my old hometown), noted such an event. (Go here for the details.)

Because it's an election year, some unions are hosting Labor Day Breakfasts and inviting candidates to come and campaign, but I doubt many candidates are looking forward to that chore. There's a lot of deep-seated anger among blue collar workers right now, and justifiably so. Any incumbent walking through the door can anticipate hostility.

I live in the Los Angeles area, and as far as I can tell, no such parade is planned, although there might be one which just hasn't gotten much in the way of publicity. A search of the Los Angeles Times didn't contain any listing, but I didn't check the "events" section because the web site is too damned difficult to navigate.

What the Los Angeles Times did have, however, was a passably good editorial on the state of labor today. That state, unfortunately, is not a very healthy one. The editorial does a nice job organizing and analyzing the current situation with respect to the dismal employment picture, and for that reason alone is worth the read. One section, however, bothered me. Here it is:

More jobs are being lost than created. After the 2001 recession began, it took almost three years for job gains to pull firmly ahead of losses. We're in a similar situation now, but with a much steeper drop in employment creating a far deeper hole to climb out of. Non-farm job losses outnumbered gains in all but one month from January 2008 to January 2010. Since February, job gains have pulled narrowly ahead of job losses in the private sector, but government layoffs tipped the balance back in June, July and August.

Employers have the resources to hire — corporate profits have bounced back strongly from the recession and companies have stockpiled huge amounts of cash — but not the will, at least not in the U.S. Conservatives blame the Obama administration for creating uncertainty about taxes and regulatory burdens, but the greater uncertainty for businesses is whether consumers are ready to begin spending again.
[Emphasis added]

I think the center-left editorial board has misread things dreadfully. If the companies want consumers to buy their products or services, they need to start hiring so the consumers have the money to spend.


What I think is going on is that too many companies are back to thinking only in three-month increments. Quarterly reports which reflect reduced labor costs and higher profits keep the shareholders happy and the share prices high. That, of course, means bonuses for the CEOs and other top executives, who then proceed to reduce labor costs further. Sooner or later that mode of operation is going to bite the companies' backsides, and we'll go from the Great Recession into the Great Depression II, one which will pinch even the wealthy.

That cavil aside, however, the editorial also contains some of the proposals being thrown about to bring employment back. Like I said: it's worth a read.



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