Friday, December 31, 2004

The malaise of American Labor

Major Newspapers have devoted the off-season of major news to Article series about the rise of Bankruptcies and wide Income swings currently generated in the American economy. The Articles are basically fill-Copy, and do not analytically study the references. This Post will attempt to bring a clearer picture.

The major cause of instability of American Households remains loss of the security net common prior to the 1970s. Most Economists would protest this account, but the loss of the security net devolves through Corporate escape from taxation, the switch from One-Income to Two-Income Households, and the reduction of individual Labor real Income--adjusted for inflation. The final element resides in Corporate abandonment of Blue-Collar Labor.

Economists extol the 1963 Tax Cuts, most notably the real shift from Corporate accountability. Corporations suddenly found independence from valid Tax rates upon their Income, and soon could envision the profits of abandoning policies of Employee security--previously a method to escape Corporate taxation to the benefit of the Corporation. They did not have to pay the Tax, so who cared about a protected Employee. Successive Tax Acts all contributed to Corporate escape from provision of Employee security. Health insurance, Pension benefits, security from Layoffs and Downsizing all became historical legend, as Corporations sought Profits untaxed and safe from both Government and Worker.

The switch from One-Income to Two-Income Households had drastic effect in the American economy. The Labor force suddenly increased by about 60%, with long-term impact on real American Wages. Starting Wages slowed in real growth, unspecialized Labor stopped in terms of real growth adjusted for inflation, and Benefits reduction became the easiest means to reduce real Wages--as their reduction was least noticed. One-Income Households, especially in Blue-Collar and unspecialized Labor trades, became unviable in terms of provision of sustaining Household expenditures; the term of real Working Poor was truly born, where these Households could not pay for medical services, debt-free Consumption, or save according to financial and Economic formula viability. Young laborers could not manage, except by prior education or Parental assistence--both heavy expenditures to their parental Households.

The fiinal straw was the Corporate transfer of production off-shore, destroying the American Blue-Collar Workforce. Corporate Profits pursuit meant unspecialized American Labor was disenfranchised. Corporations would accept American production, if and only if it expressed the high Profits ratio which Management demanded--they refused to accept a 5-10% Profit per Unit, insisting on a 20-30% Profit per Unit; with unspecialized American Labor destined to be wiped out. It did not matter that this Country did not have, not could ever produce, sufficient specialized Labor positions to employ the American Labor force, even if they developed the required Specialization skills.

Corporate Executives and Economists like to imply American Labor must accept this destruction, as they are the result of immutable Economic forces in the World. They are not! They are, in fact, only the artificial creation of a Special Interests heavily-financied lobbying effort to rewrite American Tax law to their own benefit. The gains of the Era of Unionized Labor, circa 1930s-1950s, can be replicated. American Tax law could state that Corporations could not activate any tax credits or tax concessions, unless they contributed at least half of Employees' salaries to Health and Pension benefits; Corporations which did not produce at least 60% of their Product on American soil being prohibited from any exercise of any tax credits or tax concessions at all. Corporations which did not fulfill their Employer obligations would go back to paying a 40% Tax rate, instead of a current real tax rate of 7%. lgl


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