Wages and Wall Street

horiz-long grey


By Barry Grey, wsws.org

Despite mounting geo-political conflicts, economic stagnation and governmental crises in country after country, stock markets in the US and around the world continue their spectacular upward climb. On Friday, as new revelations in the Trump-Russia saga intensified the crisis facing the deeply unpopular US administration, Wall Street chalked up another banner day. The Dow and the S&P 500 closed at new record highs and the Nasdaq recorded its best week of the year. Since its post-2008 crisis low point in March of 2009, the Dow has risen by 340 percent.

The quintessence of sellout US-business unionism, a fanatic anticommunist, George Meany. a former plumber, was a disgrace to labor in America for too many decades in the postwar. A CIA asset, he was as filthy a collaborator and traitor to his class as they come.

The other persistent economic trend, particularly in the United States, is the stagnation and decline of wages. This is despite a nominal US unemployment rate of 4.4 percent, a low level by historical standards, and what the media characterizes as “robust” job-creation.

Last week’s US employment report for June, despite a better-than-anticipated growth in payrolls, sparked unease even in some bourgeois circles because wages rose a mere 2.4 percent from the year-earlier period, well below the 3 percent rate in the months preceding the 2008 financial meltdown. The New York Times quoted a top executive at Manpower North America, who said: “We have not before seen unemployment drop, low participation rates and wages not move. That tells you something’s not right in the labor market.”

According to the most recent “Real Wage Index,” posted earlier this month on the PayScale website, five of the 32 metro areas included in the index saw wage declines in the second quarter of this year. Four of the five were in Midwest regions hardest hit by decades of deindustrialization: Detroit, Kansas City, Chicago and Minneapolis.

Adjusting for inflation, real wages in the US have, according to this index, fallen by 7.5 percent since 2006. In real terms, average wages in the US peaked more than 40 years ago.

The Dow Jones Industrial average (red) vs US wages (blue)

Unlike the 1929 stock market crash, which was followed in the US by social reform and a modest redistribution of wealth away from the rich, the 2008 Wall Street meltdown ushered in an intensification of attacks on the working class combined with a further enrichment of the financial aristocracy and a record rise on the stock market. Social inequality has accelerated and continues to climb.

Business unionist and current AFL-CIO chief Richard Trumka says Democrats may risk labor’s support if the betrayals continue. He should get serious about single payer and simply lead a walkout from the Democratic party. But that ain’t gonna happen.

The share of the US gross domestic product going to labor has fallen to the lowest level since the end of World War II, while the share going to corporate profits has hit record highs.

How is this situation to be explained, and what is the relationship between the staggering rise on Wall Street and the decline in working class paychecks?

The Wall Street boom and profit bonanza for the rich are not the result of a growth in production or a new upward spiral of the productive forces. On the contrary, the International Monetary Fund has placed at the center of continuing economic and trade stagnation a persistent decline in productive investment and, related to that, a slump in productivity growth.

What has happened is that the process of financialization and the growth of parasitism that led to the 2008 crash—triggered by the outright criminality of the major banks and investment firms—have accelerated in its aftermath. Far from diverting a small portion of corporate profits to finance social reforms, governments and central banks have overseen an unprecedented plundering of the world economy to rescue the financial aristocracy and make it even richer, at the direct expense of the working class.

The US Federal Reserve has led the way. After the Bush and Obama administrations seized $700 billion in public funds to finance an initial bailout of the major Wall Street banks, the Fed set about buying trillions of dollars of worthless assets to remove them from the banks’ books (dubbed “quantitative easing”), resulting in a five-fold growth of its balance sheet. At the same time, it lowered interest rates to near-zero and kept them at ultra-low levels to pump liquidity into the financial markets and drive up stock prices.

The Federal Reserve’s balance sheet has grown more than five-fold

The banks used their super-profits to provide a windfall for the financial aristocracy in the form of dividend increases, stock buybacks and corporate mergers. Just this month, the Fed gave the green light for banks to raise their payouts to big investors. Bank of America said it would increase its dividend by 60 percent and unveiled a $12 billion share repurchase plan.

This was accompanied, under Obama, with a policy of austerity and wage-cutting directed against the working class. This included the bailout of the auto corporations on the basis of an across-the-board 50 percent cut in the wages of newly hired workers, the gutting of health care for millions of workers in the form of Obamacare, and an assault on pensions signaled by the Detroit bankruptcy.

That this attack continues unabated was made clear last week when the state of Missouri cut the already derisory $10 minimum wage in St. Louis to the statewide starvation level of $7.70.

What has made this social counterrevolution possible is the nearly complete suppression of working class opposition. When the Great Depression hit in the 1930s, the example of the Russian Revolution and the existence of the Soviet Union continued to haunt the bourgeoisie and inspire working class resistance internationally. The social reforms of the New Deal were not the result of beneficence on the part of Franklin Roosevelt, but the explosive eruption of working class struggle, particularly between 1934 and 1938, including general strikes that paralyzed entire cities and a wave of sit-down strikes in auto and other industries.

The current period is dominated by the opposite—the artificial suppression of the class struggle. The US Labor Department reports that over the past four decades major work stoppages declined 90 percent. The period from 2007 to 2016 was the lowest decade on record, averaging approximately 14 major work stoppages per year.

There are many signs of growing anger and militancy in the working class. But there is no basis for social struggle in any of the existing organizations. The Democratic Party has moved ever further to the right and today functions openly and directly as a party of Wall Street, war and the CIA.

The AFL-CIO and the rest of the unions—corporatist organizations of a corrupt and reactionary bureaucracy—devote their efforts to suppressing working class opposition to layoffs, wage cuts, speedup, casualization of labor and attacks on health care and pensions. They block strikes wherever possible and sabotage them when they break out.

Strike levels (blue) and income share of the top one percent (red)

The AFL-CIO web site reflects the organization’s indifference and contempt for the working class. On the issue of wages, it notes, as part of a few perfunctory paragraphs, that “Ninety percent of Americans’ wages are lower today than they were in 1997.” Its plan of action to confront this astonishing and damning fact? A petition addressed to Congress!

Wage stagnation and the ever-greater concentration of wealth at the very top will not be halted by appeals to the bribed stooges of Wall Street in Congress or any of the other institutions of the corporate-financial oligarchy. Only the renewal of working class struggle on the basis of an anti-capitalist and socialist program will change the situation.

Wage stagnation and the ever-greater concentration of wealth at the very top will not be halted by appeals to the bribed stooges of Wall Street in Congress or any of the other institutions of the corporate-financial oligarchy. Only the renewal of working class struggle on the basis of an anti-capitalist and socialist program will change the situation.

The long and highly uncharacteristic period in which the class struggle in America has seemed to disappear is rapidly coming to an end. Anger is rising as is a desire to fight back. Last year’s Verizon strike was one of the longest and largest in many years. This growth of militancy is accompanied by a broad political radicalization and rise of anti-capitalist sentiment, which found an initial expression in the mass support for the Bernie Sanders campaign in 2016, based on the misplaced belief that Sanders is really a socialist and opponent of the “billionaire class.”

The brutal attacks on social conditions and democratic rights by Trump’s government of oligarchs will provoke growing resistance among workers and young people. This emerging movement must, however, find a new organizational form and be guided by a conscious political perspective. It must not allow itself to be channeled behind the Democratic Party or sabotaged by the unions.

About the Author
Barry Grey is a senior editorial analyst and writer with wsws.org. a socialist organization.  His site is published by the Social Equality Party (SEP) which he naturally favors as the solution to the current quagmire.  

Wage stagnation and the ever-greater concentration of wealth at the very top will not be halted by appeals to the bribed stooges of Wall Street in Congress or any of the other institutions of the corporate-financial oligarchy. Only the renewal of working class struggle on the basis of an anti-capitalist and socialist program will change the situation.

[premium_newsticker id=”154171″]

Parting shot—a word from the editors
The Best Definition of Donald Trump We Have Found

In his zeal to prove to his antagonists in the War Party that he is as bloodthirsty as their champion, Hillary Clinton, and more manly than Barack Obama, Trump seems to have gone “play-crazy” — acting like an unpredictable maniac in order to terrorize the Russians into forcing some kind of dramatic concessions from their Syrian allies, or risk Armageddon.However, the “play-crazy” gambit can only work when the leader is, in real life, a disciplined and intelligent actor, who knows precisely what actual boundaries must not be crossed. That ain’t Donald Trump — a pitifully shallow and ill-disciplined man, emotionally handicapped by obscene privilege and cognitively crippled by white American chauvinism. By pushing Trump into a corner and demanding that he display his most bellicose self, or be ceaselessly mocked as a “puppet” and minion of Russia, a lesser power, the War Party and its media and clandestine services have created a perfect storm of mayhem that may consume us all. Glen Ford, Editor in Chief, Black Agenda Report 

Make sure many more people see this. It's literally a matter of life an death. Imperial lies kill! Share widely.

2 thoughts on “Wages and Wall Street

  1. I remember well during an (un)authorized strike cira 1969 in which I was involved as a union leader. The district union representative called and asked me to tell the workers to go back to work. That was the ‘official’ position. The unofficial position was what my rep said afterwards: “But don’t let me catch you crossing any picket lines”.
    Today, union leaders ‘bosses’ live in gated communities and hobnob with the elites, hang out with their neoliberal democrat pals…..in other words F….ing Useless.

  2. This does reflect the middle class perspective, I suppose. The middle class are less than half the population. As for any bourgeois concerns about “the struggles of the working class,” notice how those concerns instantly vanish when workers get pushed out of the job market, into poverty. We’re stuck with reality out here. Not everyone can work (health, etc.) and there aren’t jobs for all. The last I heard (over a year ago), there were seven jobs for every ten jobless people who still had the means to pursue one (home address, phone, etc.).

    The US shut down/shipped out a huge number of jobs since the 1980s, ended actual welfare aid in the 1990s. In the process, we created an abundant surplus of job-ready people who are desperate for any job at any wage. There’s nothing to fall back on. This is why there is no logical reason to raise wages. Businesses are for-profit entities, after all, not charitable organizations.

    Unions? The middle class railed against unions in the 1980s, branding them as oppressive leftist organizations. Today, only a little over 11% of US workers have union representation. The US itself has been transitioning into just another third world labor state for years.

Leave a Reply