In Brief

Bosses get $243 billion subsidy for paying low wages

By Fred Goldstein The capitalist class has found more and more ways to pay tens of millions of workers below-subsistence wages by shifting what should be the cost of wages onto government at various levels. This shift of wage and benefit costs off the payrolls of the bosses and onto the government amounts to a massive subsidy to many of the richest corporations and biggest employers in the U.S. for paying poverty or below-poverty wages. Every dollar not paid by the corporations to keep their workers at...

Bosses get $243 billion subsidy for paying low wages

By Fred Goldstein

The capitalist class has found more and more ways to pay tens of millions of workers below-subsistence wages by shifting what should be the cost of wages onto government at various levels. This shift of wage and benefit costs off the payrolls of the bosses and onto the government amounts to a massive subsidy to many of the richest corporations and biggest employers in the U.S. for paying poverty or below-poverty wages.
Every dollar not paid by the corporations to keep their workers at a livable wage is another dollar in profit for fast-food and big-box billionaires, as well as other low-wage companies.

Between 2007 and 2011 the federal government spent $243 billion a year on supplements for poor workers, according to a University of California study published in 2013. (Think Progress, Oct. 13, 2013)

The study focused on fast food workers, who represent a typical segment of the low-paid workforce, but included a broader section of low-paid workers. It aimed to show the “last line of defense between between America’s growing low-income workforce and the want of basic necessities.”
The study limited itself to the cost of food stamps (SNAP or Supplemental Nutrition Assistance Program), the Earned Income Tax Credit for low-income workers, and the TANF program (Temporary Assistance for Needy Families, formerly known as welfare). It did not include Medicaid and subsidized housing.
This dramatic number, nearly a quarter of a trillion dollars to supplement below-subsistence wages, flows from the enormous growth of low-wage jobs and the drastic rise in forced part-time employment in the United States.

Fast food and big box workers paid below subsistence
Low-wage fast food workers were forced to apply for $7 billion in public assistance in 2013 for such programs as Medicaid and CHIP (Children’s Health Insurance Program), among others. Low-wage workers at a single 300-employee Walmart Supercenter are on average forced to apply for about $1 million in government benefits just to stay at the subsistence level.
A study by Americans for Tax Fairness, a coalition of 400 groups, showed that Walmart workers in 2013 were forced to apply for $6.2 billion in food stamps, Medicaid, subsidized housing, etc. Walmart has 1.4 million workers. (Forbes, April 15, 2014)
Forbes reported that McDonald’s workers had to apply for $1.2 billion in government subsistence benefits and workers at Yum Brands (Pizza Hut, Taco Bell, KFC) needed $648 million.

This situation has been intensified by the growth of involuntary part-time work. In 1968, 13.5 percent of U.S. workers were employed part time. In February it was 18.5 percent. There were 7.4 million workers subjected to forced part time when they need full-time jobs to survive. (advisorperspectives.com, March 9)

Marx on wages and profits
Karl Marx gave a basic definition of wages in his analysis of capitalist exploitation which can help in understanding this situation. Under capitalism, every worker must sell their labor power to some boss in order to survive. The price of that labor power is the wage or salary.
But the wage received is far below the value created by the worker. The total value created by the worker belongs to the boss in the form of the product or service provided. The boss sells the product or service for money and gives the worker just enough to live on. A part of the money is paid out for materials, machines, rent, interest, etc. What is left is surplus value, that is, value created by the worker but for which he or she is not paid. This part is kept by the boss in the form of profit.

The way the boss raises profits is to take more surplus value. The main way to do this is to lower wages. The bosses get the government to pay for food through food stamps, Medicaid for the poor, subsidized health care, housing, etc. These are the basics of life that the bosses should pay for by giving workers a living wage.
By shifting their labor costs onto the federal government, the bosses raise their profits and can pay below-subsistence wages.
It is this that is fueling the low-wage workers’ campaign, a just campaign whose goal must be to force the capitalists to pay a living wage, not just a bare subsistence wage, but enough to cover the cost of having a decent life.

Capitalist electoral politics and class struggle

By Fred Goldstein September 17, 2012

Adapted from a talk given at the Sept. 7 New York City meeting of Workers World Party.

At the moment of this writing, the Chicago Teachers Union has set a splendid example for the working class during this presidential electoral season. They have refused to be swept away by the electoral tide, in which both parties are financed by hundreds of millions of dollars of corporate money, and are on strike against the Chicago school administration to defend their own rights and the rights of the poor and oppressed communities of the city.

Whatever the politics of the union leadership, what makes this action so politically significant is that it flies in the face of the stampede to the polls. This is, after all, a city whose mayor, Rahm Emanuel, is Barack Obama’s former chief of staff. And this is a time when the president is engaged in a fierce electoral battle against the right-wing Romney-Ryan ticket.

The Chicago teachers represent a sector of the organized working class that has been under severe attack in recent years. In particular, they have experienced first hand the futility of relying on elections.

They have faced the so-called “Race to the Top” initiated by Secretary of Education Arne Duncan, who was formerly superintendent of the Chicago schools. This program is nothing but a big bribe to local officials and school boards, costing $4 billion, that is aimed at fostering charter schools, privatization of the public school system, abandoning the mass of school districts that are disproportionately Black and Latino/a, and undermining the union rights of teachers.

It is no accident that it was teachers facing similar attacks, along with students in Madison, Wis., who started the heroic two-week occupation of the state Capitol there.

This strike is a healthy antidote to the obsession with electoral politics that is being drummed up by all quarters of bourgeois society.

The ‘lesser evil’ dynamic

The traditional dynamic of capitalist politics is taking hold in an atmosphere in which the election is cast as a matter of life and death for the masses. They are being told to drop everything and throw themselves into stopping the Republican right-wing ticket of Mitt Romney and Paul Ryan.

To be sure, the Romney-Ryan team is thoroughly reactionary. But by focusing on this alone, the broader picture is obscured — namely, that the presidential election is at bottom a struggle between different factions in the ruling class to get their hands on the capitalist state with its $3 trillion budget and win the right to parcel out the spoils to their corporate and financial cronies.

While there are important policy differences on the surface between the two parties, there is no daylight between the parties from a fundamental point of view. Both enforce capitalist rule, wage slavery, exploitation and oppression and foster imperialist conquest and intervention abroad.

Karl Marx grasped this essence of capitalist democracy splendidly when, in analyzing the experience of the Paris Commune, he said that the oppressed are allowed once every few years to decide which particular representatives of the oppressing class shall represent and repress them in government.

The parties do look very different socially and economically, however. Comparing the Republican National Convention to the Democratic National Convention makes the parties seem as different as night and day. The RNC was probably 99.9 percent white, with delegates ranging from prosperous to rich, filled with business people and Chamber of Commerce types.

The Republicans flaunted a reactionary program, promising to cut programs and services for the masses and reward the rich. The convention marked a continued shift to the right.

It seems ages ago now, but even a reactionary like George W. Bush was compelled to run in 2000 as a “compassionate conservative” and to pay lip service to immigrants, the poor communities and their failing school systems, among other deceptions.

The present ticket, however, is running with an extreme anti-abortion and anti-lesbian, gay, bisexual, transgender and queer rights platform as its standard, in addition to threatened budget cuts and openly anti-immigrant and anti-labor policies. In his speech, Ryan even red-baited the Obama administration as being “central planners,” evoking images of socialism and the USSR. Would that the charges were true!

The DNC, on the other hand, was populated by large numbers of Black and Latino/a delegates and unionists, along with liberal public figures and celebrities. The speakers included people from these communities, as well as a Dreamer, an undocumented young Latino. Speakers made progressive statements in favor of a woman’s right to choose, same-sex marriage, immigrant rights, taxes on millionaires and billionaires, and so on. The contrast with the RNC could hardly have been greater.

Differences & similarities
But this contrast is deceiving. Consider that in his speech President Obama pledged to carry out Wall Street’s austerity plan of cutting $4 trillion from the budget, including Medicare, Medicaid and Social Security. If his cuts are not quite as drastic as those that the Republicans call for, they are still drastic and a huge attack upon the masses.

On bellicose war talk, of course, the two parties converged.

Obama’s greatest booster at the convention was former President Bill Clinton. This is the Clinton who threw millions of mainly single mothers, disproportionately African-Americans and Latinas, off the Aid to Families with Dependent Children program — welfare — and forced them to compete for scarce low-paid jobs to earn benefits, even as they struggled to raise children.

This is the Clinton who initiated the Effective Death Penalty Act, which drastically cut down the appeals process for death-row prisoners. To make the point that he was in favor of the death penalty, Clinton even left the campaign trail in 1992 to travel to Arkansas to witness the execution of a mentally disabled Black prisoner.

Clinton also initiated anti-terrorist laws that were later used by the Bush administration. He teamed up with Newt Gingrich to pass the North American Free Trade Agreement, which caused a full-scale agricultural depression in Mexico, forcing millions to leave their land as the country was flooded with cheap corn and other products from U.S. agribusiness.

Finally, Clinton had the hypocrisy to accuse Romney of wanting to deregulate financial firms and give tax breaks to millionaires and billionaires. But it was Clinton and his two Treasury secretaries, Robert Rubin and Larry Summers, who did away with the Depression-era Glass-Steagall Act, which had been enacted to limit financial speculation.

The Clinton speech, perhaps more than anything else, highlighted the deception behind capitalist electoral politics.

The openly reactionary proclamations and threats by the Republicans have set up a stampede to the camp of the Democratic Party. But this party is no less controlled by Wall Street, the giant monopolies and financiers than the Republican Party. The difference between the two parties is that the Republican base is made up of actual business owners and bosses, while the Democrats have the progressive masses and middle-class liberals as their base.

In the end, however, both parties will do the bidding of the bosses. As an example, Ronald Reagan is often denounced as the initiator of the sharp shift to the right in capitalist politics. But it must not be forgotten that it was Jimmy Carter who began the deregulation process in transportation and other spheres that was used to break unions. And it was Carter who planned the operation, carried out by Reagan, that broke the Professional Air Traffic Controllers Organization. That was the beginning of the anti-labor campaign.

It was also Carter who callously declared that “Life isn’t fair” as he signed the Hyde Amendment, denying poor women the right to federal funds for abortion. And it was Carter who began a massive military build-up that was continued by Reagan.

Carter did not do all these things because he suddenly got the ideas, but because they expressed the right turn in the ruling class, in the same way that the austerity programs of both Romney and Obama express the consensus on Wall Street today. The bankers and bosses are feeling the stress of the world economic crisis, and they want to take it out of the hides of the masses.

Shift to the right: It’s not money alone

The current wisdom is that the Republicans and the right wing are gaining ground because of the 2010 Supreme Court decision in Citizens United that corporations are people and can contribute unlimited amounts of money to political campaigns.

This argument defies historical analysis. The bosses in the U.S. have dominated the political parties and legislatures as far back as the founding of the republic. George Washington was the richest man and the largest slave owner in the U.S. at that time. In the 19th century, legislatures, presidents and judges were bought and sold by the giant railroad barons, the cattle barons and the mining companies, who were granted millions of acres of land stolen from the Native people. It was all done through corruption and bribery.

Any study of the relationship among money, politics and capitalist interests, from the booming 1920s on, shows the further fusion at the top between the political machine and big business. If there was a modification of this at all, it was during the Franklin D. Roosevelt administration, when sections of the ruling class had to be pushed back by Roosevelt so he could avoid a brewing revolutionary upsurge during the Great Depression in the mid-1930s.

To be sure, the Citizens United ruling further widened the gap between the labor movement, women’s and civil rights groups, and LGBTQ organizations, on the one hand, and the corporations on the other. But the strength of the mass movement has never been lodged in financial resources that could influence the political establishment, but in mobilization and militant struggle.

The shift to the right in U.S. politics began in the late 1970s. It was accelerated a decade later by the collapse of the USSR and has been deepened with the retreat of the top leaders of the labor movement from the arena of class struggle. It is the present and temporary relationship of class forces that is responsible for the sharp shift to the right by the ruling class, not corporate money in politics — which has always been there.

Rely on resistance & struggle

The way this situation will be reversed is to reverse the relationship of forces in favor of the workers and the oppressed. Social democrats and liberals like to bait the revolutionary forces and the left, who refuse to be dragged into the elections behind an imperialist party. They are accused of sitting on the sidelines and abstaining from the inevitable and inescapable game of capitalist politics.

But this is a false accusation. In the first place, the game of capitalist politics played by the Democratic Party — and the Republicans too — is a shell game. The workers are shown a very small prize at election time but can never lay their hands on it. The promises are accompanied by a torrent of imperialist national chauvinism and social patriotism. But the social democrats tell us there is no real struggle, so therefore we are whistling in the dark and nothing can happen outside the framework of capitalist electoral politics.

Revolutionaries, particularly Marxists, are not unconscious of the fact that the vast majority of the workers right now see the electoral arena as the primary, perhaps the only, arena in which they have any hope of getting their grievances redressed.

But revolutionaries have answers to the social democrats and the liberals. First of all, we definitely are in the game. But it is a different game — the game of resistance, the game of struggle, the game of fighting for our rights on the ground.

Second, the task of the liberation of the multinational working class belongs to the class itself. No section of the bourgeoisie will ever do that for us.

The bosses always try to take away the democratic rights of the masses when the opportunity arises. Our answer when they make the attempt — through voter I.D. laws or anything else — is to fight to defend those rights at all costs. But we do not hand over the keys to the political process to the very class enemy that wants to take away our rights in the first place.

And finally, we know that the present acceptance of the capitalist electoral framework cannot forever contain the workers and the oppressed, who are being ground down on a daily basis under the class dictatorship of capital. The fraud of capitalist democracy will not be able to contain the people who are now suffering. Between 25 million and 30 million underemployed and unemployed are losing ground every day to debt collectors, landlords, greedy health care and insurance companies, and a thousand other capitalist bloodsuckers.

The teachers, students and community activists on the picket line in Chicago are an early testament to this. The heroic workers, students and community activists who seized the Capitol in Wisconsin showed it even earlier.

Capitalism is at a dead end, and sooner or later the masses will grasp this.

In the meantime, the real game is to build a workers’ party of resistance and class struggle.

Goldstein is the author of “Low-Wage Capitalism” and “Capitalism at a Dead End.” More information is available at www.lowwagecapitalism.com. The author can be reached at fgoldstein@workers.org.

IPCC: ‘Climate change endangers life on planet’

Big business: ‘Profits come first’

The U.N. Intergovernmental Panel on Climate Change has issued a dire report based on the findings of thousands of scientists and environmental experts. It shows that climate change has already left its mark “on all continents and across the oceans,” damaging food crops, spreading disease and melting glaciers.

Big business polluters like ExxonMobil shrug it all off. The Heartland Foundation, the chief corporate climate denier — backed by the Koch brothers, the Olin Foundation, Walmart and a host of other right-wingers — issued anti-science rebuttals to the IPCC report. The Republicans in Congress tried, unsuccessfully, to pass legislation restricting the National Oceanic and Atmospheric Administration from carrying on any research on climate change.

The report talks of “extreme weather events” that are leading to the breakdown of “critical services such as electricity, water supply and health and emergency services.” It also sounds the alarm about “the breakdown of food systems, linked to warming.”

The IPCC shows how environmental damage flowing from climate change hurts the poor in poor countries and rich ones, too. As environmental change intensifies the spread of disease, inadequate health systems are overcome. Food supplies are already diminishing, and food prices are rising globally, hitting the poorest the hardest.

Automation threatens 47 percent of U.S. jobs

By Fred Goldstein on April 17, 2014

A wakeup call for labor movement and working class

Two scholars at Oxford University have made an exhaustive study of 702 U.S. occupations and new techniques in automation. They concluded that 47 percent of existing jobs are at high risk of being automated in the next decade or so.

The authors, Carl Benedikt Fey and Michael Osborne, studied machine learning (ML) and mobile robotics (MR), the latest developments in automation that have enabled robots to handle complex, nonroutine tasks. The study, entitled “The Future of Employment: How Susceptible Are Jobs to Computerization?” showed trends flow­ing from what has already been done to jobs in order to project present and future possibilities. (Oxford Martin School, Programme on the Impacts of Future Technology)

One example of ML is diagnosis of cancer at Sloan Kettering Cancer Center in New York City made by Watson, the IBM computer that famously beat the two best players on the television show “Jeopardy” and two chess grandmasters.

The computer is able to read through 600,000 pages of medical evidence, 1.5 million pages of patient records and 2 million pages of text from medical journals. It can compare each patient’s symptoms, medical history, genetics, etc., to diagnose and develop a precise treatment plan with the highest possibility of success. The possibility for this type of ML to destroy knowledge workers’ jobs is obvious. According to the study, 140 million knowledge jobs worldwide could be automated out of existence.

Advances in the field of MR are reflected in such developments as a General Electric robot that can climb and repair wind turbines or Google’s driverless cars, which can deal with heavy traffic situations and cross-country trips alike without having an accident. This is due to advanced sensors, on-board computers and GPS-guided navigation. The cars can ”see” from behind, on the sides and in front simultaneously and make the proper driving adjustments in a way no human driver can.

Of course, this type of MR can also automate forklifts, agricultural equipment and an endless number of complex manual jobs. Transport, driving, loading and jobs of all types are potentially endangered in large numbers by increasingly mobile robots developed for the bosses.

Even low-wage workers are threatened. As the talk of raising the minimum wage began to get widespread coverage, particularly with fast food workers’ demands for a $15-an-hour wage, the automation industry began to develop a hamburger-making machine that grinds the meat, shapes it, cooks it and packages it.

The costs of robots are falling steadily. When the price of a robot drops below the wages paid to workers for about a year or two, then their jobs are endangered. Lower labor costs mean higher profits for the company. That is what has happened steadily over the last three decades. And it is what the capitalists have in store for the foreseeable future.

This is only the smallest sample of what the Oxford study covers. And it is impossible to say for certain how accurate the projections of the authors are. But even if they’re off by a significant margin, the potential dangers for the working class are significant — if they are not studied and dealt with.

Workers, unions, communities need to study threat

What is needed first of all is to take this valuable study out of the realm of academia, break it down and make it accessible to the labor movement and the workers. It should become the basis of broad-ranging discussion among unionists, community leaders, students, teachers and all who are threatened by future technological assaults on jobs and wages.

Of course, the problems of the working class and the unions are great, and millions are dealing with immediate and urgent problems. It is difficult under these circumstances to turn attention to more diffuse and future threats. But if this is ignored and allowed to run its course without the workers’ intervention, it can be extremely dangerous.

The workers and the unions must get control over the introduction of technology and not leave it to the will of the bosses. Any introduction of labor-saving technology must be accompanied by demands to shorten hours without loss in pay, covering as many jobs as possible.

This development must also be accompanied by massive jobs programs to carry out socially needed projects at union pay in order to absorb however many workers are displaced by technology.

This or a similar program must be offered up and discussed among union representatives, shop stewards and rank-and-file committees throughout the labor movement, in conjunction with the communities and the campuses. A network of committees must be established to report attempts by the bosses to carry out technological layoffs, and a rounded program for a fightback must be developed.

Robots could liberate; capitalism is the danger

But it is not robots that endanger jobs. It is capitalism and the bosses that are the threat. That must be clearly understood by the working class.

This study shows more than ever that the amount of labor time necessary for the production of the wealth that society needs to live on is diminishing with each advance in technology. The problem under capitalism and the profit system is that the reduction in necessary labor time results in an increase in ­unemployment.

What is needed is to use robots and automation to lighten the load of labor and to increase the leisure time of the masses of workers who create all the wealth. But that can only be done once the private-property system — the profit system of capitalism — is destroyed. In the meantime, the working class must get organized to take control of the capitalists’ drive to install job-killing technology.

Fred Goldstein is the author of “Low-Wage Capitalism” and “Capitalism at a Dead End,” which has been translated into Spanish as “El capitalismo en un callejón sin salida.”

Marxism and long-term unemployment

By Fred Goldstein on April 5, 2014

A study published by Heidi Shierholz of the Economic Policy Institute in January compiled figures on unemployment that have important significance for the working class and for a Marxist analysis of the present dead-end crisis of capitalism.

The figures in the study confirm that the bosses’ need for labor power at all skill levels and in all occupations drastically declined between 2007 and the year ending July 2013. This is further confirmation of Marx’s general law of capitalist accumulation discussed in our last column.

Shierholz was rightly trying to refute the widespread campaign by the publicists for the bosses about how unemployment is caused by a “skills mismatch” — workers not having the right skills or enough skills to get all those jobs out there that are going begging.

The study, “Is There Really a Shortage of Skilled Workers?” thoroughly refutes the “skills shortage” argument. (epi.org, Jan. 23)

jobs_0410The study found that no matter what the skill level of workers, their unemployment rate went up by 150 percent to 190 percent from 2007 to 2013. The unemployment rate for workers with less than high school education was 10.3 percent in 2007 and 15.9 percent in 2013. For high school graduates, the unemployment rate was 5.4 percent in 2007 and 9.6 percent in 2013. For workers with some college, the unemployment figures jumped dramatically from 4.0 percent in 2007 to 7.3 percent in 2013; for college graduates, it went up from 2.4 percent to 4.5 percent and for those with advanced degrees, it went from 1.7 percent to 3.2 percent, that is, almost double. (See graph)

It is important to note here that the higher the skill level the higher the change in the rate of unemployment. That makes sense in capitalist terms because the higher the skill level, the greater the wages and salaries. Getting rid of the higher-paid workers brings a bigger payoff for the bosses per job eliminated.

Unemployment up, job openings down in all occupations

jobopenings_0410Shierholz’s study also lists 20 occupational categories covering the entire workforce. Whatever the occupation — from construction, food preparation and maintenance to education, computer programming and healthcare — the unemployment rate in each category went up 150 percent to 200 percent in the year ending June 2013 compared to 2007. In no occupation was there any evidence of a labor shortage.

To drive home the point of an excess of workers — the reserve army of unemployed — being forced to compete for a diminishing number of jobs, the study shows that the number of workers seeking jobs vastly outnumbers the job openings in all occupations in 2013 (see graph).

For example, in the retail trade there were close to 1.4 million workers and less than 400,000 job openings. In accommodation and food services 1.2 million workers were competing for fewer than 400,000 job openings. In manufacturing 625,000 workers are looking for a job but there are fewer than 100,000 manufacturing job openings. Similar gaps exist in all occupations.

Shierholz also shows that in 2012 the average number of hours worked per week in each occupation has declined in almost all occupations compared to 2007. This demonstrates clearly that the unemployment numbers have nothing to do with bosses adding hours to the present shifts.

The study shows that the sure sign of any tightness in the labor market in any particular occupation would be an increase in wages. Shierholz shows that, on the contrary, in occupation after occupation wages have fallen in 2012 compared with 2007.

In compiling these figures, the Economic Policy Institute makes the argument for more investment by the capitalist government in job stimulus. And it is a progressive argument. The working class, community and student organizations should demand a widespread jobs program. Anything that will alleviate unemployment and the suffering and hardship of the workers and the oppressed should be supported.

However, no temporary stimulus package will get around the present crisis of capitalism. Science and technology have been used by the bosses to get rid of millions of jobs permanently. Technology has also been used to reduce the skills required for the remaining jobs and lower wages. Massive investments in robots, computers and automation of all types, are part of capitalist competition among the giant monopolies to raise their profits, to get greater market share and, in the course of this process, for each capitalist outfit to reduce their wage bill. As Karl Marx explained, 150 years ago, that is why they spend the money on technology.

Fred Goldstein is the author of “Low-Wage Capitalism” and “Capitalism at a Dead End,” which has been translated into Spanish as “El capitalismo en un callejón sin salida.” See ­lowwagecapitalism.com. Both books available at online booksellers.