The Middle Class Squeeze

The Labor Research Association has published some interesting statistics about wages and corporate profits. As you read these numbers recall that Republicans both in Harrisburg and Washington have failed to vote to increase wages for those at the bottom of our economic ladder. They have, however, voted themselves pay raises.

Mercer Consulting has determined that pay for salaried (middle class) workers at 350 companies barely equaled the rate of inflation for 2005. The profit for those companies rose by 23%. The CEO's for those companies, excluding stock, rose 14.5% in 2004 and another 7.1% in 2005.

Mercer also calculated that the Fortune 500 companies added just 2% more emploees as their revenues increased 10.2% and profits increased 18.8%.

Average worker incomes in this period rose at an average of 3.5%, barely ahead of inflation.

What do these numbers mean? It means the American middle class is working harder for less and companies are cashing in for very nice profits. It means as workers are being asked to work longer hours for less real pay and at increasing rates of productivity, corporate America isn't sharing the fruits of that labor with them. Remember these figures do not reflect any stock or stock options awarded to CEO's. The obscenely huge pay packages being awarded to CEO's of late reflect this dichotomy. The middle class is under attack and corporations are firing the guns.

The quest for profit at any expense is actually stupid. Reducing the middle class translates into smaller markets for your goods and services. Consumers need disposable income to spend for anything more than the essentials. Our economy this decade was partly fueled by homeowners cashing in the equity in their homes and using the funds for spending. Now, as mortgage rates increase and energy costs gulp more of a family's budget there is less and less money for Play Stations, Impalas, and plasma televisions. Those economic dollars are drying up.

It's time to remember the workers. It's time to stop destroying the middle class. It's time for unions to adapt to changing conditions and its time to elect legislators willing to allow unions fair and level playing fields for organzing workers. History has illustrated it is unionized workforces that made the middle class and only good, honest, effective unions can reverse this current slide. I've seen some pretty ineffective unions and some unwilling or unable to adapt to new conditions. Let's hope they can get their acts together in time to preserve our middle class.