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Labor Day Lament

Workers at Caterpillar’s plant in Joliet, Illinois returned to work earlier this month after ratifying an agreement that ends a fifteen week strike.  While the workers and their families will be happy to see paychecks coming in, the agreement is hardly something to celebrate.  The more senior workers were forced to agree to a six year wage freeze while those hired after 2005 will receive one 3% wage increase over the next six years.  The union avoided some work rule concessions but was forced to accept cuts in their retirement program and sharply higher contributions to their medical plan.  The sad truth is that in a depressed economy with few to no alternative manufacturing jobs available, workers had very limited options in the face of an employer determined to depress its salary scale over the coming years.  

Maybe you’re thinking that union workers are generally overpaid and need to accept the realities of a different economic environment.  At this Caterpillar plant the most senior two thirds of the workers are paid an average of $26 per hour, about $50,000, out of which they are being asked to increase their medical benefit contributions.  The new workers get paid as low as $12 an hour or about $23,000 a year, barely enough to be considered even lower middle class for a family.  By the end of the contract all of the workers will have received no pay increases or one pay increase, and will have lagged behind the national cost of living increases.

Maybe you’re thinking Caterpillar was in dire circumstances in the midst of a recession and had to take desperate measures to save the company and these jobs.  In fact, Caterpillar had a record profit of $4.9 billion last year with forecasts for an even better performance this year.  That money will be shared with stockholders and with the CEO, Douglas Oberhelman, whose compensation was increased by 60% in 2011 to $16.9 million.  That’s an amount equivalent to the combined salaries of 340 of his highest paid workers, and 740 of his lowest page workers at the Joliet plant.  

Romney and Ryan are accusing Obama of inciting class warfare, but it’s hard to make that charge stick when the war has already been declared and essentially won.  Since 1978 real after tax income for the top 1% in this country increased by 277% while increasing 38% for the middle 60% and 18% for the bottom 20%.  (Congressional Budget Office)  The ratio of CEO to worker pay went from 42/1 in 1980 to 107/1 in 1990 to 325/1 in 2010.  (Business Week)  The top 1% received 8.9% of the national income in 1976.  That number rose to 23.5% in 2007 (Quarterly Journal of Economics)  And all of this was aided and abetted by lawmakers who dropped the top marginal tax rates from 70% to 35% from 1980 to 2007 and who are increasingly beholden to the most wealthy Americans.

This Labor Day Caterpillar workers in Joliet will at least be celebrating the fact that they have jobs.  But not much else.  Their humiliation by the company was softened somewhat by a $3,100 ratification bonus, up from the $1,000 Caterpillar had offered.  While this will help cover back wages lost during the strike, all the bonuses combined represent only about 15% of Mr. Oberhelman’s annual pay, though don’t expect him to be shelling it out of his pocket.  He will be doing other things on Labor Day, like looking forward to his higher paid workers retiring or dying so they can be replaced by new employees at the low end of the wage scale. 

Where’s the rage?  Occupy did get income inequity on the national agenda, but it’s hard to imagine that it will be able to emerge again this fall as a potent force.  Much of the political rhetoric will be about curtailing the alleged power of labor unions a la Scott Walker in Wisconsin and Mitch Daniels in Indiana.  Proposed deficit reducing federal budgets turn out instead to be income inflators for the wealthiest.  The religious voice remains muted, disorganized, as anxious about offending its own members as it is about applying the message of the Hebrew prophets to today’s idolatrous circumstances.  Labor Day should be more than a last gasp of summer fun or a prelude to Rally Day, offering a bold “no” to the current state of affairs and inspiring the social conscience of at least a few in the pews.  I suspect Mr. Oberhelman isn’t overly worried.  Sadly, the workers probably don’t expect much either.  Wouldn’t it be wonderful if pastors, priests, and rabbis across the country surprised them?

John H. Thomas

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