Conceding the point on American wages

By Lee Russ

Thursday, October 13, 2005 at 02:35 PM

Okay, sometime in the last week I decided that we had finally gone from stage one of the deflation of America, to stage two of the deflation of America.  Stage one was the recent damper on wages for those American jobs that have yet to be shipped overseas.  The most discernbible effect of stage one is that prices in America have risen faster than wages in America for the last year-plus.

Stage two hit home with the announcement that Delphi Corp., the huge auto parts manufacturer, is asking its employees to take a 63% pay cut, and some loss of benefits, to boot.

Think about that for a minute: 63% cuts.  Meaning your new salary would be 37%, barely more than one third, of your old salary.  So if you used to make $100,000, you'd now make $37,000.  If you used to make $50,000, you'd now make $18,500. AND they want Delphi workers to quadruple their contribution to the cost of their medical benefits, from about 7% to about 28%.

The sad but completely expectable truth is that Delphi's request for wage concessions is hardly unique; it looks like actual decreases in wages (and benefits)--are being imposed on/demanded of American workers in a variety of fields.

Airlines are the most prominent example of employee wage concessions, but Delphi seems to indicate the spread of that phenomenon to the automotive industry, with many analysts expecting GM to seek concessions very soon.

Where does this end up, especially since the essentials of the cost of living (fuel, food, and shelter) are rising rapidly? What does this mean for ordinary workers' ability to send their children to college, where tuition, books, and fees are skyrocketing?

It looks to me like we're approaching the off ramp to the 19th century, and there is a suspicious lack of media coverage of the broad story (as opposed to the intermittent stories of individual company actions, with each past story forgotten by the time the next story appears).

Headlines/Snippets on wage concession stories from recent news media:

Sprint workers on strike in 4 states
Orlando Sentinel, FL
...almost half of them in Florida, have gone on strike over benefit reductions and wage concessions that their telecommunications employer is seeking. ...

Delta seeks new wage concessions
Investor's Business Daily - Sep 12, 2005

The Pit Boss Vs. GM
Forbes. 10/10/05
"[GM's] Cutting health care benefits is not enough. Layoffs and wage cuts comparable with the airlines' torturous experience are going to be the drill."

City Council subpoenas Kilpatrick, officials over budget issues
Detroit Free Press
Friday, September 16, 2005
..."The subpoena also requests that the administration provide a host of budget documents, including the police and fire department's restructuring plans, and documents that show what kind of savings the city has realized through layoffs, cuts in overtime and wage concessions."

New Milwaukee Symphony Contract Stipulates Pay Cuts for Musicians ...
PlaybillArts, NY - Sep 29, 2005
The Milwaukee Symphony Orchestra's musicians and management have agreed on a new four-year contract that includes a pay cut this season

50 protest pay cuts for arson officials
Bryan College Station Eagle, United States - Sep 14, 2005
By APRIL AVISON. Three longtime Bryan fire officials may have their salaries cut by about 10 percent next year, City Council members decided Tuesday. ...

Aloha workers 'tired' of bad news
Honolulu Advertiser, HI - 8 hours ago
... Aloha's management and unionized workers took a 10 percent pay reduction this year, which is on top of 10 percent pay cuts that employees had accepted in January 2003.

Union Workers Reject Contract Concessions
KWWL, IA - Oct 9, 2005
More than 350 members of the United Steelworkers Union, Local 1861, were asked to accept pay-cuts and pay more for health care in order to keep and add jobs...

`On call' pay fight looming
Leelanau Enterprise, MI - Oct 6, 2005
... Despite impassioned pleas by the affected court employees and family court administrator Betsy Fisher, the board decided to keep pay cuts in place. ...

Mesaba workers brace for cutbacks
Minneapolis Star Tribune (subscription), MN - Oct 7, 2005
... 254 Mesaba employees, said AMFA's negotiators got a good indication of the company's financial situation when management asked for 10 percent pay cuts

Other industrialized countries are experiencing the wage reduction phenomenon, also.  All "old line" industrial powers, where the wage structure created a working class middle class:

Volkswagen jobs saved in SUV deal
BBC News, UK - Sep 27, 2005
"Volkswagen has agreed to build its new sports utility vehicle in Germany after securing wage concessions from unions."

Lufthansa Becomes Latest German Company to Win Wage Concessions
Bloomberg - Oct 6, 2005

CIS workers protest to Exec over 30% pay cuts
Scotsman, United Kingdom - Oct 4, 2005
FINANCIAL advisers from the Co-operative Insurance Society yesterday brought their protest over planned 30 per cent wage cuts to the Scottish parliament

Courts face crisis as barristers fight back over pay cuts
Times Online, UK - Sep 18, 2005

Employees reject pay cuts, Olymel won't reopen Princeville, Que. ...
Brandon Sun, Canada - Sep 20, 2005
... pork producer Olymel LP says it won't reopen a Princeville, Que., plant after ex-workers voted to reject pay cuts ...