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| THE STATE OF THE AMERICAN WORKPLACE September 3, 1997 |
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Questions asked
in this forum:
What role will orgnaized labor play in the new workplace? How has technology changed the way we work? What is driving the increase in contingent workers? How prevalent are the golden parachutes given to CEOs? How do we improve the workplace atmosphere? Why do service jobs still pay so little?
NewsHour Backgrounders
August 22, 1997:
The NewsHour reports on Teamsters' President Ron Carey's election troubles.
August 20, 1997:
Paul Solman explores the fallout from the UPS strike on labor/management relations.
February 20, 1997:
John Sweeney, the newly elected president of the AFL-CIO, discusses the state of the labor movement.
February 20, 1997
Paul Solman leads a discussion on whether an unfettered economy is best.
October 21, 1996
Paul Solman explores the bud vase economy and the wage gap.
September 2, 1996:
The Online NewsHour and the NewsHour's regular panel of historians explore the history of labor day in separate reports.
May 14, 1996
The NewsHour reports on the debate in the Senate over the Teamwork Act.
March 25, 1996
The NewsHour historians examine the history of economic insecurity and economist Harris Sussman on coping with the modern workplace.
A question from N. Bauman of New York, NY: Why do K-Mart employees, who are making $7 and $10 an hour, reject unions, which could give them $15 or $20 an hour like the UPS workers? What is K-Mart going to do--move its stores to Indonesia?
Why are American workers getting an average of $10 an hour, when European workers are getting $15 or $20 an hour? Why does a pizza chain pay its American workers $6 or $7 an hour without health insurance, when the same chain pays its German workers $15 or $20 an hour plus health insurance?
Dr. Walter Licht responds:
There is an easy answer to the European and American comparisons: unionization. Less than 15 percent of the American workforce now labor under union contract. In Europe the equivalent figure is 50-75 percent. Why K-Mart workers have not been open to unionization is complicated: it has to do with management recruitment practices, and the large hiring of part-time workers (who are very difficult to (organize), and with successful efforts (so far) to create a workplace culture that places great emphasis on team work and spirit. Wal-Mart stores tend also to be in small towns where there is little trade union presence or traditions of unionism and the American trade union movement itself has been slow to organize service workers.
Edward Potter responds:
In a competitive labor market, workers' paychecks depend ultimately on their productivity. Differential productivity of workers at K-Mart and UPS explains their pay differential. Thus, a union could not "give" K-Mart employees the same pay that UPS workers earn.
Firms pay workers according to their contributions to the bottom line. While artificially lifting wages through legislation like the minimum wage, or unionization, can squeeze higher pay from employers in the short-run, this comes at a price. Wage demands from unions and governments not withstanding, companies still will hire workers only if it is worth their while to do so. A higher wage than that determined by the market leads companies to shed employment. The contemporaneous existence of higher pay and high unemployment rates in Europe bears this out. Furthermore, the higher before-tax wage in Europe compared with the U.S. can be illusionary since tax rates are much higher there than in the U.S.
It then comes as no surprise that projections by the Organization for Economic Co-operation and Development (OECD) indicate that unemployment in the European Union will linger around 11 percent in 1998. This projection contrasts sharply with the strong showing of the U.S. labor market where unemployment has been about 5 percent during the current recovery and shows no signs of increasing.
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