AFL-CIO recently spoke to Steve Greenhouse, author of The Big Squeeze: Tough Times for the American Worker
Question: Why did you title your book The Big Squeeze?
Greenhouse: I really feel there’s a squeeze on workers. In many ways, corporate America is clamping down on its workers. Wages have been cut over the past few years. We’ve seen health benefits get worse. Middle-class Americans have health insurance while the typical worker has to pay twice as much for health insurance as was the case seven years ago. We’ve seen good pensions kind of disappear, evaporate and be replaced by 401(k)s, which I describe as Swiss-cheese retirement plans. A lot of workers don’t have 401(k)s—many workers have little to support themselves when they retire. While wages are stagnant and benefits are getting worse, workers also are being squeezed to work harder. There’s less job security than there used to be. And with all the rounds of downsizing, workers feel more insecure on the job. If you’re feeling insecure, you’re less likely to push for better wages and benefits.
Q: In your book, you say a profound shift has taken place in the American economy. What has caused this shift?
Greenhouse: Many workers are worse off than before partly because of globalization and off-shoring. In the 1950s and 1960s, workers were treated with much more respect and companies were doing much better because they didn’t face much foreign competition. In the 1980s, a lot of factory workers, blue-collar workers got hit in the steel industry, auto industry and the tire industry. Now with all the offshoring to India, engineers, accountants, architects are being squeezed by globalization. Globalization not only takes away jobs, it creates pressure to hold down wages.
Another big factor is that labor unions are not as strong as they used to be. Unions represent a fraction more than 7 percent of private-sector workers. Back in the 1950s, they used to represent 35 percent to 40 percent. Companies really had to deal with them, and unions had leverage to keep up wages and benefits. Now that unions are weaker, they don’t have that same strength on benefits and wages.
A third factor is that Wall Street has more power than before. In the 1950s and 60s, we created this wonderful middle class. Individual investors didn’t push companies to maximize profits. But the whole creation of institutional investors and mutual funds made Wall Street much more powerful. And Wall Street is telling companies they have to maximize profits and that means holding down costs, including labor costs.
The fourth factor is soaring health care costs. Health care costs went from 5 percent of GDP in the 1960s to 15 percent now. And a lot of money that’s going to health care increases is money that might have gone to wage increases.
Q: How do we shift it back?
Greenhouse: Globalization is a very powerful force. It’s hard to stop. The United States should try its darndest to create good middle-class jobs. We need to focus far more on reinvigorating manufacturing. We’ve lost one in five manufacturing jobs since 2000, more than 2.5 million good jobs that paid middle-class wages and benefits.
The nation has to focus more on training kids. Far too many kids do not get a college education. The nation has to focus far more on getting companies to invest here and innovate here. Far too many times businesses with the choice will develop their own plant in India or China instead of in the United States. I think it’s important to develop third-world countries, but too often it’s done at a cost to America’s future.
Also, if labor unions can rebound and represent 15 percent to 20 percent, it would make a big difference and companies would become much more tempted to address the needs and concerns of workers.
Q: You include examples in your book of employers such as Wal-Mart doing really horrible things like forcing workers to work off the clock. How do employers get away with doing these kinds of things?
Greenhouse: While top corporate executives say they would never countenance lower level managers breaking the law, they create unrealistic budget expectations that force lower-level people to break the law or lay off people or clamp down on wages. Second, there is not enough wage, hour and safety regulation. The workforce has increased from 99 million workers to 149 million in the past three or four decades, but the number of federal wage and hour inspectors has actually declined. If there’s too little regulation, business knows it can take advantage.
Q: In your book, you cite some good companies. What’s in it for them if they pay their workers more and treat them well?
Greenhouse: Some companies can really serve as models. Some ask why do they do that? Doesn’t that cost them money? Yes, it might cut into their profits some, but these companies say it’s better for them long term. These companies say when we treat our workers well, when we give them good benefits, we feel real loyalty from them. They work harder. They’re more productive. They treat customers better. There’s less theft. We don’t have much turnover. It really pays off.
Steven Greenhouse has covered workplace issues for The New York Times since late 1995 and is one of the few remaining full-time labor reporters in the country. AFL-CIO Now Senior Writer James Parks interviewed Greenhouse about his new book, The Big Squeeze: Tough Times for the American Worker.