Week In Review

A Weekly Column by Bill Onasch
January 3, 2012

Greetings as we begin another year. My holiday break included some good times, and overdue payment on a sleep deficit crisis, but I also sneaked in a look at the news here and there. On to the next holiday!

The Confident Consumer
To avoid cranking up old Eudora, I have most of my various e-mail accounts forwarding messages to my Yahoo web mail. When I go to retrieve them I’m greeted by a summary of news headlines. One day last week the lead headline was “Consumer Confidence Soars.” It was immediately followed by “Sears To Close Stores Because Of Dismal Sales.” I guess it’s a glass half-full kind of thing.

In cyclical recessions prior to the Great one that began in 2007 it was good news when workers in manufacturing were brought back to work. Some modest hiring in that sector is resuming now but Louis Uchitelle delivers a mixed message in a New York Times article entitled Factory Jobs Gain, but Wages Retreat,

“Manufacturers are hiring again in America, softening a long slide in factory employment. But for a new generation of blue-collar workers, even those protected by unions, the price of employment is likely to be lower wages stretching to retirement.

“That is particularly true of global manufacturers like General Electric. With labor costs moving down at its appliance factories here, the company is bringing home the production of water heaters as well as some refrigerators, and expanding its work force to do so.

“The wages for the new hires, however, are $10 to $15 an hour less than the pay scale for hourly employees already on staff — with the additional concession that the newcomers will not catch up for the foreseeable future. Such union-endorsed contracts are also showing up in the auto industry, at steel and tire companies, and at manufacturers of farm implements and other heavy equipment, according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the AFL-CIO’s director of collective bargaining.”

If you are one of the new CWA/IUE hires at GE’s Appliance Park in Louisville you may be confident but, making only twelve bucks an hour, you are not going to be a very effective consumer. Before you even get your paycheck the employer will deduct an unhealthy portion to cover your health insurance as well as your contributions to a stock-market driven 401(k). If your present one goes kaput, you may have to buy a replacement water heater or refrigerator. But earning only 25 grand a year gross will preclude kicking in that same amount for a year of college education for your kid, or a 3,000 dollar big screen wall mounted television, or a retooled Ford Explorer equipped with Microsoft Sync. You’re at best going to be treading water, not pumping up consumer demand.

A story in today’s NYT begins with a sober recognition of this reality,

“American consumers are running out of tricks. As the weak economy has trudged on, they have leaned on credit cards to pay for holiday gifts, many bought at discounts. They are dipping into savings to cover spikes in gas, food and rent. They are substituting domestic vacations for international trips, squeezing more life out of their washing machines and refrigerators and switching to alternatives as meat prices have risen. That leaves little room for a big increase in spending in 2012, economists say, a shaky foundation for the most important pillar of the American economy.”

I deal with this surrender of living standards--even as union officials and labor’s “friends” in office proclaim their undying allegiance to the “Middle Class”--in an article posted New Year’s Day, No Middle Ground.

Somewhat related, was a very big news story since our last Week In Review–the short-lived House revolt threatening to block a bipartisan acceptance of President Obama’s major plan for Middle Class relief.

In exchange for a fast-track decision on the Keystone XL tar sands pipeline (more on that below), he got Senate Republicans to agree to a brief extension of unemployment compensation for the long-term jobless. They also okayed, for two months, what the White House cynically bills as a Middle Class “tax cut”--actually continuing not to collect a portion of the payroll tax dedicated to Social Security. That tax cut will be offset by raising consumer mortgage fees–mainly more money out of pocket for the Middle Class designated beneficiary of this shenanigan.

After the Senate already started leaving town for the Christmas break, the cracked tea pots threatened to scuttle this package. With no deal in place, up to three million would have lost unemployment benefits and most workers would have seen their first take-home pay of the new year reduced by over two percent. But, after even the Wall Street Journal warned them nothing good could come from appearing so mean-spirited, the loony right were forced to back down. All this must be revisited, of course, well before the Ides of March.

Offshoring to Muncie?
The victims of the decimation of the American Middle Class are not always just in the USA. It appears that global corporate good citizen Caterpillar is preparing to offshore Canadian jobs to take advantage of cheap labor in–Muncie, Indiana.

After seven months of “bargaining” that did not budge from demands to cut wages more than fifty percent and eliminate pensions, Caterpillar locked out 650 CAW members at its Electro-Motive Diesel plant in London, Ontario New Year’s Eve.

EMD, the principal competitor with General Electric (organized by UE in Erie, Pennsylvania) for the North American diesel-electric locomotive market, was a division of General Motors until being sold to private equity in 2005–who in turn resold it for a tidy profit to Caterpillar in 2010.

Caterpillar is in the process of cranking up a brand new, nonunion EMD plant in Muncie. CAW wages at the London plant were about 35 dollars an hour. The wage rates in Muncie–where the company got tax-payer handouts to open up--range from 12-16 dollars per hour. But, even more embarrassing is the company pointing out on their web site that their UAW-organized plant in Illinois has a contract that provides about half the level of wages and benefits the London workers enjoyed. For more details click here

Not A Keystone Comedy
It’s been an exceptionally mild winter so far in the Midwest. Kansas City has yet to see any measurable snow and a record 66 degrees F temperature was recorded here on New Year’s Eve. The meteorologists attribute this to a jet stream that has kept frigid air in Canada–where it belongs, many in these parts would say.

This is another example of the uneven effects of global warming. I fully expect that those of us currently basking in what was once unseasonable mildness will pay a price later–either in big snows before Spring or a return to near drought conditions that prevailed last Summer and Fall. Our traditional way of life in this region is conditioned by sharing cold air with our northern neighbors.

But one thing we don’t need to share is any more of the synthetic oil flowing south from the Alberta tar sands. There is already an extensive network of Keystone pipelines bringing the dirtiest fuel on Earth to refineries in the Midwest. That slipped in under the radar of media attention because there was little effective opposition mounted by the Establishment environmental groups.

The current effort to extend Keystone XL all the way to refineries near Gulf of Mexico ports has encountered substantial opposition on both sides of the border--including even sections of the labor movement. As he approached his reelection campaign, President Obama decided to defer likely approval of the project until after the election. But the Republicans in Congress did not allow him to get off that easy.

The ultimatum to fast-track Keystone XL was not just partisan sniping, however. Despite all the malarkey about American energy independence a recent Los Angeles Times article notes that exports of gasoline and diesel fuel refined in the USA set an all-time record in 2011–and was a big factor in spiking domestic gasoline prices. A major area of growth was Central and South America--best served by Gulf ports.

So urgency is driving both the energy barons eager to exploit market opportunity and those who recognize stopping XL is crucial in the fight against catastrophic climate change. Impressive mass actions persuaded the White House to initially back down. More of the same--and even bigger--are needed now.

Blocked Grants
One of the ironies of lesser evil domination of U.S. politics is that the last administration producing a number of significant reforms benefiting working people was that of Richard Nixon. That’s when we won such important gains as OSHA, the EPA, and the Urban Mass Transit Act. Though I remember this time well the majority in this country had not yet been born.

Less well known was the program known as Community Development Block Grants. These help fund community projects in urban areas that generally get the short shrift from their state governments and don’t have the authority to raise enough revenue on their own.

By most measures the urban core is worse off in this time of Great Recession/Jobless Recovery/Mass Foreclosures than even when experiencing “rioting” during the Nixon years. But the decades-long decline in funding has dropped more precipitously during the Crisis. Michael Cooper writes in the New York Times, “This year the federal government is giving out just $2.9 billion — a billion dollars less than it gave two years ago, and even less than it gave during the Carter administration, when the money went much further.”

This has facilitated such further attacks on working class cities–especially those with Black and Latino majorities–as those being inflicted by the Governor of Michigan who seems poised to add Detroit to the list of those ruled by liquidators appointed by Rick Snyder.


I’ve done a little tweaking, and made one major change, on the kclabor.org home page. Our news links are now on our long under-utilized Labor Advocate Blog. This format allows easy incorporation of editorial comment along with the links to stories. It also may attract new visitors from the blogging community.

That’s all for this week.

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