Class War in the USA
Corporate america's coffers are overflowing with cash. "In company after company, we're seeing huge buildups of cash," Jeffrey D. Fotta, CEO of Ernst Institutional Research in Boston told BusinessWeek in February. General Motors ended 1996 with more than $17 billion in cash, Ford with $15.4 billion, Chrysler with $7.8 billion, Microsoft with $9.2 billion and Intel with $8 billion.
For big business, current earnings are an embarrassment of riches. "The worry is that many companies are taking on cash so fast they, can't spend it efficiently," explains Business-Week.
The source of the cash buildup is soaring U.S. corporate profitability, which has exceeded market analysts' expectations for 16 straight quarters. And there is little doubt as to the source of the rising profits: corporate downsizing and stagnant wages.
There is an important question about about why wages remain stagnant, however. With the U.S. unemployment rate dropping to around 5.5 percent over the past two years, why has there not been substantial upward pressure on wages?
When unemployment rates fall, the law of supply and demand says wager should go up - fewer available workers should push up workers' pay. But wages haven't risen.
The reason is job insecurity, a fact widely understood indeed, practically celebrated - by economists, government officials and corporate executives.
"Atypical restraint on compensation increases has been evident for a few years now and appears to be mainly the consequence of greater worker insecurity," crowed Federal Reserve Chair Alan Greenspan in February testimony before the Senate Banking Committee. Greenspan touted stagnant wages as the central explanation for the "low-inflation environment" which he called critical for maintaining "sustainable economic expansion."
Increased capital mobility and foreign competition, widespread corporate downsizing, a politically weak labor movement, unenforced labor laws and technological innovation have all combined to strengthen business power. Employers have used their power to intimidate and threaten workers, so that they fear unionizing, asking for a raise or even quitting and looking for another job.
In recent weeks, impeccable sources have explained the story in straightforward terms.
Greenspan told the Senate Committee that corporate downsizing and rapidly changing technology have contributed to job insecurity. "Technological change almost surely has been an important impetus behind corporate restructuring and downsizing," he explained. "Also, it contributes to the concern of workers that their job skills may become inadequate. …