Excess Capacity Harming U.S. Workers
by Seth Sandronsky
Dissident Voice
January 17, 2003
Excess capacity
(unsold goods and services) is now running a red line through the U.S. economy,
from airline seats to fiber-optic cable. Consequently, long-term joblessness is
rising.
“The number of
persons unemployed 15 weeks or more rose to 3.2 million in December, an
increase of 815,000 over the year,” the Labor Department recently reported. The
devil’s in these details.
I mean the
household turmoil caused by this trend. It is less easy to measure, though no
less real for those living it.
Most people know
that being out of work for a prolonged period is not the key to domestic
tranquility. Joblessness means a struggle to pay your bills, which places
stress on personal and social relations generally.
Returning to
excess capacity in the economy, it doesn’t fall from the sky. Rather, it is a
part of the capitalist system itself, dynamically productive and destructive.
When private
investment grows, jobs are easier to find. This was the case in the late 1990s
and some of 2000 for the U.S. economy.
Then, employers
hired new employees. They, in turn, increased production in many industries.
One example was
the telecommunications industry last decade. Such job growth also made
investors more capital.
The official
jobless rate was lower then. And workers’ productivity (output per hour of
work) was rising as the economy grew.
Fed Chief
Greenspan frequently noted workers’ increasing productivity. Wall Street
cheered.
Some of the
productivity benefits flowed to Main Street. But not as much as went to big
investors in the suites.
Eventually, a
situation arose in which production exceeded consumption. The ability of
consumers to buy what was for sale on the market was limited by their incomes.
Meanwhile,
investors didn’t halt their quest to accumulate more capital. But they did
begin to pull back on their investment in equipment and workers.
Suddenly, the
“new” economy of high productivity and wondrous technology wasn’t looking so
wonderful. Neither was the job market.
Just ask former
dot-com workers in the San Francisco Bay Area. Much has changed for them since
those halcyon days.
The official
U.S. unemployment rate for Nov. and Dec. 2002 was six percent. Black workers
are more than twice as likely than whites to be out of work.
Last Dec., there
were 398,000 discouraged workers nationwide who stopped seeking paid work. They
think that there are none to be had, and who can argue?
You don’t have
to be an economist to see that job hiring is slowing. Unprofitable capital is
being idled to reduce excess capacity in the U.S. economy.
Consider Kmart
Corp. The mass retailer will fire
35,000 workers and idle 326 more stores by April 30, as it works off excess
capacity to leave bankruptcy protection.
Businesses are
trying to restore profitability by reducing their backlog of unsold goods and
services. To this end, businesses are
also seeking to cut the price of labor-power.
Government typically
backs business’ efforts. Case in point is the federal government’s refusal to
bail out United Airlines, resulting partly in a bankruptcy judge ordering the
reduction of union wages for some workers after the carrier filed for Chapter
11 bankruptcy reorganization.
Lowering the
wages of unionized workers is one way for businesses to reduce excess
capacity. Later, new hiring at lower
wages can begin.
The bottom line
for the working majority and their families in the U.S. is that the nation’s
economy is becoming leaner and meaner as excess capacity bears down on
businesses around the country. The
leaders of Iraq and North Korea aren’t to be blamed for this situation.
Much patriotic
rhetoric from politicians and pundits serves to obscure such a basic fact. They much prefer to back a national unity
that seeks to keep the class system of the few determining the lives of the
many firmly in place.
What a way to
run an economy!
Seth Sandronsky is an editor with Because People Matter,
Sacramento's progressive newspaper. Email: ssandron@hotmail.com