Professor Harley Shaiken Summarizes Everything I’ve Been Thinking Regarding Labor

I was listening to a “Democracy Now!” podcast when I was taken aback by one, long quote by Professor Harley Shaiken (a UC Berkeley professor specializing in labor and economy) that pretty much summarized many of the points I’ve (tried to) make in various blog entries regarding labor. You can listen to the entire hour-long podcast online. Below is the quote in question:

“Of course labor costs are a critical factor for any company and they’ve become particularly critical when you have a downturn. But the labor cost were not what lead us into the current mess with General Motors. How do we know that? Because GM had the same labor structure significantly higher than today in the 1990s and earned billions when it was in tune with the market and its vehicles were selling. So its not labor costs that got us here but they’ve become a very convenient culprit. Now it is true that there are really extraordinary pressures downward on labor costs. The UAW recognized those political realities and made major concessions in a recent contract to preserve the jobs at GM. I don’t think they had much of an alternative in that, but cutting labor costs won’t get us out of this and we forget that the flip side of labor cost is purchasing power. In the 1950s and 60s, GM and the US auto industry paid the highest industrial wage in the world and made billions for their shareholders and that translated into a very vibrant, growing economy because workers spent that money and that created even more jobs. So to the extent that you hammer labor cost down and you use that as your exclusive focus, essentially what you’re saying right now is ‘well, what we need in this economy is less purchasing power’ — that’s hardly a route for economic recovery and completely misstates how we go into the current situation and unless we understand that clearly its going to be far more difficult to get out of it.”

Makes sense to me. Glad to see I’m not the only one thinking this.