Inflation-- Another A Weapon The Rich Use Against America's Working Families

The Daily Show welcomes McCain and his cronies to St Paul

Yesterday I mentioned that I had gone out for lunch with a senior VP from Citigroup. She told me more than just how Dubai's Sheikh Mohammed bin Rashid Al Maktoum celebrated his 4th wife's 28th birthday by buying her Barney's. She also told me that "we" had decided that the way to keep the U.S. from slipping from a nasty Recession into a devastating Depression, was to let inflation run loose "a bit." But don't worry, even if McCain knows nothing about economics and even if McCain's chief economic advisor, Phil Gramm, thinks economics is a study of how to relieve the middle class of its savings on behalf of his clients and patrons, we all know that George Bush was an economics scholar at both Yale and Harvard. And the proof: the Bush Economic Miracle, which McCain promises to keep on track exactly as it is if he's elected president.

Today the mainstream newspaper most acceptable to the right-wing establishment, the Wall Street Journal, indicates, in a story called Inflation Is Stinging U.S. Workers Harder, that the plans to let a little inflation loose is right on schedule. And, as planned, the burden in America is falling right on the shoulders of American workers. No matter how much one quibbles over how many homes McCain has or over his definition of "rich" as meaning someone who earns $5 million a year or more, inflation isn't likely to make him feel much pain-- even if it's policies that he's supported that are the cause. According to his personal financial disclosure McCain's net worth is about $36 million dollars. He doesn't feel our pain.

Consumer prices are rising at their fastest pace in more than a decade in both the U.S. and the euro zone. But it's affecting workers on the two sides of the Atlantic in very different ways.

In Montgomery, Ala., Steve Murphy, an instructor for adults with mental disabilities, doesn't expect to get a raise because his employer is getting squeezed by higher fuel bills. In Madrid, Spain, travel agent Ignacio Temprano gets raises to match inflation because Spanish unions helped negotiate such increases into law. He says he considers the extra money "a bonus."

Unions are more powerful in the 15-nation euro zone than in the U.S., and many laws and practices there are more worker-friendly. That's part of the reason why many European workers are keeping up with inflation better than their U.S. counterparts.

Wages and salaries in the euro zone were 3.4% higher in the first quarter than in the year-earlier period, matching the first-quarter annual inflation rate. It was the steepest wage increase in the 15 countries that share the currency in nearly six years. Inflation in the euro zone hit 4% in July, and many economists expect wages to keep rising this year.

In the U.S., where unions are weaker and wages aren't often indexed to inflation, workers fell behind. Consumer prices were 4.1% higher in the first quarter than in the year-earlier period, but workers' wages and benefits increased 3.3% over the same period. Inflation has risen further since the first quarter, hitting 5.6% in July, while compensation growth has slowed.

Experienced, class conscious European workers have been smart enough-- and powerful enough-- to protect themselves from the avarice and selfishness of the McCains and Bushes of their societies. Upper class Europeans can no longer use inflation as a "cure" for their excesses without the pain being spread throughout society. American workers have bought into the "we're all middle class" myth (which includes anyone making less than $5 million/year in McCain's construct to $250,000/year in Obama's vision of Hope to the bitter reality of a $50,000/year paycheck). The result has been a weakening, naive network of American unions, unable to protect themselves from the predictable excesses of unregulated predatory capitalism that is so well personified by Bush, Cheney, McCain and McCain's likely running mate, Mitt Romney... oh, and Larry Ellison.

In the U.S., Federal Reserve policy makers appear confident that a slowing economy will suppress wage growth. They are expected to keep the Fed's key short-term interest rate at 2% through the end of the year, which could help nurse the economy and financial system back to health. Fed Chairman Ben Bernanke has signaled that he's keeping a close eye on wage behavior to gauge the risk of a price spiral.

Organized labor has a lot to do with differences between wage inflation in the U.S. and Europe. In the U.S., just 7.5% of private-sector workers are union members, and about 12% of all workers, including government employees. In the euro zone, 18% of private-sector workers, and 22% of all workers, are unionized.

In parts of Europe, unions have even more clout than their membership numbers suggest. In much of the euro zone, there is a tradition of big unions negotiating wages for large sectors of the work force, not just their own members. The unions wrangle with employer associations, rather than individual firms, to secure wage deals. In euro-zone countries where such centralized negotiations are less common, wage gains are lagging.

...In the U.S., collective bargaining is far less common, and dwindling union membership has eroded workers' bargaining power. Labor laws enable most companies to trim staff freely during an economic
downturn, leaving U.S. workers with less leverage to press for higher pay. Health insurance linked to employment often makes workers reluctant to leave their jobs, even if wage gains are meager.

Only 2% of U.S. union contracts have clauses that tie wages to inflation, according to a survey of unions and employers by the Bureau of National Affairs, a publisher based in Arlington, Va. In the late
1970s, more than one-third of such contracts included cost-of-living adjustments. High inflation during the 1970s prompted many employers to eliminate the provisions.

Some U.S. workers in industries that are booming, such as coal and steel, are managing to keep up with inflation. Massey Energy Co. of Richmond, Va., a mostly nonunion coal producer, has already given
miners two raises this year, and has guaranteed increases and job security for the next three years. The company is handing out $80 a month in gasoline cards to help workers cover fuel costs.

U.S. Steel Corp., one of the world's largest steel producers, agreed this month to a contract with workers that the United Steelworkers union has called its best in three decades. Workers would receive an initial raise and a $6,000 payment, plus annual pay increases of 4% for several years.

But as the economy has slowed, many U.S. workers haven't been able to keep pace with inflation. In Low Moor, Va., 154 unionized production workers at MeadWestvaco Corp., a packaging and office-products maker, argued for wage increases that would help them cover higher fuel costs. Ray Plasters, an equipment operator and head of United Steelworkers Local 8-490, says it was a tough sell. "The company takes the approach that its costs are going up, too," he says.

Last month, workers agreed to a new contract with annual wage increases of no more than 2.25% for the next three years. Mr. Plasters says he figured the union had little leverage to push for more because MeadWestvaco's competitors are also holding down wages. Fight too hard, he reasoned, and the company might shift work overseas.

Yes, the ultimate threat that the Republican/Blue Dog trade policies have dumped on American working families.