According to the ILO, “Americans work 137 more hours per year than Japanese workers, 260 more hours per year than British workers, and 499 more hours per year than French workers.”
Using data by the U.S. BLS, the average productivity per American worker has increased 400% since 1950. One way to look at that is that it should only take one-quarter the work hours, or 11 hours per week, to afford the same standard of living as a worker in 1950 (or our standard of living should be 4 times higher). Is that the case? Obviously not. Someone is profiting, it’s just not the average American worker.
If we look at wages in America compared to productivity since the 1970's, we see that while productivity has increased steadily, wages have remained relatively flat.
This has been a bountiful economic boon for American business. The cost of labor, as a percent of production, has been steadily decreasing for the past 40 years. This resulted in ever increasing profits. On the other side of this economic equation, American workers have been caught in ever increasing inflation with no off-setting increase in earnings.
For a time, American business was able to expand exports to compensate for greatly increased production in a society with wage controlled limited buying power.
In the early 70's American business figured out how to increase American consumption, to keep up with increased production, while decreasing labor costs and increasing profits even more.
The answer was to loan business profits back to the workers. Now profits could be made from profits while increasing the debt of the worker and assuring his/her need to work even harder, without the need for more capital investment. This was brilliant.
American business took in more and more cash while the buying power from wages of their workers remained static. This presented a problem for the business community, until someone figured out that the way to increase consumption was to loan the workers the money to buy more stuff. There was simply no other way to invest ever increasing profits. This was a brilliant scheme and it has worked extremely well for the past 40 years. During that time the standard of living in America rose faster and higher than at any other time in history.
BINGO! Now American business had a winning economic model. They were able to make money at both ends from their workers. On one hand American workers were willing to work harder, longer and smarter. Computers play a major role, increasing productivity while lowering labor costs. The American work week steadily increased from the low point at the end of the American labor movement in the late 60's where 1 in five households had 2 working parents to the 2000's where 70% of American families have 2 working parents. This is a staggering increase in the American labor force.
American workers were eager to elevate their standard of living and were willing to worker longer hours and harder to get there. So began the beginning of the end for the post 60's American business model.
Now the American worker is tired and worn out. He/she cannot work harder than they already do. The business community is slowly realizing that the rate of increased productivity in America has been slowing over the past decade, while foreign labor costs make foreign production more profitable.
There is nowhere for the current American economic system to go in the new world economy. Business has run out of ways to invest its profits in America. The American worker has reached, and passed, any reasonable amount of loan debt, so that part of the profit equation is disappearing. Though the profits (15-30% from credit cards / student loans) are pretty good, the risks to American business, loaning its profits back to the workers who created the profits, has become too risky. Even though the American worker/taxpayer has been willing to socialize what had previously been private debt (70's Savings and Loan collapse + Wall Street collapse), the US tax base has deteriorated to a level where 47 percent of Americans do not pay federal incomes taxes.
The American way is running on fumes. There is nothing remaining to exploit. We have passed the point where political ideologies will make a difference. American business has been very successful since the second World War. Now the piper must be paid and the party may already be over.
I hope that our economy turns around quickly. I hope everyone has a good job very soon. I hope that our education system finds a way to get our children to once again hit the books, and get serious about getting an education instead of merely getting a degree. I hope we, as a nation, find a way to stop paying 2 to 3 times as much as other industrialized nations, for a mediocre, profit-driven medical system. I hope we as a people find a national dialog instead of everybody talking and nobody listening.
We are our own worst enemy.
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