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Friday, December 02, 2011 - Union leader: As membership declines, the middle class shrinks

The difference between the rich and poor today is the largest since the 1920s, a labor leader says.

Changes in the economy seem to contribute to a decline in the amount of middle-income earners, with the biggest reason being declining union membership, according to former Michigan AFL-CIO President Mark T. Gaffney.

“I think we are at risk of heading towards a permanent underclass that will be less skilled,” he said.

Gaffney spoke at Oakland University about the relationship between declining unions and the shrinking middle class as a part of the 2nd annual fall lecture series sponsored by the School of Business Administration economics advisory board.

He was first introduced to organized labor in 1975 when he worked on car ferries crossing Lake Michigan between Ludington and Wisconsin.  He worked on Great Lakes iron ore freighters and was member of two unions, the National Maritime Union and the United Steelworkers of America from 1977 to 1981.

As president of the state federation, Gaffney represented 750,000 active and retired union members in more than 40 affiliated unions. He now serves as a representative for Teamsters Union Local 214.

One reason average incomes have declined is due to dwindling union membership during the past 30 years, Gaffney said.

In 2010, the union membership rate — the percent of wage and salary workers who were members of a union — was 11.9 percent, down from 12.3 percent a year earlier; the number of wage and salary workers belonging to unions declined by 612,000 to 14.7 million, U.S. Census figures show.

He rattled off more statistics:

—   Every year, union membership decreases by 3.5 percent.

—   Now, more public workers are union members than private sector workers.

—   Women make up 48 percent of union members.

—   Fewer than one in 10 workers is in a union.

Manufacturing is the base of unionization. It has always been dear to Gaffney’s heart.

“Each job in the factory supports seven other spin-off jobs,” he said. “The jobs provide solid benefits for middle-class people.”

Unions began in America as guilds — their job was to protect work not necessarily to bring people into their organizations, Gaffney said. The guilds were there to protect existing work, bring apprentices into that work and keep people out of the market.

Union growth was at its highest peak in Michigan in the 1930s and ’40s.

The wealthiest control two-thirds of the nation’s wealth and the top one percent holds 40 percent of the wealth, Gaffney said. The number of hourly workers is decreasing, while CEO pay has increased 250 percent in last 30 years.

“Wal-Mart is the largest employer in today’s economy — it is a drag on the labor economy,” he said.

Wages have been largely flat, while productivity has been rising, Gaffney said. The invention of computers in the worksite has changed the way retail stores work and all the profit that they make goes straight to management and shareholders.

“It solidifies the concern we should have with rising profits in corporations and the lack of increase in our wages,” said senior philosophy major Jennifer Sepnick.

Last year, in the Bank of America, six people made a billion dollars in bonuses, Gaffney said.

General Electric made $14 million in profit in 2010, and has not paid taxes in five years, Gaffney said. Today, businesses pay about 6 percent in taxes compared to what they paid in the past — 27 percent.

“The middle class folks struggle, while corporations pay less and less taxes,” he said.

In the 1970s, the middle class made up about 53 percent of the income, according to Heidi Shierholz, an economist with the Economy Policy Institute. In 2010, that figure had dropped to 46.3 percent.

To deal with the economy in the 1970s, workers had three coping mechanisms, Gaffney said: Women joined the work force, people embraced the debt by mortgaging homes and using credit cards, and people worked more hours.

Now, he said, workers are unable to capture their share of the value and gains in productivity, so it goes to wealthier people.

“If we have a government that cannot do anything to help us, we will remain in a stagnant condition, especially with reducing wages and charging people more for health insurance,” he said.

“We have to have a fair tax system and bring jobs back. We need to stop the wage reductions and help individual families become consumers again to help move the economy forward.”

By: Mayuri Munot
OU News Bureau