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New Era for Labor

Posted by Mark Motive on May 8, 2010 Mark's Blog Add comments
May 082010
In an earlier article (Bourgeoisie vs. Proletariat) I showed why this recession and recovery is tilted to the advantage of the capitalist classes or bourgeoisie (big business, investors). In a nutshell, excess supply of the labor classes will keep labor costs down to the benefit of employers. In fact, it increasingly looks like the only way for the US to reach full employment is to keep labor costs down. [Of course, this assumes companies actually need labor.]

A recent article by David Rosenberg includes a couple graphs that clearly illustrate my point, and provide an idea of just how long the capitalist class advantage will last. Total unemployment as measured by U-6 and the available pool of labor are both at very high levels. According to Rosenberg, it would take about 28 months of job numbers similar to last week’s to absorb the excess. This will keep labor costs down to the benefit of the owners of capital. [Labor cost disinflation is shown in the bottom chart.]


  • asiequana

    But doesn’t lower employment and lower wages lead to less demand which in turn leads to lower prices and thereby reduced corporate margins and returns to the owners of capital (which just so happen to be the pension funds of the workers)?

  • Plan B Economics

    You’re right. But lower aggregate demand will stabilize at some base level (if it hasn’t already) – there’s only so much people can cut back…especially when unemployment insurance helps provide a floor for spending. Also, look at the recent profit spikes that have been made on the back of cost cutting (aka layoffs). The 2009/2010 profit recovery is a story about cutting costs by 20% while only seeing revenue decline by 10%.

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