Is there a more challenging time to be an American wage earner? The landscape of employment and income management is shifting dramatically, and many workers are feeling the strain.
To start, Washington unleashed an astounding $6 trillion in money creation, resulting in the highest consumer price inflation in four decades. As a consequence, real wages have been squeezed from a solid lager to a mere pilsner alternative.
At this juncture, the push for better wages through unionization is leading to significant job cuts. The harder wages are pushed up, the fewer jobs remain.
Just last month, for instance, Yellow Corp., a trucking company, sought Chapter 11 bankruptcy. Yellow’s CEO, Darren Hawkins, attributed the company’s downfall to the International Brotherhood of Teamsters.
In contrast, Teamsters General President Sean O’Brien counters, claiming that it was Yellow’s “dysfunctional, greedy management” that led to the failure, insisting, “They shamelessly pin their corporate incompetence on working people.”
Who holds the moral high ground? That remains ambiguous.
What is evident is that around 30,000 workers now find themselves in search of employment. For some of these truckers, their departure from Yellow might turn out to be a blessing in disguise.
They might seize the opportunity to develop new skills that command higher pay, free from the pressure of union demands.
With hard work and resilience, they could emerge far better off than what Yellow offered. Enhanced paychecks and greater fulfillment could lie ahead in their new paths.
Conversely, others may find themselves at a disadvantage. They might settle for lower-paying positions with competitors or, worse, find themselves relying on unemployment benefits.
No matter how you slice it, millions of American workers are caught in a vise. Income levels and living costs are starkly misaligned, and using credit cards to bridge the gap is a perilous fix.
Expect the Unexpected
The challenge for wage earners lies in the sheer expense of living today. On average, full-time employees in the U.S. earn roughly $75,000 annually.
While that figure may seem substantial, it hardly stretches far.
After deducting federal and state taxes, along with Social Security and Medicare contributions, the take-home amount dwindles to around $57,000. When you subtract an additional 4 percent (or $3,000) for 401(k) contributions and another 6 percent (or $4,500) for health insurance, that figure plummets to about $49,000, or $4,125 each month.
Now, let’s take away costs like $2,000 for rent, $400 for a car payment, $100 for a cell phone bill, $200 for gas, $300 for utilities, and $800 for groceries, leaving a mere $325 for the rest of the month. One pair of shoes for the kids and a couple of Happy Meals, and that cash is gone in a flash.
While these numbers might vary depending on geographic location, the reality is clear: a $75,000 income simply doesn’t go as far as it used to. This is the daunting situation facing Americans.
A recent study by SecureSave found that 67 percent of Americans lack sufficient savings to handle unexpected expenses. Yet, based on various studies, it’s wise to anticipate such financial surprises.
Whether it’s a blown head gasket, a broken tooth, or a malfunctioning washer, having a financial cushion to cover these costs is critical.
Work Less, Make More
When wages are insufficient to cover expenses, options for navigating the month become limited. Unfortunately, many resort to credit card debt, which only exacerbates long-term financial woes.
Another approach for workers is picking up a second job to supplement their income. However, time is a finite resource.
Families may also consider downsizing their lifestyles, opting for a simpler diet or moving to more affordable neighborhoods. In extreme cases, multiple families might share a single residence. While this helps manage bills, the reduction in quality of life is palpable.
These alternatives are far from ideal, making the enticing promise of “working less and making more” ever more appealing.
Have you heard of Shawn Fain?
He was largely unknown until the Wall Street Journal spotlighted him in a Labor Day article titled, Meet the Man Who Has Detroit on Edge.
Fain is the newly elected president of the United Auto Workers (UAW), having taken office in March after defeating the incumbent Ray Curry.
A fan of ‘90s hip-hop, he carries a paycheck stub from one of his grandfather’s Chrysler jobs from 1940. Fain has an intriguing proposal: he wants autoworkers to enjoy a shorter, 32-hour workweek and a hefty 46 percent wage increase.
This ambitious offer is part of negotiations for labor contracts covering about 146,000 hourly employees at major automakers like General Motors, Ford Motor, and Stellantis (owner of Jeep, Ram, and Chrysler).
The Art of the Lose-Lose Deal
Existing contracts are set to expire on September 14—less than a week away. Fain has indicated that if negotiations aren’t concluded by then, he’s poised to strike against all three automakers simultaneously.
“How far are you willing to go to get the contract you deserve?” Fain called out to a charged audience during a recent rally, set against Eminem’s “Not Afraid.”
Fain certainly seems to have a grasp on the situation. However, he might not achieve the anticipated outcome for the 146,000 hourly workers he represents. What he ultimately secures could be something different altogether.
A month ago, demonstrating his negotiation tactics, Fain metaphorically tossed Stellantis’s proposals into the trash, labeling them “lowball” and “a slap in the face” to union workers.
Just weeks later, UAW Vice President Rich Boyer disclosed that Stellantis threatened to move production of their Ram 1500 pickup trucks from Detroit to a facility in Mexico. Stellantis has not yet commented on this matter.
As the September 14 deadline looms nearer, a simultaneous strike across all three automakers may yield the ‘work less, make more’ deal Fain and Boyer are championing. They might even celebrate it as a significant victory.
But who truly benefits? The UAW? General Motors, Ford Motor, and Stellantis? Initially, it seems the real winners may be laborers in Mexico.
This scenario exemplifies the unfortunate lose-lose outcomes that emerge from negotiations between union leaders and corporate executives following a period of severe monetary debasement—an issue that remains only partially addressed.
If this trend continues, Detroit autoworkers fortunate enough to keep their jobs will soon discover that a 46 percent wage increase may not suffice.
What will Fain and Boyer seek next? What unresolved tensions will arise?
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Sincerely,
MN Gordon
for Economic Prism
