A Lament: All Work and Less Pay

By Stephen Koepp

It is not easy to work up a sweat inside the frost-coated chambers of the Norcal vegetable-freezing plant in Watsonville, Calif. Even so, the company's 700 employees are perspiring heavily these days. The workers have stepped up their productivity 10% over the level of two years ago without any major improvement in the food-processing equipment at their disposal. Yet for all their labors, the workers are not getting more pay but less. Last March they accepted wage cuts of 17%, from $7.06 an hour to $5.85 for most packers. They had little choice: the new arrangement saved their jobs, which were threatened by low-priced frozen imports from Mexico and Central America.

! Norcal's packers are not alone in working harder for the same or lower pay. For the first sustained period since World War II, the same frustrating experience is affecting millions of American workers, from steelworkers to grocery clerks, airline pilots to meat-packers. A prime reason: over the span of the 1980s, wages have been lagging slightly behind inflation, even at today's comparatively mild pace of about 5%. Between 1980 and June of this year, for example, the average weekly earnings for U.S. workers increased from $235 a week to $309. But after adjustment for inflation, including a dramatic peak at the beginning of the 1980s, that paycheck actually slid backward over those years, to $227. The rise in productivity among U.S. manufacturing industries, however, was a brisk 4% each year from 1981 to 1985. During most of the previous decade, this measure of output per worker had increased only 1.2% annually. In fact, last year's U.S. productivity hike of 3.5% surpassed that of Japan (2.8%) and West Germany (1.9%).

That situation should bode well for short-term U.S. competitiveness, but discontent among American workers is rising. Says Harley Shaiken, a labor economist at the University of California at San Diego: "It amounts to a reversal of the American dream." Agrees Rudy Oswald, chief economist for the AFL-CIO: "There is a growing feeling of 'We won't take any more of this.' "

Why the prolonged pay squeeze? By the early '80s, American wages in many sectors were ripe for attack because they remained too high in relation to industrial paychecks in the rest of the world. The porous U.S. economy made such an imbalance impossible to maintain as domestic goods suffered from an invasion of bargain-priced products from countries with lower wage scales: textiles and steel are prime examples. High unemployment during the recession of 1981-82 gave companies more leverage to seek wage concessions or at least hold the line. The newest challenge to wages has been the economy's takeover frenzy, which has inspired managers to pare down work forces and hike profits as a partial defense against marauders.

Not all workers, of course, have suffered losses. Among those who have, the rollbacks may involve nonwage items, ranging from lost vacation time to shrunken health benefits. But a pay reduction remains the unkindest cut. Buffy Mello, 34, a divorced mother of three, dreads the arrival of next March because she is among 950 workers at the USS-POSCO steel mill in Pittsburg, Calif., who will suffer a 4.5% pay reduction at that time. For Mello, a junior-grade electrician, the change will reduce her wages from $14.37 an hour to about $13.73, a difference of $108 a month. Other workers elsewhere are getting raises, but the hikes are not enough to keep up with prices. Some 98,000 production workers in U.S. transportation-equipment industries got an average 2.5% wage boost over the past year, which still trailed inflation about 1 percentage point.

Many workers have had to give up cost of living allowances, or COLAs, a form of wage protection that spread widely during the high-inflation 1970s. Many corporations are seeking to replace regular pay raises with annual bonus systems. These lump-sum payments, common in executive circles, expand and contract with a company's profitability. The advantage for employers is that the bonuses cost less over the long haul because they do not compound year after year, as raises do. Last October, Boeing reached an agreement with its machinists that froze basic wages while granting annual bonuses that will average about 7% of their base pay.

Despite workers' complaints, though, only a portion of the country's increased productivity can be chalked up to more intense toil. Much of the gain results from the scrapping of obsolete plants and the installing of improved technology. Says Stanley Mihelick, Goodyear's executive vice president for worldwide production: "The mistake that people make is that all of this productivity is because workers are sweating more. Hell, no. It comes from our $1.5 billion investment in new plant and equipment."

What employees have often got in return for lower wages is increased job security. That was underlined last week, when the Labor Department announced that U.S. unemployment had fallen to 6.1% in June, from 6.3% the previous month.

Still, the feeling is strong among many U.S. workers that their lost wages are serving mainly to enrich managers, shareholders and investment bankers. One statistic that buttresses the notion is the increase in top executive compensation, which, according to one survey, climbed about 18% last year, even as rank-and-file wages stagnated.

Anger among labor-union members could flare up during the next few weeks, as the United Auto Workers begin negotiating new contracts for 459,000 workers at Ford and General Motors. If bargaining breaks down this year, the U.A.W. is likely to choose Ford as its primary strike target. Reason: the company, which passed GM last year with earnings of $3.3 billion, is now Detroit's most profitable automaker. Even if those negotiations proceed smoothly, however, there are other signs that labor's restiveness is slowly increasing, despite the decline of U.S. union membership from 20.1 million in 1980 to 17 million in 1986. Last year the number of major U.S. work stoppages rose for the first time in the 1980s, to 69, from 54 in 1985. This year the number could rise again.

CHART: TEXT NOT AVAILABLE

CREDIT: TIME Chart by Cynthia Davis

CAPTION: WAGES: NO POT OF GOLD

Workers' average weekly earnings

DESCRIPTION: Adjusted-for-inflation wages and current-dollars wages, 1980 to May 1987. Color illustration: Workman with lunchbox; rainbow.

With reporting by Dan Goodgame/Los Angeles and Richard Hornik/Washington