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Wages don't figure in rebound
As profits soar, employees say good times haven't reached them
By Charles Stein, Globe Staff | May 5, 2004
For Caterpillar Inc., times could hardly be better.
Like much of corporate America, the Peoria, Ill., maker of construction equipment is benefiting from a surprisingly powerful economic rebound. Two weeks ago, the company reported a 200 percent increase in first-quarter profits and predicted profits for the rest of the year would be strong, as well. Chairman Jim Owens credited the global expansion and people across the company who are ''making a positive difference."
Not all those people are feeling as chipper as Owens. Three days after the earnings announcement, Caterpillar's 8,000 union workers rejected a proposed contract that offered one-time bonuses instead of raises, required bigger worker contributions for health insurance, and mandated significantly lower pay for new hires.
''The contract was a slap in the face," said Randy Ary, a 30-year Caterpillar veteran who voted against the pact. ''The company is making good money. All we are asking for is a share."
Other US workers may be asking for the same thing. A full year into an economic expansion that continues to pick up momentum, profits are growing rapidly, while wages are rising barely at all. In the fourth quarter of 2003, profits as a share of the total economy reached their highest level in more than 50 years. The share of the pie going to wages and salaries hit a 50-year low.
''What we are seeing is historically unprecedented," said Andrew Sum, an economics professor at Northeastern University.
On the household level, the split also is lopsided. Affluent families have received significant gains from the rising value of their stocks and homes. On top of that, the well-to-do were the major beneficiaries of President Bush's tax cuts.
''Up to this point, most of the benefits of this expansion have accrued to higher-net-worth households," said Mark Zandi, chief economist at Economy.com, a Pennsylvania research firm.
Posted by P6 at May 5, 2004 09:03 AM
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