Labor Day Statement 1995

Renewing the Social Contract:
Reclaiming the Dignity of Work and the Rights of Workers

Bishop John H. Ricard, S.S.J., Auxiliary Bishop of Baltimore
Chariman, Committee on Domestic Policy
United States Catholic Conference
September 4, 1995

This Labor Day finds the American economy shifting, churning, and adapting to new realities. Even as our economy continues to expand from the last recession creating millions of new jobs, it is reported that most Americans have seen their income decline or just hold even. Young people with only a high school education are at a marked disadvantage. As they enter the workforce, they start jobs paying some 30 percent below similar jobs of the late 1970's. Indeed, wages for most Americans who have only a high school education have deteriorated. Families must work longer hours with more members of the family in the workforce just to keep pace. Income for middle-class families stagnates. From the shipyards of the East, the steel mills and auto plants of the Midwest, the textile mills of the South, to the high tech, aerospace industries of the West, American companies, American people, and American workers find that the "old ways" of working or doing business no longer exist. For too many, the assumed social contract between employer and employee has been replaced by "survival of the fittest."

Once our economy depended almost totally on the land. Each farmer, or more likely a family, could live fully off the land. Now agriculture employs just 1.6 percent of the American workforce. Then the industrial revolution developed the factory where many people prospered within the structure of manufacturing. In the last 25 years, the manufacturing sector, which helped many workers join the middle-class, has lost millions of jobs and now appears on the decline.

Change has brought us from the agricultural age, to the manufacturing age, to the still evolving service/information age. This emerging sector beginning to dominate the American economy brings challenges both to the workplace and to workers. Today, the economy relies increasingly on our knowledge--especially scientific knowledge--our capacity for interrelated and compact organization, as well as our ability to perceive the needs of others and to satisfy them. More than ever, our work is work with others and our work is work for others: it is a matter of doing something for someone else. While our nation still grows huge amounts of food and still manufactures a vast number of
goods, it relies more and more on "high technology" rather than human brawn to provide our daily bread. 

This new technology is freeing for many; but others face serious problems, all associated with economic change. The fact is that many people do not have the ability to make an effective and dignified contribution in this new economy. They do not have the sophistication or basic knowledge which would enable them to express their creativity and develop their full potential in this new environment. Without additional training and education there is no way for them to enter this network of knowledge and intercommunication.

Catholic social teaching increasingly recognizes the positive value of the market and of enterprise within society, but always places it at the service of the person. "The modern business economy has positive aspects. Its basis is human freedom exercised in in the economic field, just as it is exercised in many other fields. Economic activity is indeed but one sector in a great variety of human activities, and like every other sector, it includes the right to freedom, as well as the duty of making responsible use of freedom." The economy is only one part of the human experience, not its sole determinant. It, like other aspects of society, must work to build the common good. As Pope John Paul II notes, Catholic teaching envisions a society of work freely chosen, of enterprise, and of participation. He envisions a society not directed by, or directed against, the market; but where society and the government appropriately regulate the economy to guarantee that the basic needs of the whole society are satisfied. Business, as the Pope reminds us, is not just not a society of capital goods;' it is also a 'society of persons' in which people participate in different ways and with specific responsibilities, whether they supply the necessary capital for the company's activities or take part in such activities through their labor."

More than 92 percent of the American workforce work for someone else. A vast amount of corporate restructuring took place in the late 70s and through the 1980s when American productivity lagged and wages followed. But since1982 the stock market has exploded -- increasing more than 400%, at the same time it is reported that the average wage has fallen about 15%. The market has responded to record corporate profits produced by robust gains in worker productivity and other factors. This renewed growth in productivity in the last few years has been accompanied by, not the traditional increase in wages, but an actual decline in real wages. This decline of wages and benefits for working people in United States over the last ten years has resulted in the largest gap between the rich and poor in the industrialized world.

The so-called "downsizing," or some suggest "rightsizing," of corporations has brought about not just the elimination of jobs, but the remaining work often pays less, is part-time, and without health care or a pension. All of this has resulted in significant increases in the number of working families with children falling into poverty. In fact a majority of poor Americans live in households with workers, most of whom have no health insurance or pension. The minimum wage is now some 26% below its average for the 1970s when adjusted for inflation. Instead of sharing in the expanding economy created by rising productivity, many workers have come to depend on the Earned Income Tax Credit which has been raised three times since the mid- 80s. Recently an investment banker worried that "we face a real risk right now of dramatically increased social tensions and political upheaval if wages don't begin to catch up with the productivity curve."

The purpose of business in this new economy remains the same as other economic enterprises: to seek a profit by providing a service to the larger community and fulfilling the human needs of the people involved in the business. But John Paul II warns "profitability is not the only indicator of a firm's condition. It is possible for the financial accounts to be in order, and yet for the people -- who make up the firm's most valuable asset --to be humiliated and their dignity offended. Besides being morally inadmissible, this will eventually have negative repercussions on the firm's economic efficiency... Profit is a regulator of the life of a business, but it is not the only one; other human and moral factors must also be considered which, in the long term, are at least equally important for the life of a business."

Business ownership entails moral responsibilities to the larger society that requires it to create opportunities for work and add to the common good. In Economic Justice for All, the bishops point out that work is so important that "all who can work are obliged to do so." John Paul II in Centesimus Annus adds this corollary: "The obligation to earn one's bread by the sweat of one's brow also presumes the right to do so. A society in which this right is systematically denied, in which economic policies do not allow workers to reach satisfactory levels of employment, cannot be justified from an ethical point of view, nor can that society attain social peace."

As America produces less things, products, manufactured goods, etc. and produces more ideas, services, and intangibles the nature of businesses and work changes. Those who possess skills, technology, and know-how become as important as landowners in years past. Work must not only provide for our own needs, but those of our families, our community, our nation, and all humanity.

A person is due -- at whatever task, in whatever job, by the very fact of their humanity -- both the possibility to survive and the possibility to contribute to the common good. The old adage "an honest day's work for an honest day's pay" implies a social contract between an employee and employer. It also recognize the responsibility of employers and society to workers. Society must affirm this contract by ensuring that everyone who can work has the opportunity to do so. On the other hand, every business -- regardless of its size, function, or organization -- must respect the basic human rights of workers which include a living wage sufficient to support a family, old age and unemployment protection, a decent work environment, and the right to organize and bargain collectively.

On this Labor Day, we call on leaders of business and labor, government and other mediating organizations to reflect on the human consequences and moral dimensions of our changing economy. All must seek to renew the social contract which offers dignity to workers and puts work at the center of our national economic life.