The Verizon Corporation is asking its workforce to accept wage and benefit reductions—despite being a very profitable company. Morgan Stanley’s recent analysis shows Verizon’s net income from ongoing operations was $13.9 billion in 2010, up more than 16 percent from 2007. No wonder Verizon’s stock has outpaced that of the S&P index and other telecommunication’s firms, something Verizon itself brags about in its last annual report. How, then, can Verizon freeze current workers’ pensions and eliminate pensions for new workers? Ask their workers to accept reductions in holidays (to seven), reduced sick pay and the substitution of the current health plan with one having high deductibles and contributions? The unions involved estimate that benefit and wage reductions would total $20,000 per worker each year.

Understandably, the workers have gone on strike. This labor conflict, however, is a microcosm of a broader trend in our economy, one that is not healthy for overall growth and certainly not conducive to improved living standards for America’s working families.

American workers are beset by a deep recession that continues with no end in sight. Unemployment has been roughly 9 percent or above each month for over two years and underemployment has correspondingly remained at 16 percent or more. At some point over the course of the year, one out of three workers (four out of 10 Hispanic or black workers) will be unemployed or underemployed. Simply put, we have been stuck for a long time with unemployment that is worse than even the worst moments of the last two recessions. The consequence is that a June poll showed that 43 percent of adults have been either unemployed or have an unemployed family member. Some 61 percent of respondents knew a family member or friend (or themselves) who personally experienced a reduction in wages, benefits, or hours worked. The misery from persistent high unemployment is widely shared. Unfortunately, the consensus of forecasters expects unemployment to still be 8.5 percent at the end of 2012, so the misery will continue.

In stark contrast, businesses are doing exceedingly well. The Commerce Department has recently reported that corporate profits have increased by a third since the start of the recession: this is a very impressive gain since the economy is still smaller than it was before the recession began. Not surprisingly, the total amount of wages and benefits earned by workers has yet to return to pre-recession levels. What we have is an economy in which businesses and highest-income households do very well even when the vast majority is deeply hurting. Over the last four quarters only 73.7 percent of the income generated in the corporate sector went to employees in wages and benefits, the lowest share since during World War 2, when wages were deliberately suppressed. Correspondingly, the 26.3 percent share of corporate output going to profits is the highest since the World Was II years.

This is not a national accomplishment of which we should be proud, nor one that augurs well for the future. And it didn’t happen by accident. This outcome is a reflection of the continued disempowerment of America’s workers that has emerged from three decades of eroding labor standards, deregulation, privatization, globalization, weakened labor laws and other policy choices that have given employers the upper hand. Policies that were supposed to make us better off have led to a deterioration of job quality and an increase in economic insecurity.

The results are that wages are not growing as they should, which is holding back consumer spending (and not allowing households to pay off their debts). All of which, in turn, is holding back the economy. This mugging of the workforce—what else can you call wage and benefit reductions in the face of high profitability?—occurs because it can, because employers can have their way with most workers. Verizon and other employers may think this is simply good strategy for their businesses, but it undercuts our ability to provide robust growth and to ensure a rising living standard and some basic economic security (health, retirement) for workers and their families.

In this light, the resistance of Verizon workers can be seen as an attempt to maintain a reasonable labor standard in the workplace, the standard by which profitable firms share improvements in productivity with their employees. If Verizon workers are forced to accept givebacks, this will only have negative consequences for other workers, further constraining consumption and growth. It is unusual these days for workers to go on strike so the Verizon workers deserve our admiration. What we need is for the Verizon workers to be successful and for their example to be followed by other sectors in the economy. I wish them well, and so should we all.