A Grade 9 mechanic makes $33.75/hour, but we all know BIW is collecting much more than that from the Navy.¹ This intuition has a name in economics. It’s called “the surplus value theory,” and its logic can help you understand more than just low wages.

Key words: surplus value, wages, price, overhead, profit, privatization, mutualization

Surplus value is the difference between the price the Navy pays for a ship and the wages BIW actually pays the mechanics who build her. At $33.75/hour, a Grade 9 makes $270/day in wages ($33.75 × 8 = $270). Let’s say that skilled Grade 9s build about $168.75 worth of ship every hour, too. That’s $1,350 worth of ship a day ($168.75 × 8 = $1,350). The total value of ship produced is called the price ($1,350) because that is the amount of money BIW earns for selling it to the Navy. What’s leftover after subtracting a mechanic’s wages ($270) from this price ($1,350) is called surplus value. In this example, the surplus value is $1,080 ($1,350 – $270 = $1,080).²

A substantial amount of surplus value funds the overhead necessary to run the business. BIW couldn’t pay Grade 9s $168.75/hour and still keep the lights on. The Navy pays for the ship, not BIW’s electric bill. Other overhead costs include materials, tools, and support staff. BIW must pay for maintenance, human resources, and frontline supervisors. Let’s say three quarters of all surplus value goes to paying these necessary overhead costs. That’s $540 in overhead ($1,080 × 0.75 = $810), leaving $270 in profit. Thus, price is the sum of wages, overhead, and profit:

price = wages + overhead + profit

$1,350 = $270 + $540 + $270

And surplus value is the sum of overhead and profit:

surplus value = overhead + profit

$810 = $540 + $270

The above example assumes a 1-3-1 ratio between these parts. Note: I’m going to be referring back to this ratio a lot in the coming paragraphs because it is convenient, not because this ratio is real. Companies don’t publish these ratios for a reason. We’d probably be very upset if we knew how much BIW was profiting off our labor. In any case, the framework for understanding surplus value is much more important than the precise figures.

Not enough people learn about surplus value theory because it was Karl Marx who came up with it.³ (I write with a gasp, clutching the pearls I bought on a pipefitter’s salary). To be clear, I am neither a Marxist nor an economist. I’m not a subject matter expert, but I do find this basic concept key to understanding a lot of things about the way capitalism works. For instance, why does BIW hate when its employees take PB time? BIW doesn’t have to pay your wages when you take a PB day, so why does management so rigorously enforce the absentee policy? PBs cost them nothing!

PBs actually carry a high cost under surplus value theory. Remember, your productivity pays for all of BIW’s overhead and profits. Scale the previous 8-hour example up to a full 40-hour week: (Multiply everything by 5.)

price = wages + overhead + profit

$6,750 = $1,350 + $4,050 + $1,350

A Grade 9’s weekly wages are $1,350. BIW sells the amount of ship that Grade 9 produces in a week at a $6,750 price tag. Recall that one day’s labor produces a ship price of $1,350. This means you pay for yourself after your first day of the week. The next three days of work pay to keep the lights on, and the final day returns a profit. But you can’t generate surplus value if you call out a PB on Friday. The price BIW can command for your labor is reduced by $1,350. Wage and overhead costs are fixed, so BIW has to rebalance the equation by reducing its profits:

price = wages + overhead + profit

$5,400 = $1,080 + $4,050 + $270

BIW still made enough money that week to pay for you, your supervisor, and CMP. But BIW didn’t claim any profit for the surplus value you would have generated on Friday. Of course, BIW doesn’t have to pay you Friday’s wages, so the actual profit they’re able to claim is still $270. This isn’t nothing, but it’s far below the $1,350 BIW was expecting. This is the equivalent of that Grade 9 working a full 40-hour week but only getting paid for Monday. Wouldn’t you be mad in that scenario?

Of course, you might take the pay cut if you had no other choice. Many workers faced this scenario or starvation in the 19^th century. “For both business people and workers,” the historian Melvyn Dubofsky observed, “the late nineteenth century was scarcely the best of times.”⁴ Overproduction, layoffs, and wage cuts pockmarked the Gilded Age.⁵ This instability led workers to form unions in the first place. The IAM formed in 1888 in response to a decade of unstable wages, for example.⁶ But falling wages don’t tell the full story. Not only did management claim control over the surplus value produced by laborers. Managers claimed control over their employees’ wages, too.⁷ Companies paid employees in scrip. They forced them to live in company housing, buy groceries at the company store, and bank in company banks. They claimed this was for their employees’ own good. They argued workers didn’t know how to spend their own money. There’s a throughline from 19^th century “industrial paternalism” to the paternalist attitudes about SNAP recipients’ spending today.⁸ But that’s a story for another time. The story I’m telling you today is that our system is not the natural order of things. There is no natural order of things. “The economy” doesn’t exist in nature. We made it up. We decided workers are entitled to a wage, and capitalists are entitled to surplus value. It hasn’t always been this way, and it doesn’t have to stay this way, either. We decide how the economy should be structured, just like BIW makes choices about how to administer its absentee policy.

When I was hired in 2021, BIW was still applying the attendance policy as though all of its employees had been there for 30 years. BIW assumed they had plenty of time off, knew the game, and got what was coming to them. This was no longer true. BIW had been hemorrhaging experienced mechanics since 2019. That year, the IAM National Pension Fund released a Rehabilitation Plan. This plan eliminated the 30-and-out option. This option had allowed anyone with 30 years in the pension to retire no matter their actual age. Beginning in 2022, all participants in the pension would have to wait until 65 to claim their full pension.⁹ Many mechanics had been hired in their 20s in the late ’80s, early ’90s. Now in their 50s, many opted for early retirement over another decade of shipbuilding. BIW hadn’t done any serious hiring for decades. Now they couldn’t hire enough new people. Maine had just passed a law guaranteeing workers across the state 40 hours of vacation.¹⁰ BIW was exempt, offered new hires like me just 24 hours, and pretended that was enough.¹¹ Many of us had relocated to Maine from over a thousand miles away. We struggled to find housing, doctors, and daycare. This translated into low turnout and high turnover as people moved back home.

Lately, BIW has been excusing far more PBs. This is not because the company suddenly became benevolent. In reality, the company has simply found itself in a take-it-or-leave it job market. BIW’s circumstances are like those of the downtrodden workers who formed the IAM. Those starving, huddling masses of machinists had it far worse than BIW, but the economics are more-or-less the same. Few are beating down the gates to work at BIW these days. The company can accept $270 in profit or none at all. Which would you choose if you had to?

Facing lower and lower profits every year, BIW has felt forced to change its approach. This manifests in the company’s administration of the absentee policy. It also appears in recent investments into the community. This year, BIW has made serious investments in daycare, housing, and transportation.¹² The union has been lobbying for these projects for years. BIW ignored its workers, but the company cannot ignore its shareholders. BIW is not running a daycare or building houses because it is the right thing to do. BIW is investing in these projects because it has to to stay competitive in the shipbuilding industry.

Most progressive reforms have happened under similar circumstances. The New Deal was a response to the Great Depression, for example. Facing revolutionary fervor, FDR saved capitalism from itself through progressive reforms. The regulatory state forces corporations to invest part of the surplus value generated by your labor into social goods like:

• Minimum wage;
• Overtime protections;
• Social security;
• Healthcare benefits;
• Environmental controls;
• And safety equipment.

Without these rules, corporations would put their shareholders above everyone else. To simplify things quite a bit, the spectrum from communism (far left) to capitalism (far right) is in how you answer this question: who gets to make decisions about how to use surplus value?

Nineteenth century America answered with an affirmative, “Capital!”¹³ This led to the Great Depression. FDR employed just enough communism to save capitalism from itself, but he was far from an ideologue.¹⁴ When it came to the question of surplus value, post World War II America landed somewhere in the middle. This is more-or-less the politics of Democratic Socialists, too. (Although they might disagree.) Regardless, America has been moving further right ever since what the historian Jefferson Cowie called the “Reagan Restoration.”¹⁵ This restoration has culminated in Donald Trump’s second presidency, his tariff talk evocative of 19^th century robber barons, and the “K-shaped economy” they have resulted in.¹⁶ History shows where this is heading.

But the capitalist politicians in control of this economy don’t want you to know history or surplus value theory. What’s crisis to us is opportunity for them. Surplus value provides a framework for asking questions. These questions are incredibly dangerous to their profit margins.

Take healthcare as another example. Cigna insures employees at BIW. Cigna made more than $2 billion in the third quarter of 2025 alone.¹⁷ (That’s July through September.) A family on BIW’s Physician Open Access (POA) plan contributed to these profits through a weekly premium of $39.82, or $2,072.20/year. ($39.82 × 52 = $2,072.20). How much of that premium contributed to Cigna’s billions? Apply our hypothetical 1-3-1 ratio, and the appeal of universal healthcare becomes clear. Assume Cigna is claiming 20% of the price of your healthcare in profit. Everything else being equal, you would save $414.44/year taking Cigna out of the equation. ($2,072.20 × 0.20 = $414.44). These economics are why scholars on public policy are in consensus. Switching to a single payer healthcare system would save American citizens trillions!¹⁸ It is these economics which put universal healthcare on the IAM’s official platform.¹⁹ Even right-wing think tanks like the Mercatus Center agree with us.²⁰ Policy-makers in Congress only disagree because there is no money to be had in universal healthcare. Congress cannot do insider trading on an industry with no stocks to trade.

There are a lot of private industries that probably should be in the public sector. They aren’t because capitalists stand to make a lot of money off of them in the private sector. Instead of exploring mutualization, this country is increasingly trending toward privatization. A 2023 ballot initiative would have replaced CMP with Pine Tree Power, a publicly owned utility company. Electricity prices are rising twice as fast as inflation, but rates at municipally-owned utilities are rising much slower than investor-owned power companies like CMP.²¹ Pine Tree Power would have put the power grid in the hands of the people by mutualizing CMP, but Maine voters rejected the initiative.²² Pine Tree Power’s defeat was a prelude to Project 2025’s push for more privatization. The Trump administration seeks to privatize public institutions. These include education, the postal service, veterans assistance, and weather data.²³ Privatizing these industries would mean expanding capitalists’ portfolio to include more and more profit-generating industries. If capitalists get their way, accessing any of these services will cost you more. (That’s if you get access at all.) Something has to give.

You can visualize this with our formula. Take the VA for instance. Right now, there is no profit-motive attached to veteran healthcare. You can strike profit from the formula:

price = wages + overhead + profit

The price is the same as the cost in taxes plus any copays veterans might pay at the VA. To keep this simple, let’s say the VA costs $1,000 per taxpayer. Let’s say 25% of that goes to VA workers, and the rest are overhead costs:

$1,000 = $250 + $750 + $0

Privatize the VA, and you introduce profit back into the equation. Let’s assume its new owners want to make $250 in profit, a 1-3-1 ratio. The new numbers add up to more than $1,000:

$1,000 ≠ $250 + $750 + $250

One of three things has to happen to rebalance this formula:

1. Veterans/taxpayers pay more for VA services (raise the price);
2. VA workers are paid less for administering services (reduce wages);
3. And/or the VA cuts overhead.

“And/or” because its buyers would probably get away with all three at once. This could mean benefits cuts, layoffs, and closing clinics. (All of this is already happening, by the way!)²⁴ Secretary Doug Collins has already destroyed the only real opposition a privatized VA would face in instituting any of these changes. Back in August, Collins eliminated all unions at the VA. If the government agrees to give up a service like the VA to the private sector, working people will lose all say in how it is run. Especially without a union to give them a voice on the job.

Even with our union contract, BIW retains far too many “management rights.” These include the sole rights to:

• “Assign and direct the workforce;”
• “Control and regulate the use of machinery, facilities, equipment, and other property of BIW;”
• And “make strategic business and marketing decisions.”²⁵

Under America’s capitalist economy, capitalists own the means of production. General Dynamics owns the shipyard, all the material, and the tools necessary for shipbuilders to do their jobs. They also make 100% of the decisions about how to use the surplus value generated from these means by your labor. This included the decision to give CEO Phebe Novakovic a $23 million compensation package in 2024.²⁶ This was more than 350 times as much as any Grade 9 earned that year.²⁷ If workers were in the driver’s seat, we may have used that money to build houses instead.

Communists believe communities should own the means of production for this very reason. They say the means of production should be held in common. (Communism, community, and common all share the same Latin root: commūnis.) Daniel Carson won a city council seat in Bangor last month after previously holding leadership roles in the Communist Party. He explained this affiliation to the Bangor Daily News. “I am a person who believes that working class people should be in the driver’s seat of this country.”²⁸ Daniel believes communities of workers should make decisions about how to invest the fruits of their labor, not big business. I met Daniel at this year’s Labor Summer Institute, and his politics made a lot of sense. Obviously, voters agreed.

BIW will not raise wages, increase benefits, or invest in communities unless it has to. BIW’s profitability has to be at stake. Incidentally, this is what makes work stoppages so effective. Withhold your labor, and you withhold the boss’s profits. You may lose out on your wages, but your employer stands to lose out on a lot more surplus value. But I want you to think bigger than a strike for a moment. How would we elect to invest the surplus value from our labor if BIW did not answer to General Dynamics? If we were in the driver’s seat?

Picture a shipyard held in common by the shipbuilders. Think of a co-op. Under a 1-3-1 ratio, a Grade 9 could work a 32 hour week without a loss in pay, or they could earn $67.50/hour instead of $33.75/hour. Maybe we’d give ourselves a modest raise instead. We deserve it after all. Maybe we’d dedicate the rest of the surplus value to projects we think are important. Say we pay ourselves $50/hour and set aside $17.50/hour to build houses, daycares, parks, parking lots, and hospitals. Whatever the real numbers are, there’s no denying this: there’s a lot of money in shipbuilding. All of it should stay here in Maine.

1. Agreement between Bath Iron Works and Local S6: August 21, 2023 to August 23, 2026 (Bath Iron Works, 2023), p. 30. ↩︎
2. For definitions of “surplus value,” see: Merriam-Webster, “surplus value,” accessed December 2, 2025; Cambridge Dictionary, “surplus value,” accessed December 2, 2025, Oxford Reference, “surplus value,” accessed December 10, 2025. ↩︎
3. Marx was interested in surplus value as the mechanism for the historic accumulation of capital by ruling elites. The framework provided here is an adaption of this theory. For Marx’s original framework, see: Karl Marx, Capital: A critique of political economy (1887), vol. 1. ↩︎
4. Melvyn Dubofsky, The State and Labor in Modern America (University of North Carolina Press, 1994), p. 2. ↩︎
5. See: Jack Beatty, Age of Betrayal: The triumph of money in America, 1865-1900 (Vintage, 2007). ↩︎
6. Robert Rodden, The Fighting Machinists: A century of struggle (Kelly Press, 1984), pp. 1-5. ↩︎
7. See: Nicolas Delalande, Struggle and Mutual Aid, trans. Anthony Roberts (Other Press, 2023), pp. 74-77. ↩︎
8. For examples of SNAP paternalism, see: Katy Li, “SNAP’s Paternalism is Wasteful and Stigmatizing,” Niskanen Center (2017, July 13); Akhil Saxena, “Ending Paternalism in Food Aid: The case for cash benefits,” Brown Political Review (2022, May 24); Katia Riddle, “RFK Jr. wants to stop people using SNAP benefits to buy soda. Will it help?,” NPR (2025, April 3). ↩︎
9. See: IAM National Pension Fund, “Changes-At-A-Glance,” news release (2019), p. 2; IAM National Pension Fund, “Rehabilitation Plan” (2019, April 17). ↩︎
10. Maine Department of Labor, “Earned Paid Leave,” accessed December 10, 2025. ↩︎
11. See: Maine Department of Labor, “Earned Paid Leave,” accessed December 10, 2025; Strike Settlement Agreement between Bath Iron Works and Local S6: August 24, 2020 to August 20, 2023 (Bath Iron Works, 2020), p. 28. ↩︎
12. See: General Dynamics Bath Iron Works, “General Dynamics Bath Iron Works breaks ground on workforce housing,” news release (2025, October 28); General Dynamics Bath Iron Works, “General Dynamics Bath Iron Works teams with Greater Portland Metro to expand BREEZ service to Bath,” news release (2025, July 10); Nora Saks, “New metro bus service makes it a breeze to commute to BIW,” Maine Public (2025, July 17); Paul Bagnall, “New child care center in Brunswick geared toward Bath Iron Works employees,” Portland Press Herald (2025, September 4). ↩︎
13. See: Jack Beatty, Age of Betrayal: The triumph of money in America, 1865-1900 (Vintage, 2007). ↩︎
14. See: Peter Canellos, “What FDR Understood About Socialism That Today’s Democrats Don’t: He ruled at the height of government activism, but saw ideology as something to fear, not embrace,” Politico (2019, August 16). ↩︎
15. Jefferson Cowie, The Great Exception: The New Deal and the limits of American politics (Princeton University Press, 2016), p. 29. ↩︎
16. For tariff talk, see: Melvyn Dubofsky, The State and Labor in Modern America (University of North Carolina Press, 1994), p. 22; for “K-shaped economies, see: Christopher Rugaber, “Here’s why everyone’s talking about a ‘K-shaped’ economy,” AP (2025, December 1). ↩︎
17. See: Bruce Japsen, “Cigna profits hit nearly $2 billion despite rising costs,” Forbes (2025, October 30). ↩︎
18. See: Christopher Cai et al, “Projected costs of single-payer healthcare financing in the United States: A systematic review of economic analyses,” PLOS Medicine (2020, January 15). ↩︎
19. IAM Constitution (2025), iii. ↩︎
20. For more discussion on the Mercatus Center, see: Diane Archer et al, “22 studies agree: ‘Medicare for All’ saves money,” The Hill (2020, February 24). ↩︎
21. See: Scott Horsley, “Electricity prices are climbing more than twice as fast as inflation,” NPR (2025, August 16); Blanca Begert, “Why Are Rates Rising Faster at Investor-Owned Utilities Than at Public Utilities?” Inside Climate News (2025, November 5); For a further analysis of these sources, see: James Baratta, “Lightning in a Bottle: Regulatory capture is at the root of the affordability crisis in electricity. Public power could offer a way out,” American Prospect (2025, December 3). ↩︎
22. See: Evan Popp, “Years-long campaign for consumer-owned utility defeated after deluge of opposition spending,” Maine Morning Star (2023, November 7). ↩︎
23. For examples, see: Brian Keyser and Andrea Ducas, “Project 2025’s Medicare changes would restrict older Americans’ access to care and imperil the program’s financial health,” Center for American Progress (2024, August 15); Peter Green, “Donald Trump’s playbook for privatizing America’s government,” Quartz (2025, February 7); Stop Project 2025 Task Force, “Subject-by-subject breakdown of Trump’s Project 2025,” Office of Congresswoman Zoe Lofgren (n.d.). ↩︎
24. See: Sara Dorn, “Veterans Affairs Cutting As Many As 35,000 Jobs By End Of Year, Report Says,” Forbes (2025, December 13); Office of Congressman Don Beyer, “Trump, Republicans Shut Down Virginia Rural Health Clinics,” news release (2025, September 10); Katia Riddle, “VA patients feel the cuts to mental health care, as thousands more layoffs loom,” NPR (2025, March 11); VA, “VA dismisses more than 1,000 employees,” news release (2025, February 13). ↩︎
25. Agreement between Bath Iron Works and Local S6: August 21, 2023 to August 23, 2026 (Bath Iron Works, 2023), pp. 4-5. ↩︎
26. AFL-CIO Executive Paywatch, “Phebe Novakovic: General Dynamics Corp (GD),” accessed December 20, 2025. ↩︎
27. See: Agreement between Bath Iron Works and Local S6: August 21, 2023 to August 23, 2026 (Bath Iron Works, 2023), p. 30. ↩︎
28. Quoted in: Annie Rupertus, “City Council candidate wants Bangor to invest in housing and public services,” Bangor Daily News (2025, October 1). ↩︎