This is Part II of a series of articles commemorating Labor Day, which became a national holiday in the USA in 1894 and was on Sept. 1 in 2014. Part I was posted on Storeboard yesterday and focused on the fact that the states where employees are paid the most and the wealthiest states are often the states where the percentage of employees in unions is the highest and the states where employees are paid the least and the poorest states are often the states where union participation is the lowest.
The last few decades haven’t been kind to American laborers because their wages have been stagnant and declining.
There are three reasons, according to an Economic Policy Institute report that was released last week and was summarized in a U.S. News & World Report article entitled “Wages Have Fallen for Almost Everyone This Year.” The reasons are declining unionization, excessive joblessness, and globalization.
There isn’t enough space in this blog for a full analysis, but I feel compelled this week, the week that Americans celebrate Labor Day, to point out how much unions have helped workers and communities throughout the United States. In the decades after World War II, the USA became the most prosperous nation in the world and the nation with the strongest middle class thanks in part to the strength of labor unions. Unions were integral in addressing the power gap between the business community and ordinary employees — a gap that was very wide in the years leading up to The Great Depression.
Then, things changed. For a variety of reasons, labor unions declined. The unions’ own flaws were one reason for this decline, but the bottom line is that the percentage of American employees in unions declined from 20.1 percent in 1983 to 11.3 percent in 2013, according to the Bureau of Labor Statistics — and American employees suffered as a result.
During roughly the same period of time, from 1979 through 2013, the median hourly wage rose only 6.1 percent, but the median hourly wage rose 40.6 percent for the richest 5 percent, according to the Economic Policy Institute report. By my calculation, that means the median hourly wage rose about 4.3 percent for the lower 95 percent. It took me 20 minutes to figure that out so I better be right.
And the 4.3 percent figure includes the extraordinary gains that average Americans made during the late 1990s when “wage growth was broad-based, and even strongest for the lowest-income earners,” the report says.
The report explicitly says that from 1979 through 2007 “more than 90 percent of Americans saw incomes grow more slowly than overall income growth” because the richest Americans “benefitted from increased bargaining power rooted in developments in corporate governance and financial regulation.” There’s no doubt that declining unionization was a key factor in the bargaining power of the ‘5 percent.’
If wage inequality had not risen between 1979 and 2007, middle class incomes would have been about $18,000 higher in 2007 than they actually were, the report says. “Weakened unions explain a fifth to a third of the entire rise of wage inequality,” the report says. Thus, declining unionization has cost American employees roughly $3,600 to $6,000 per year.
Many corporate apologists blame the workers themselves for their low salaries, arguing that the younger generation of employees has been less disciplined, more spoiled, and less productive. Do NOT believe the “Get off my lawn” liars.
Here is what the Economic Policy Institute report says about the gap between productivity and wages — “From 1948 to 1979, productivity rose 108.1 percent, and hourly compensation increased 93.4 percent. From 1979 to 2013, productivity rose 64.9 percent, and hourly compensation rose 8.0 percent.”
I have one word to describe what employers are doing when the salaries they’re paying employees has grown one-eighth as much as the employees’ productivity growth — stealing.
Employers’ wage theft would be significantly less if labor unions were stronger.
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