Revisiting Labor History
E.J. Dionne opines on the contributions of organized labor to American economic history …
All but forgotten is the fact that our nation’s extraordinary prosperity from the end of World War II to the 1970s was in significant part the result of union contracts that, in words the right wing hated Barack Obama for saying in 2008, “spread the wealth around.” A broad middle class with spending power to keep the economy moving created a virtuous cycle of low joblessness and high wages.
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Between 1966 and 1970, as Gerald Seib pointed out last week in the Wall Street Journal, the United States enjoyed an astonishing 48 straight months in which the unemployment rate was at or below 4 percent. No, the unions didn’t do all this by themselves. But they were important co-authors of a social contract that made our country fairer, richer and more productive.
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There are many complicated reasons why these arrangements broke down, but I do not see things getting substantially better unless we find ways of increasing the bargaining power of wage-earners — precisely what Reuther and his fellowship dedicated their lives to doing.
Around The Dial – September 7
Economic policy reports, blog postings, and media stories of interest:
- Paul Krugman wonders if 1938 has come to 2010.
- Free Exchange weighs the benefits of public infrastructure spending.
- Ezra Klein asks why Washington wants people to work longer.
- The Los Angeles Times reports on the long-term unemployed.
- The Charlotte Observer looks at the changing role of community colleges,
North Carolina Wage Trends
A new policy brief from the N.C. Budget & Tax Center tracks wage trends in North Carolina.
In addition to the declining trend in income, it is also important to look at the hourly wage of workers. Wage growth is clearly linked to a household’s standard of living and consumption and thus the strength of economic recovery. Growth in wages is driven by a tight labor market where, in order to keep workers, employers must raise wages. In a period of weakness, like today’s labor market, workers and job seekers have less ability to negotiate for higher wages given the scarcity of employment opportunities. At the national level, there are currently five job seekers for every job opening.
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The median hourly wage of workers in North Carolina in 2009 was $14.95, just 60 cents higher than in 2000 when the median wage was $14.35.
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The wage growth that occurred in the 2000s in North Carolina largely benefited those at the upper end of the income distribution. In contrast, wage growth in the during the expansion of the 1990s was more broadly shared.
More Help Needed
In an interview on The PBS NewsHour, Christina Romer, the outgoing chair of the Council of Economic Advisers, discussed the state of the economy and the effects of the American Recovery and Reinvestment Act. Romer’s remarks also demonstrate the political and ideological complexities that are preventing responses to current problems.
Editor’s Note
The Policy Points blog will not be published today in honor of Labor Day. Regular posting will resume tomorrow.
Thank you for your interest in the blog!
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