More Feted Labor Statistics

In a working paper entitled Addressing the Problem of Stagnant Wages, Frank Levy and Tom Kochan continue the assault on the notion that things are better than they were 30 years ago.  In point of fact, the wage stagnation for men is staggering and is only slightly better for women.

As shown in the figures, between 1980 and 2009, labor productivity increased by 78 percent but:

• The median compensation of 35 to 44 year-old male high school graduates (with no college) declined by 10 percent. 
• The median compensation of 35 to 44 year-old male college graduates (without graduate degrees) grew by 32 percent, less than one half as much as overall productivity growth. 
• Only the median compensation of 35 to 44 year-old men with post-graduate training came close to labor productivity growth increasing by 49 percent.

Data for Men, 35-44 working full-time

Data for Women, 35-44 working full-time

As the American workforce expands productivity (a staggering 78% in 30 years!), ensuring ever growing profits for the capitalist class, the workers responsible for this remarkable achievement continue to see their wages (and their lot) stagnate in a nation that is increasingly unequal.

The authors point to the decline of unionization as a key driving factor in wage stagnation

The decline of unions has undercut workers’ wages through multiple channels.  Researchers have pointed to the way in which unions propagated wage norms through much of the economy and acted as a pro-worker pressure group in the formation of federal and state  policy. With few prospects for organizing new workers or industries, the bargaining power  and innovative capacity of collective bargaining both declined.  By the mid 1980s, traditional arms-length union management relations no longer were able to generate the productivity needed to compete on the basis of high wages.

The take-aways for me are:

1. Stay in school! A high-school diploma is a ticket to stagnation
2. Stay in school! A college degree will barely keep you moving forward
3. Stay in school! A post-graduate degree is the path to success
4. Reinforce Union Rights! Repeal Taft-Hartley and return to a period when labor had a stronger voice at the bargaining table
5. Tax the Rich! If the capitalist class will not share the wealth with the workers responsible for their success, then the government must step in to ensure some measure of equity

But of course we continue to starve primary and secondary education in this country.  And while we starve it, we blame the teachers for not getting the job done.  Clearly things are amiss in America (in many ways) and a recommitment to education is needed.  And this does not mean turning our educational system over to greedy billionaires to mould children into corporate cogs for their capitalism machine, but a system which teaches children the value of learning and of free thought.  The kind of creative thinking that launched men to the moon, built Hoover Dam and cured polio.

But an economy that only produces wealth for people with a post-graduate education cannot stand for long.  The vast majority of Americans are unable or unwilling to pursue even a 4-year college degree at this time, let alone a post-graduate degree.  We must work to move the outcomes of success that are accumulating with the top 2% of our economy down into the middle and working-classes.  Without this, our demand-driven economy will fail.

The authors suggest a process of corporate profit sharing that encourages firms to "share the wealth" with the workers, regardless of their job classification.

Beyond consideration of workers’ incomes, broad-based compensation helps firm  economic performance. More than 100 studies that compare firms with and without broadbased incentive systems and/or compare firms before and after they introduce such systems,  find that broad-based incentive compensation systems are generally associated with higher  economic performance for firms and better labor-market outcomes for workers, particularly when implemented with human-resource management complementary policies that engage workers’ knowledge, skills, and motivation to improve operations and enhance performance. Workers in such systems generally have higher job security and receive such pay on top of their regular pay and benefits, along the lines of efficiency wage or gift exchange theories of wages, which mitigates concerns about risk.