9-5 Rat Race: Unions blame employers for poor entry level salaries

9-5 Rat Race

Editor: Draco Copper | Tactical Investor

9-5 Rat RaceFewer Unions, Lower Pay for Everybody

The bottom 90 per cent of Americans earned 50.7 per cent of all pretax income, while the top 1 per cent earned 23.9 per cent, according to research by Berkeley economist Emmanuel Saez. The Great Depression and World War II acted as equalizers, and by 1944, the bottom 90 per cent earned 67.5 per cent of income, while the top 1 per cent earned just 11.3 per cent.

But that relative equality started to morph again in the 1970s and by 2012, the bottom 90 percent accounted for just 49.6 percent of all pretax income, while the top 1 percent held 22.5 percent.

since 1979, the percentage of U.S. private-sector workers that are unionized has fallen to 10 per cent, from 34 per cent. Unionization among men without a college degree has fallen to 11 per cent from 38 per cent in 1979. And that, in turn, has led to some pretty compelling changes in the way workers are compensated, and the power they have to influence their earnings. “Policies regarding unions and the minimum wage are going to affect the wage structure, such as how much of the value of the company makes have to be given to workers, especially low and middle pay workers,” Saez told me in a phone call earlier this month.

Proof that unions Help workers?

The EPI paper by Jake Rosenfeld of Washington University, and Patrick Denice and Jennifer Lairdof the University of Washington, looks at how the decline of unions has impacted the earnings of workers who don’t belong to unions. The authors find that the presence of unions significantly affects the wages of non-union workers, especially those without a college degree. Non-union men without a high school diploma would be experiencing weekly wages that were 9 per cent higher if union density had remained at 1979 levels, the author’s estimate.

That translates to $3,172 a year.  Non-union men without a bachelor’s degree would have seen weekly wages that were 8 per cent higher with union density at 1979 levels; weekly wages for all private-sector men would have been 5 per cent high with that union density. Full Story

How the American economy conspires to keep wages down

Unemployment stands at a modest 4%, but paychecks aren’t growing. Although today’s is the best-educated workforce in history, employers just insist that workers need more training.

In other words, they’re gaslighting us. Meanwhile, over decades, employers have built and maintained a massive collective political apparatus to hold down wages. To call it a conspiracy would be only slight embellishment.

The symptoms of the problem are not hard to miss. In February, for example, the American economy posted its biggest one-month jobs gain in a couple years, but wage growth stayed stalled out. For months, economists and financial journalists have been puzzling over the question, as Bloomberg put it, of “why the economy grows but your paycheck doesn’t”.

Economists will tell you that wages generally increase with productivity – that you’re paid in line with the value of what you do. This was credible from the end of the second world war to the 1970s, when productivity and hourly wages rose almost perfectly in sync. But according to research by the Economic Policy Institute, from the early 1970s to 2016 productivity went up 73.7%, and wages only 12.3%.

Work is intrinsically political. In return for your wages, you’re supposed to submit – not once but every day

The current of fear running through the workplace is one of the best ways to tell there’s something more than a market transaction happening there. But fear can go both ways. In West Virginia and Oklahoma, the irreplaceable teachers terrified Republican officials. With unemployment down, more of us are becoming irreplaceable every day. There’s leverage for workers there, but you have to be willing to scare your boss to use it. Full Story

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