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Charting the Decline of American Wages

Discussion in 'Political Discussion' started by Mrs.PatsFanInVa, Mar 5, 2011.

  1. Mrs.PatsFanInVa

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    #24 Jersey

    Last edited: Mar 5, 2011
  2. IcyPatriot

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    #87 Jersey

    As the NFL has become more popular I have become older ... a direct correlation.

    It also proves absolutely nothing ...
    Last edited: Mar 5, 2011
  3. patsfan13

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    Another great example of liberals utter ignorance on how economies grow, thanks for the link.
  4. Nikolai

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    #54 Jersey

    I'm not necessarily anti-union, but I do tire of the idea that correlation equals causation.
  5. reflexblue

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    Now thats not very nice. :nono:
  6. Chevy

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    [​IMG]

    Just as valid as the OP's chart.
  7. PatsFanInVa

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    So if there is no correlation, I take it that union workers do not, in fact, earn more than non-union members?

    Because no matter how weak that correlation is, if union members make more than non-union members, at least some causation can be demonstrated just by the gap in earning power. Fewer union workers, lower average earning power.

    But I'll leave you guys to puzzle out how union workers secure labor standards, and then have those standards adopted throughout the workforce. That too must have some amazing coincidental mechanism to explain it. Union workers strike to get a 40-hour week, non-union members suddenly get one. Weird.

    PFnV
  8. Stokes

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    OK PF/Mrs PF, others have made the point that the decrease in union membership is not necessarily causative, that much should be obvious. The chart shows the share of income going to the middle class has shrunk, from 52% to 46%. Wouldn't a much more likely reason for the decrease be that a number of those middle class households have become UPPER class?

    "Over the past two decades, the number of households in those brackets decreased by 3.9%, from 48.2% to 44.3%. During the same time period, the number of households with incomes below $25,000 decreased 3.5%, from 28.7% to 25.2%, while the number of households with incomes above $75,000 increased over 7%, from 23.2% to 30.4%.[44]"

    American middle class - Wikipedia, the free encyclopedia

    Also PF the 40 hour work week example is probably a bad one, as those changes began in the 1800's and were largely codified during the new deal. This chart begins in the late 60's.

    Look, unions have played a critical role in the establishment of fair working conditions in the country and will continue to do so I'm sure, but suggesting that there's a link between recent declines in union membership and a purported decrease in wages (which is NOT what this data suggests) seems unlikely to me.
  9. Mrs.PatsFanInVa

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    You might have quit reading too soon, Stokes.

    It's not that individual people are making more money, it's that households are now, more than ever, composed of two incomes. And that 7% increase occurred not in the mid-range entering the higher range (in other words, not $50,000 now earning $76,000 which would signify your Middle Class moving on up to the Upper Class) but occurred strictly in those who already earned more than $100,000 per year - meaning they were already there. It is not the poor getting middle class and the middle class getting rich - it is the rich getting richer.

    Poverty rates increased early in the 1980s until late in the 1990s when they started to go back down. Since 2000, the percent of all people living in poverty is up from 11.3% to 12.3% in 2006.

    A possible explanation for the increase in the higher earnings categories is that more households now have two wage earners. However, a closer analysis reveals all of the 7% increase can be found in households who earn over $100,000.[44]
  10. Mrs.PatsFanInVa

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    #24 Jersey

    Are you saying that you do not believe there is a decrease or stagnation in American wages?

    For a quarter of a century, from 1980 to 2004, while U.S. gross domestic product per person rose by almost two-thirds, the wages of the average worker fell after adjusting for inflation.

    From an economic standpoint what has happened is that the link between productivity and wages has been broken. No longer does economic growth mean increases in the real earnings for the working class as their productivity rises. This was evident through Clinton’s last term when between 1997 and 2001 the top 10 percent of U.S. earners received 49 percent of the growth in real wages and salaries; indeed, the top 1 percent got 24 percent of the total while the bottom half of workers received less than 13 percent. This trend is of longer duration. Based on a somewhat different calculation the share of income going to the top .1 percent quadrupled between 1970 and 1998 at the expense of working-class earners.


    Wage Stagnation, Growing Insecurity, and the Future of the U.S. Working Class - Monthly Review
    Last edited: Mar 6, 2011
  11. Nikolai

    Nikolai Football Atheist PatsFans.com Supporter

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    #54 Jersey

    No one is saying that (I don't think). But to say that the decline in union membership is the cause is simply inaccurate at best, and probably disingenuous.

    I think you're missing the wider point. Does a union worker in the auto industry make more than a non-union worker (if those exist) in the auto industry? Of course.

    Let's look at the real reasons why the wages have declined, and where the money is going:

    1. The bulk of American manufacturing jobs have been shifted overseas as the US economy becomes much more a service based economy. The manufacturing jobs were largely unionized, but it wasn't "breaking the unions" that caused membership to disappear, but the shipping of jobs overseas. When this happened, a significant portion of middle class income was slashed. Here's a correlation: as more American jobs are shifted overseas, American union membership has declined.

    2. The minimum wage has close to the lowest purchasing power it has had since the 1960s, saved only by recent increases that have helped pull it closer to the poverty level, but still not over.

    3. All these newly laid off workers begin seeking new jobs and career changes, putting in job applications in other industries. The number of applicants for a given job are higher, putting downward pressure on the salary, as the employer will be less willing to negotiate than simply move on to another applicant that will accept less money to do the same job. Here's another interesting correlation: The average amount of years an American has spent in one job has decreased significantly since the 1960s, which is concurrent with the aforementioned wage decreases. Makes you think...

    4. Employer pockets the savings, so CEO wages go up, profit margins are increased, and upward pressure on these gains is created (after all, who would want to see slower growth of money? I guess the worker bees have to want it...). More downward pressure on wages.

    5. BUT, though manufacturing workers are losing jobs at a higher rate, it's not quite high enough to fill the demand for highly skilled technology and other positions, so people in these industries gain advantages in salary negotiations, which illustrates Stokes' point. Some people, not just CEOs, have benefited from our new global economy and are moving upward in the wage brackets. It's enough to justify globalization on the macro scale, but it does not offset America's wage problem.

    6. Remember #1's service-based economy? There is downward pressure forming there as well, as even service-based jobs are being shifted overseas to India and China.

    I've got to go, but I think you see where I'm going. I'm no economist, but I did sleep in my own bed last night.

    TLDR - Globalization has a far bigger impact, and dwindling union membership is just a byproduct of that.
    Last edited: Mar 6, 2011
  12. Patters

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    Unions champion increased compensation and as a result many non union companies increase compensation to prevent unionization. That's the correlation.

    The NFL champions football and as a result football has grown more popular. That's a correlation. What's the correlation to the fact that your aging?

    Your analogy makes absolutely no sense. Why even bother to post something like that? Is that really the best you can do?
  13. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Your correlation is correct, too. But the fact is that the wealth in the US has increased, so there's obviously enough money in the economy for a strong union movement to demand increased compensation for those in lower income jobs.

    Perhaps you did not notice that the chart purports to show the middle class share of income, which probably does not include minimum wage earners.

    Did you know that unions protect jobs and compensation in the exact situation you're talking about? You are citing a specific reason why we need unions--to prevent a downward wage spiral due to unemployment.

    What in the world does that have to do with unions. Unions press for higher compensation against the forces you describe? Do you know what unions do? You seem confused.

    What does that have to do with the fact that effective unions increase compensation for the middle class? Specialists have always done well, with or without unions.

    Again, strong unions prevent wages from dropping and make it much more difficult for firms to ship jobs overseas.

    Strong unions can fight globalization, thus negating your whole point.
  14. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Unions fight for increase compensation, which often forces non-union shops to increase compensation (in order to discourage the formation of unions).

    Your chart shows that, like Icy, you either can't comprehend a simple logical framework (that organized groups of people are more effective at fighting for their rights than those who are not organized) or have no honest response. I think it's the latter. Since you can't counter the correlation, you're posting nonsense.
  15. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    I think there's ample evidence since the 80s that the number of households with two working people has increased, that more people are taking part-time jobs (because full-time jobs are less available), that individual savings has declined (since Reagan) and debt has increased, and that middle class benefits have been stagnant for years. (Unlike Europe, most people still get only a couple weeks vacation, don't have pensions, get minimal paid time off for family emergencies, etc.) Overall, life for the middle class (from an economic pov) has gotten worse in many cases.

    Furthermore, looking at the chart that Mrs. PFinVa posted, it already takes into account your point about people moving from one income bracket to another. I think there's an obvious trend line that continues despite the boon during the economic heyday of the Clinton era. While it's true the middle class did lose more ground (share of national income) as a result of Clinton's economic policies that sent some of them into the upper class, the trend line regardless continues downward.
    Last edited: Mar 6, 2011
  16. PatsFanInVa

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    Okay. First, this is what happens when you post in the middle of the night. I typed "correlation" rather than "causation" in my response, thus muddling the point that the better pay and working conditions in a strong labor environment are in fact caused by the presence of the unions.

    Nik makes a great point: given an environment in which corporations are free to outsource jobs, and in-source their outsourcing through use of a shadow economy which expands the labor pool to those who will break labor laws (with the risk born by the demonized labor pool, not by their employers,) we can expect wages to decline.

    However, as Patters counters, labor unions are against both these phenomena. Stronger unions, with greater membership, would be more effective advocates against the elimination of the middle class. This makes sense, since an era of strong unions was in large part responsible for the creation of the American middle class.

    So here is how this larger conversation is breaking down - it's a collection of paradoxes, if we stick with our black-and-white worlds:

    Choice 1: No unions, and polarization of American wealth; effectively, accelerate the elimination of the middle class. Most in the middle class become what we would now consider "lower middle" or become poor.

    Advantages: cheap labor domestically, therefore, a more attractive environment to create domestic jobs at rates that compete with some developing nations.

    Disadvantages: The vast majority of Americans working harder, for less pay.

    Choice 2: Strong unions, less polarization of wealth toward the top, resurgence of the middle class so it thrives again.

    Advantages: Some of the wealth in our U.S. economy is available to maintain a middle class; less poverty; better long-term outcomes for the state, in that we do not need as much in the way of alleviation-of-poverty programs, particularly for the elderly and future elderly (i.e., through a system of pensions, perhaps modified to recognize plan design issues from the 20th centrury experience.)

    Disadvantage: Those who make money by having money can make less when those who make money by doing work make more; greater prevalence of outsourcing; again, the specter of jobs departing.

    This dichotomy takes us back to the Globalization moment of the mid-90s, when, as a society, we basically decided that a global economy was coming and there was no escape. We picked the cheap goods of the Wal Mart made-in-china model over more expensive goods. For the next 15 years, we became the world's consumers -- that's what we did for a living, and of course, we were doing it with borrowed money.

    The ultimate solution, of course, in terms of globalization, is that there will one day be no distinction between the American working class and the Ghanaian working class. At that point, it will be as attractive to hire an American as a Ghanaian (or a Thai or a South Korean or whatever, depending on the industry.)

    We know that this is broad-brush. We know that productivity (read, automation) is higher here than abroad. But that's the basic standard of "competition" that will make manufacturing more attractive in the US than elsewhere - we have to cost as little as a South Korean or a Thai or a Ghanaian.

    Can the globalization genie get put back in the bottle? Patters? B5? Nik? Opinions? I actually think not, not at this point.

    In the presence of globalization, what's the path to a stronger middle class?

    That's a different question from the cause of middle class decline. We've established that the unions fought against it, and the wealthy profit from it. The next question is whether you can do anything about it.

    Of course, a larger question is whether there is any way to prevent all wealth from concentrating at the top of the pyramid, an ultimately suicidal course of action. To argue that this is the ultimate outcome is to agree with Marxism, pure and simple... although you may feel happy to put a gloss on the outcome that it is "good," it does not matter. Consumption cannot continue with demand crippled by plummeting wages.

    Oddly enough, China, of all places, gets this. They are currently pushing the expansion of Chinese demand as their next step, through the mainstreaming of the benefits of Chinese society. Happy Chinese consumers is now their policy goal... and from our point of view it's about bloody time.

    We'll sell them some Buicks. They like their Buicks. In China, Buick is luxury. What else? And of course all the manufacturing done in China will result in higher prices for consumer goods, if Chinese consumers have to be empowered with better wages... which is a boost for the retention of manufacturing in the U.S.

    But all that's in the range of the back-and-forth on the constant climb downward, as long as we rely on the old economy, unless we are willing to accept that our economy will depend on competing on playing fields we've abandoned.

    What's next, in short?

    Do we create a fortress America, accepting the skyrocketing cost of finished goods, by insisting through tarriffs that we make goods in America, with American labor, for American consumers -- attempting to turn back the clock?

    Do we accept a global marketplace (as seems inevitable at this point)? If so, what's the mechanism by which the middle class as we know it survives?

    It's very clear that destroying the unions in the 80s was a necessary precursor to the globallization of the 90s, and that that movement was ultimately bad for the American middle class (although by the way, it was good for a lot of other nations -- something that the humanist within me celebrates even as I wring my hands over the American situation.)

    So what do we do here that can only be done here, and that can employ Americans at the wages Americans are accustomed to?

    How can we handle our international labor agreements in such a way as to achieve our ends, for the middle class?

    Who wins, ultimately, in the wealth-concentration engine that is defined by the constant march toward cheap labor sources on the part of corporate concerns?

    If the answer to the above is that ultimately the wealthy profit by this search for cheap labor, and that the middle class can be predicted to fail, is there not a shared concern for the workers and middle class of every nation, to correct this imbalance?

    Purist capitalism dictates that concentration of wealth at the top is inevitable. The difficulty is we are not at the top, nor are most people. Ultimately, the pure model predicts the impoverishment of anyone who works for a living, unless some other feature prevents this impoverishment.

    For much of the 20th century the unions played the part of this impeding mechanism.

    Is the 21st century mechanism going to be a resurgence of organized labor? Will it be something else? Or are we saying we've been fooling ourselves all along, and that the wealthy must become wealthier until the worker can no longer supply the demand to make the engine run, and the wheels just come off?

    Again, point of view #1 has merit: If you have a global market, capital will typically fly to the lowest labor pool (somewhat mitigated by higher productivity, etc., here.)

    Point of view #2 has merit: If we only mollify the desire of capital owners for cheap labor pool, we as the middle class/working class are doomed to a perpetual race to the bottom and systematic impoverishment, bounded (if indeed this is a boundary) only by our ability to consume those goods and services that capital owners must peddle to continue the system. In here and now terms, we're only useful insofar as we roughly approximate the buying power and lifestyle of a Thai sweatshop worker or a Ghanaian peasant. (This is also mitigated by all sorts of factors - but take it as a state of our direction, not a state of absolute equivalency.)

    Random obersvation: It's funny how those who most assiduously assert "American exceptionalism" are the same ones who want the American lifestyle to most quickly race toward the same standard that pertains in third-world nations. And it's equally funny that I, a humanist at heart, find myself looking for ways that rich nations can maintain something like their current standard of living for the rank and file -- a standard of living that itself is great wealth by many international standards.

    So, which is it? Does the middle class have to be further impoverished in America? Is that the goal?

    If not, what's the way out?

    Sorry that the post is long. I like to think the posts are long because I'm weighing considerations not captured in the bumper stickers. Like I always say, guys, cope.

    PFnV
    Last edited: Mar 6, 2011
  17. IcyPatriot

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    You conveniently in this post and the one above where you mock me leave out the biggest factor of all. As women entered the job market more and more and households then had 2 incomes vs mostly 1 in the 60's ... the brackets shifted. Many economists scoff at notions such as this because what constitutes middle class is extremely arbitrary. Added to that of course is that as manufacturing has left the country union jobs have declined.

    I think I need to face palm this thread also ... it's full of fail.

    Did I mention that those union jobs were a great factor in why those companies left the country?

    Oh ... I know ... Reagan and Bush made them do it.

    Shall we discuss the huge inflation of the 70's ... which is why many families went to 2 incomes. :rolleyes::rolleyes::rolleyes:
    Last edited: Mar 6, 2011
  18. Stokes

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    The data I've seen suggests that even adjusting for inflation wages have still increased, the problem is that wage increases have been outpaced by things like healthcare costs and home values (which themselves help the middle class people that already own them!).

    Game Over for the American Middle Class – Inflation Adjusted Wages up 20 Percent in Last 20 Years While Housing Costs are up 56 Percent and Healthcare Costs are up 155 Percent.

    I agree this is a problem but I guess disagree on the source. I see things like loss of our manufacturing base to cheaper labor overseas as bigger factors.

    Also, Both the data from the original chart and the dat from the page I cite are from the US census bureau, so the definitions of middle class should be consistent. At any rate, on a household basis $100K + is still considered middle class

    "Taking into account the percentages provided in the six-class model by Gilbert, as well as the model of Thompson and Hickey, one can apply US Census Bureau statistics regarding income. According to these class models the lower middle class is located roughly between the 52nd and 84th percentile of society. In terms of personal income distribution in 2005, that would mean gross annual personal incomes from about $32,500 to $60,000.[20] As 42% of all households, and the majority of those in the top 40%, had two income earners, household income figures would be significantly higher, ranging from roughly $50,000 to $100,000 annually.[13] "
    American middle class - Wikipedia, the free encyclopedia

    Bottom line is that I'm not really disagreeing with the point that the middle class is being squeezed, just that I don't know that the office workers of America unionizing will lead to a change in that trend. Maybe that's naive of me.
  19. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    I mocked your post because it mocked the thread.

    Yes, with women entering a market where unionization was weak, the market was flooded, and compensation declined, so that caused more 2 worker households. Without unions there is downward pressure on wages and without unions, there is vastly less political pressure to keep manufacturers in the US. NAFTA was opposed by unions, but they were already too weak. I think you're proving my point with your examples.

    As I said, you cited examples where the decline of unions caused economic decline for the middle class, so this comment of yours tells me you don't know what argument you should make to support your point of view.

    Did I mention to you that if unions had not been in decline, those companies would have had a harder time leaving the country?

    The fact is that one of Carter's signature "accomplishments" was the deregulation of the trucking industry, which did great harm to wages of truckers across the country. Reagan furthered that with his anti-union bent. Thus, hundreds of thousands of good paying middle class jobs dropped, which rippled throughout the economy, mostly affecting the middle class.
    Last edited: Mar 6, 2011
  20. Patters

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    Overall, if you look at the accomplishments of unions: child labor, workplace safety, minimum wage, 40 hour work week, weekends, retirement benefits, health care, vacation and sick pay, and so on, these have become staples of middle class compensation. Also, while unions certainly put pressure on corporations, by and large the decline of unions has less to do with them forcing companies into bankruptcy than with anti-union legislatures and the success of unions in making non-union shops raise middle class compensation.

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