2013 The40YearSlump
- (Meyerson, 2013) ⇒ Harold Meyerson. (2013). “The 40-year Slump.” In: The Prospect, 2013-11-12.
Subject Headings: Rising Tide Lifts All Boats.
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Abstract
From 1947 through 1974, American workers brought home most of the wealth they produced. Since 1974, they've steadily lost power and they are getting just a fraction of the wealth that they produce today.
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Since 1947, Americans at all points on the economic spectrum had become a little better off with each passing year. The economy’s rising tide, as President John F. Kennedy had famously said, was lifting all boats. Productivity had risen by 97 percent in the preceding quarter-century, and median wages had risen by 95 percent. As economist John Kenneth Galbraith noted in The Affluent Society, this newly middle-class nation had become more egalitarian. The poorest fifth had seen their incomes increase by 42 percent since the end of the war, while the wealthiest fifth had seen their incomes rise by just 8 percent. Economists have dubbed the period the “Great Compression.”
This egalitarianism, of course, was severely circumscribed. African Americans had only recently won civil equality, and economic equality remained a distant dream. Women entered the workforce in record numbers during the early 1970s to find a profoundly discriminatory labor market. A new generation of workers rebelled at the regimentation of factory life, staging strikes across the Midwest to slow down and humanize the assembly line. But no one could deny that Americans in 1974 lived lives of greater comfort and security than they had a quarter-century earlier. During that time, median family income more than doubled.
Then, it all stopped. In 1974, wages fell by 2.1 percent and median household income shrunk by {{$}1,500. To be sure, it was a year of mild recession, but the nation had experienced five previous downturns during its 25-year run of prosperity without seeing wages come down.
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The industrial Midwest never recovered. Between 1979 and 1983, 2.4 million manufacturing jobs vanished. The number of U.S. steelworkers went from 450,000 at the start of the 1980s to 170,000 at decade’s end, even as the wages of those who remained shrank by 17 percent. The decline in auto was even more precipitous, from 760,000 employees in 1978 to 490,000 three years later. In 1979, with Chrysler on the verge of bankruptcy, the UAW agreed to give up more than $650 million in wages and benefits to keep the company in business. General Motors and Ford were not facing bankruptcy but demanded and received similar concessions. In return for GM pledging not to close several U.S. factories, the UAW agreed to defer its cost-of-living adjustment and eliminate its annual improvement increases. Henceforth, as the productivity of the American economy increased, the wages of American workers would not increase with it. Tide and boats parted company.
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| Author | volume | Date Value | title | type | journal | titleUrl | doi | note | year | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2013 The40YearSlump | Harold Meyerson | The 40-year Slump |